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The Law of April 17, 2018 therefore lays down a new framework of tax incentives for research and development activities aimed at consolidating a competitive framework for innovation in Luxembourg.

According to data published by the European Patent Office and the European Union Intellectual Property Office, IPR-intensive activity sectors accounted for 42% of GDP and 27.8% of direct jobs (or 60 million employees) in the European Union between 2011 and 2013.

As with the previous intellectual property regime, the new provisions provide for an exemption from income tax of 80% of the amount of adjusted and compensated net eligible income.

However, the field has been restricted to patents (in the broad sense) and computer software. Trademarks and domain names are no longer on the list of eligible assets.

Substantial activity and eligible expenditure

Moreover, for a company to benefit from this partial tax exemption, it must justify substantial R&D activities (that is to say that it makes eligible expenses directly related to income from intellectual property rights) and that it has itself borne the costs of R&D. Thus, profits are taxed directly in the country where value creation has occurred and cannot be artificially transferred to other countries.

Article 50ter nevertheless allows companies with their head office in Luxembourg to carry out their R&D activities in a permanent establishment located in another country of the European Economic Area, on the condition, in particular, that R&D expenditure is allocated to them under a preventative double taxation treaty.

The level of the amount that may be partially exempted depends on the extent of the R&D activities undertaken by that company and is determined by the level of eligible expenditure actually incurred.

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On the way to Smart Manufacturing Week

28-10-2020

The 3rd edition of Smart Manufacturing Week will be held in digital format from 16 to 20 November. It will be an opportunity to share experience of digital transformation and sustainability strategies in order to meet the challenges of tomorrow.
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Take part in the Circular By Design Challenge

27-10-2020

Twelve weeks of intensive coaching are offered to the most inspired creatives willing to develop ideas and propose solutions to achieve sustainable and circular ambitions. Applications must be submitted by 4 December.
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“Key issue behind ecodesign is lifecycle thinking”

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Speaker at the Circular by Design Challenge presentation webinar, the 27. October, Professor Martin Charter, an international specialist in the circular economy, explains the challenges of circular design.
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«Building a better life for everyone»

01-10-2020

The director of the Ordre des Architectes et Ingénieurs-conseils looks back on the awards ceremony for the Bauhärepräis OAI 2020 and the perspectives for the sector.
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Protective masks made in Luxembourg

01-10-2020

The company Santé Services S.A. and the Robert Schuman Hospitals have just obtained all the necessary certifications for selling their own surgical masks on the European market.
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