By developing cleaner and more energy-efficient processes and products to address environmental issues, the ecotechnologies sector is becoming a key driver for economic growth both globally and in Luxembourg.
At the same time, patents, trademarks, and copyrights continue to be used to protect and remunerate ownership rights to inventions and improvements. In a knowledge-based economy, intellectual property assets and revenues are of utmost importance. Companies remain focussed on investing in Research and Development (R&D), information technology, and advertising. In this context, managing the location of intellectual property assets is a key strategic issue for international comporations.
Luxembourg, an essential place for EcoTech & IP investment
World-renowned for its extensive financial sector, Luxembourg is also home to a growing ecotechnology sector. Leveraging on Luxembourg’s favorable business environment, nearly 200 Luxembourgish companies are serving many sectors by improving energy efficiency, water efficiency, materials efficiency, etc. Ecotechnology companies are supported in Luxembourg by 28 public agencies and six research institutes. The Luxembourg Government actively supports this development through a large set of environmental and eco-innovation measures, including the attractive Luxembourgish tax regime. Two laws are considered as milestones in this sector: (i) The law of 5 June 2009, which introduced a series of incentives to help facilitate the aid application procedures; and, (ii) The law of 18 February 2010, which displayed different forms of investment schemes that may give rise to public aid. The National Agency for the Promotion of Innovation and Research, known as Luxinnovation, provides companies with information, assistance and advice on innovation and R&D in Luxembourg. Additionally, the Luxembourg EcoInnovation Cluster helps companies develop sustainable capabilities through innovative materials and better use of natural resources. The agencies offer contacts and information by working as intermediary for developing public-private partnerships and by networking at both national and international levels, while also giving access to various specialized support services relating eco-innovation.
Coinciding with the promotion of ecotechnologies, the Luxembourgish government has also positioned the country as a very attractive location for the ownership of corporate intellectual property ("IP") assets. Since 2008, Luxembourg has one of the most attractive frameworks for IP in the world. The Luxembourg IP tax regime provides for an 80% exemption on royalties and capital gains derived from many types of IP. Companies benefiting from the regime are subject to an effective tax rate as low as 5.84% on qualifying “net” IP income (gross revenue from the IP less directly related expenses, depreciation and write-downs). Qualifying IP rights extends to patents, trademarks, service marks, designs, models, internet domain names and software copyrights. Thanks to various tax incentives, Luxembourg is also a top-choice destination to develop R&D activities. Additionally, Luxembourg does not levy withholding tax on royalties related to patents, trademarks and know-how. Beyond the tax aspects, Luxembourg has developed its IP standards and participates in all the major IP treaties and conventions, hence companies compete in a business environment respectful of IP rights. The process of registration and validation of patents is also notably easy.
Due to the increasing importance of ecotechnologies in Luxembourg, KPMG has created a dedicated Ecotech team comprised of experts in the fields of audit, tax and advisory to assist Ecotech companies, regardless of size or sector, to deliver tailor made, industry specialized, business solutions. Furthermore, KPMG Luxembourg has recently launched K-Start, a free tool/service to help you launch new projects on the Luxembourg market. Together with you, we aim at enhancing your performance on the market. Concerning IP, our services include:
- Analysis of transfer of IP rights from other jurisdictions to Luxembourg
- Determination of the tax treatment of IP income and the application of the Luxembourg IP tax regime
- Determination of the arm’s length royalty payments and of notional deductions for self-developed patents, as well as managing the valuation of IP rights upon transfer to or from related parties
- Assurance and accounting advisory services
- Valuation services in the context of IP and equity securities