Tax exemption (Art. 50 bis) applies even if a trademark has been registered after it had been used in the market

One of the first case law decisions regarding the 80% tax exemption on IP revenues has recently been issued by the Luxembourg first instance Court. (Tribunal administratif du Grand-Duché de Luxembourg, 2e chamber N° 30215, Jugement du 27.6.2012)

The benefit of said exemption had initially been refused by the tax authorities due to the fact that the trademark, filed after January 1st 2008 as required by the law, had been used before said date.

Existence of a prior use of the name being subject to a trademark application filed after the date of entry in force of the tax exemption (January 1st 2008) has been considered as being an obstacle to benefit from the exemption in the tax authorities’ circular of 5 mars 2009, p. 17 (interpretation memo).

The Court has however considered that the positive law, where use creates no trademark rights, shall prevail and be applied by the tax authorities. Thus Art. 50 bis is to be applied even if a trademark has been registered after it had been used in the market.
This decision is in line with the positive tax and trademark laws, and is clarifying the situation with regard to the application of the tax exemption, as well as its purpose, i.e. to sustain marketing and technical innovation.

This regime has been described in detail and explained in our book, “vademecum Intellectual Property in Luxembourg” that can be ordered here.
Please contact us if you have enquiry regarding the IP tax exemption or this decision.

Olivier Laidebeur
Pierre Kihn