Why think of Luxembourg?

Why Think Luxembourg for intellectual property (IP) management rights ?

In order to promote Luxembourg as a key centre for IP management rights, tax provisions were adopted by Luxembourg’s Parliament in 2007.

It provides for an 80% tax exemption on net income derived from certain IP rights and on capital gains resulting from the disposal of such IP rights and an 80% deemed income deduction for self-developed patents.  Thus, qualifying IP rights benefit from a 5.76% corporate tax (in lieu of the 28.80% standard corporate tax).

This measure is applicable in Luxembourg as of 1 January 2008.

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Why think Luxembourg for audiovisual services ?

Because of its:

- flexible regulatory framework resulting from a minimalist implementation of the Audiovisual Media Services directive (formerly Television Without Frontiers directive) ;

- 3% super-reduced VAT rate on television and radio services irrespective of the transmission mode selected (air waves, satellite, internet, mobile networks);

Luxembourg is becoming a privileged location for the establishment of television and new audiovisual services activities.

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Why Think Luxembourg for a B2C e-Business Platform?

Non-EU Internet services providers offering services to EU individuals must register and account for EU value added tax (“VAT”). VAT will be charged to their customers at the rate of their country of residence ranging from 15% to 25%. However, setting up a B2C sales company in Luxembourg can make non-EU providers benefit from the advantage of charging VAT to their EU customers at 15%, the lowest VAT rate in the EU. As a result, to benefit from the competitive edge provided from a lower VAT rate, major US entities such as Amazon, AOL, Microsoft, Apple I-tunes have decided to establish their EU B2C e-business platform in Luxembourg. (...)

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Why Think Luxembourg for a Multinational Headquarters?

Luxembourg offers an attractive regime to locate the headquarters of multinational enterprise (“MNE”). In addition to flexible legal framework and corporate governance rules, a range of tax advantages are available for such headquarters. This allow for efficient tax planning using not only the possibilities offered by domestic tax law, but also the opportunity to locate specific activities in branches established in a more friendly jurisdiction depending on the type of activity envisaged. In addition, tax efficient profit repatriation schemes may be easily structured. (...)

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Why Think Luxembourg for a Private Equity / Venture Capital Entity?

Luxembourg’s law of 15 June 2004  on Capital Risk Investment Company (Société d’Investissement à Capital Risque) (“SICAR”) establishes an attractive regulatory and tax regime for venture capital or private equity entities with a view to encourage their establishment in Luxembourg. From a tax perspective, the SICAR is not taxed on income generated by eligible investments. Moreover, at the investor’s level, there is neither Luxembourg withholding tax nor capital gain exposure in the hands of a non resident investor. The fact that a SICAR may be used for a wide range of investments, that it may have a variable capital, that is not subject to legal restrictions regarding risk spreading policy, and that it has a relatively light approval procedure, provides flexibility to its investors. Moreover, regulatory requirements such as the regulatory authority approval of the articles, the obligation to publish a prospectus and to have a depository for the SICAR’s assets, should provide certain security to the investors. (...)

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Why Think Luxembourg for a Securitization Vehicle?

Luxembourg’s new law on securitization establishes an attractive regime for securitization vehicles (“SV”) allowing them to acquire a wide spectrum of claims and receivables and reissue specific and multiform securities to investors. The SV not only proposes a flexible and advantageous corporate structure in relation to its form and management, but also offers protecting measures for the SV and their investors. It further offers to the investors a full range of possibilities to obtain a neutral, or nearly neutral, tax treatment. Hence, it is expected that this vehicle will be widely used by domestic and foreign investors. (...)

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Why Think Luxembourg for a Financial Participation Company (Soparfi)?

The Grand-Duchy of Luxembourg offers a very attractive legal and tax framework for the localization of holding companies of international groups. As a result, more than 2000 holding and financial participation companies are incorporated each year in Luxembourg. 

When certain conditions are fulfilled, financial participation companies (“SOPARFI”) are not taxed on dividend income they receive and on capital gains arising from the sale of participations as well as, upon liquidation, the liquidation surplus.

Such advantages make this type of vehicle particularly attractive for the implementation of corporate structures aiming at achieving a tax optimization for international groups. It is of special interest when the sale of participations is envisaged.


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