Article 50ter – a new IP box for Luxembourg

On Thursday 22 March 2018, the Luxembourgish parliament passed a new law on the tax regime for intellectual property, offering a tax advantage to companies according to their scope of research and development activities.

The law aims to create a new tax regime concerning IP rights created as from 1st January 2008 and outlines the conditions to be fulfilled by a company in order to benefit from a tax exemption for its revenues deriving from its research activities.
It delineates eligible assets such as patents and copyright on software, but trademarks and domain names are not eligible anymore, compared to the previous regime (article 50 bis).
Maximum exempted revenues are also redefined, including an assessment of the direct and indirect costs linked to the taxpayer’s research activities, and the determination of eligible expenses.

The new law (article 50ter) will be in force for the 2018 tax year. However, revenues deriving from IP rights filed before 1st July 2016 still enjoy the benefit of the earlier regime (article 50bis) up to 30st June 2021, including an exemption for trademark and domain name revenues without application of a maximum exemption limit.

Olivier Laidebeur