Luxembourg and its IP regime: still possible until 30 June 2016
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At the end of last year, in implementation of an agreement with the OECD as well as the EU, a bill was enacted in Luxembourg, abolishing the IP regime as from 1 July 2016. However, a transitional period was negotiated from 1 July 2016 until 30 June 2021 for intellectual property rights built up or acquired before 1 July 2016.
It remains to be seen what the future will bring. It is expected that a new IP regime will be introduced in conformity with the nexus approach of the OECD report regarding BEPS (Base erosion and profit shifting) Action Plan 5. For this regime, the existence of a substantial economic activity would be key, and the income from intellectual property rights would only be able to benefit from the favourable regime if the cost of research and development is borne by the Luxembourg company.