LUXEMBOURG IP TAX REGIME

Transcription

1 LUXEMBOURG IP TAX REGIME FINANCIAL ADVISORY TAX CORPORATE SERVICES - REAL ESTATE January HOCHE PARTNERS TRUST SERVICES S.A.

2 INTRODUCTION As from 1st of January 2008, Luxembourg introduced a favorable tax regime for income derived from certain Intellectual Property rights (hereinafter referred as IP rights ). The Luxembourg Income Tax Law entitles a Luxembourg company to benefit from an allowance of 80% on the net income derived from intellectual property under some conditions. The net book value of the IP is also exempted from the Luxembourg net wealth tax as from 1st of January HOCHE PARTNERS TRUST SERVICES S.A.

3 LEGISLATION The allowance covers income derived from the use or the right to use : Software s Patents Trademarks Designs / models Domain names. The 80% deduction is furthermore applicable to the profits generated by the sale of such IP right. If a tax payer uses a self-developed patent for his own purposes, he can benefit from a deduction of 80% of the fictive earnings he would have earned if he had licensed the income that Patent to a third party. 3

4 DEFINITION OF NET INCOME The allowance applies to net income directly derived from the above mentioned IP rights. The net income needs to be understood as the difference between the gross income derived from IP rights and any expense which is economically linked with the income : Interest expenses in connection with the debt which financed the acquisition of the IP rights Lawyers fees in relation with the filing of the IP Depreciation of the IP rights 4

5 CONDITIONS TO BENEFIT FROM THE REGIME In order to benefit from this regime, the following conditions need to be jointly complied with: The IP right has to be acquired or constituted after the 1st of January The tax payer should accrue as an asset any expense incurred in relation with the development of the IP right In case of an acquisition, the IP right may not be acquired from an associated company. 5

6 TYPICAL TAX STRUCTURE Shareholders Income tax : depending on jurisdiction Luxembourg IP company Effective tax burden : 5.76% Royalties paid No or reduced WHT Operating Company (EU Company, non EU Company) 6

7 ABOUT OUR FIRM Hoche Partners Trust Services SA is a one stop shop firm which can offer all services required for the incorporation and full management of Luxembourg and offshore companies including tax services, accounting, corporate services, directors services and audit ( Commissariat aux Comptes ). In addition to the set up and the full management of IP structures, Hoche Partners Trust Services SA is also experienced to provide customized solutions including complex instruments such as MRPS (Mandatory Redeemable Preferred Shares) or CPEC (Convertible Preferred Equity Certificates) which are hybrid instruments analyzed differently in cross border legislations Securitization companies used to optimize taxation on a portfolio of loans or to segregate investments and to split the legal ownership from the economic interests. 7

8 ABOUT OUR FIRM Your contacts: Mr Alain HEINZ, Managing Partner Phone: E: Mr Jean-Pascal CARUSO, Partner Phone: E: Mr Laurent KIND, Partner Phone: E: 8