From the end of the transition period for the new IP box to the application of the investment tax credit for the space sector, 2021 brings new dynamics for innovative multinationals in Luxembourg. Here, we take a quick run through the most significant updates to date.
IP box: end of the transition period
The grandfathering period of the OLD IP box regime (article 50bis LITL) is in place until 30 June 2021. In order to continue to benefit from an IP box regime after this date the taxpayer will have to meet the conditions of the legal framework of article 50ter (applicable since 1 January 2018), which aligns with the BEPS “nexus approach”. In the case that the IP right does not qualify for the new IP box regime, one may assess the opportunity to transfer IP rights before June 30, 2021 to still benefit from the 80% exemption on capital gain under the old IP box regime.
Investment tax credit extended to space industry
The new law extends the possibility to apply investment tax credit in Luxembourg for companies active in the space sector. The investment tax credit is granted against corporate income tax and corresponds to roughly 16% of the cost of the investment.
Contrary to other assets eligible for the investment tax credit, there is no requirement to physically use the space objects in the territory of Luxembourg or EEA. This is really good news and no doubt it will help to attract more investment in the space sector of Luxembourg.
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What’s on: Multinationals in the new year