A Luxembourg IP box tax regime in a BEPS fashioned way

An article published in the June 2018 edition of “AGEFI Luxembourg” on Luxembourg’s replacement IP box.


On 28 June 2019, the Luxembourg tax authorities published an administrative circular (the Circular) on the application of article 50ter of the Luxembourg income tax law (LITL) which introduced the Luxembourg intellectual property tax regime (IP Regime) with effect from the 2018 tax year. In brief, the Circular is designed to provide guidance in relation to the application of article 50ter LITL. The Circular provides explanations and clarifications on a number of aspects of the IP Regime, such as further details on the eligibility of particular assets, research and development activities, the scope of eligible income and the concept of qualifying expenditure.

Luxembourg has adopted a “first mover” position towards implementation of the measures set out in the OECD Base Erosion and Profit Shifting “BEPS) action plan. In particular, to comply with Action 5 (Countering Harmful Tax Practices More Effectively) of the plan, the Luxembourg Chamber of Deputies passed the Luxembourg law of 18 December 2015, repealing and replacing the former intellectual property box tax regime, subject to transitional rules and incorporating a grandfather clause.

The article by Pierre-Régis Dukmedjian, Nadejda Girleanu and Alejandro Dominguez of Simmons & Simmons Luxembourg LLP explains the operation of the new IP box.

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