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IP regime in Luxembourg, exempt 80% of eligible IP income.

The Luxembourg IP regime (art. 50ter LIR) exempts 80% of eligible net income from certain intellectual-property assets, under the modified nexus approach that ties the benefit to R&D expenditure actually incurred. We scope eligibility and tracking. FSL documents, computes and ensures compliance; legal opinions and reserved acts are coordinated with our partner lawyers and notaries.

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In short

The IP box is a tax regime that exempts 80% of eligible net income from qualifying IP assets (patents and copyright-protected software, under conditions), in proportion to qualifying R&D expenditure (nexus ratio). Trademarks and marketing assets are excluded.

Reviewed by Mickaël LOCManaging Director · Licensed accountant 10077274 · Updated August 6, 2026ProfileLinkedIn
Legal basis

Article 50ter LIR, introduced by the law of 17 April 2018, compliant with the OECD modified nexus approach (BEPS action 5). Replaces the former art. 50bis regime. Net wealth tax exemption also available on eligible assets, under conditions.

Key takeaway

  • The regime exempts 80% of eligible net IP income (art. 50ter LIR).
  • The benefit follows the nexus approach: it depends on real R&D spend.
  • Patents and protected software qualify; trademarks are excluded.

Who this is for

  • Technology companies and software publishers
  • Industrial groups holding patents
  • Innovative start-ups and scale-ups
  • Structures centralising R&D and IP in Luxembourg

What we do

  • Asset eligibility analysis (patents, protected software)
  • Nexus ratio and eligible net income computation
  • Documentary tracking of qualifying R&D expenditure
  • Application in accounting and tax returns
  • Coordination with legal protection of assets (IP counsel)

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FAQ

Frequently asked questions

Which assets qualify for the IP regime?

Mainly patents (and similar rights) and copyright-protected software, created or developed after 31 December 2007. Trademarks, domain names and other marketing assets are excluded.

What benefit does the regime offer?

An 80% exemption of eligible net income (royalties, gains, embedded income), i.e. a reduced effective tax on that portion, plus a net wealth tax exemption under conditions.

What is the nexus approach?

A ratio limiting the benefit to the proportion of qualifying R&D expenditure actually incurred by the taxpayer, in line with OECD BEPS action 5. Documentary tracking of expenditure is therefore essential.

Must R&D be developed in Luxembourg?

The benefit is higher the more qualifying R&D expenditure is incurred by the taxpayer (or outsourced to unrelated third parties). We structure and document the tracking.
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