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Intellectual Property (IP) in Luxembourg
This regime, applicable to income from intellectual property ("IP") rights entered into force on 1 January 2008.
 
I) Scope of application of the regime (IP):
 
This regime is applicable to the income received by any Luxembourg taxpayer (natural or legal person).
 
In accordance with this regime, 80% partial relief is applied to the net income and capital gains arising from:
 
- copyright on computer software,
- a patent,
- a trademark,
- a drawing, logo, model,
- a domain name,
(hereinafter "IP rights") acquired or created after 31 December 2007.
 
The IP regime produces an effective tax rate of 5.84% since January 1st, 2013 (Luxembourg City) with respect to the net income and/or capital gains falling under the scope of application of this regime.
 
The IP cannot have been acquired from a person having the status of associated company:
 
- one which holds a direct investment of at least 10% in the share capital of the company that is the beneficiary of the income,
 
- one whose capital is held directly in the proportion of at least 10% by the company that is the beneficiary of the income,
 
- one whose capital is held directly in the proportion of at least 10% by a third company and where the latter holds an investment of at least 10% in the capital of the company that is the beneficiary of the income.
 
NB: Copyright other than copyright on computer software, drawings, formulas or secret processes and other analogous rights, as well as income from licences for industrial, commercial or scientific equipment is excluded from the scope of application of this regime.
 
II) Particular tax benefits of the Luxembourg IP regime:
 
- Payment for the use or concession of IP rights
- Use of a patent created by the company for the purposes of its own activity
- Gains from the disposal of IP rights
.
III) TVA:
 
The transfer of copyrights, patents, trademarks and similar rights, as well as their exploitation for the purpose of obtaining regular income therefrom, is considered an economic activity within the meaning of the 6th VAT Directive
 
According to the law, the VAT treatment applicable to the licensing or sale of IP rights by a Luxembourg company is as follows:
 
- If the beneficiary is a person subject to VAT residing in another EU country, no Luxembourg VAT is owed and the VAT of the beneficiary country will, in principle, be paid through self-assessment by the beneficiary.
- If the beneficiary is resident in a state outside of the EU, no Luxembourg VAT will be owed.
- If the beneficiary is a Luxembourg resident or is a non-taxable person residing in one of the EU member states, Luxembourg VAT is charged at the rate of 15% by the supplier.
 
In return, the acquisition of IP rights by a Luxembourg company subject to the VAT of a resident entity of another member state or in a third state will be subject to VAT at the rate of 15%, which will be paid through self-assessment by the Luxembourg buyer (i.e. declared as VAT owed and VAT deductible in the same return).
 
The information and comments expressed in this document in no way constitute any fiscal opinion binding on Centuria Capital Luxembourg S.A.
Therefore, this document is not a contractual document.