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. Financial Services Luxembourg documents, computes and ensures compliance; legal opinions and reserved acts are coordinated with our partner lawyers and notaries.
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The Luxembourg IP box is a tax regime that exempts 80% of the eligible net income derived from qualifying intellectual property assets, mainly patents and copyright-protected software, under conditions. The exempt share is limited in proportion to the qualifying research and development expenditure incurred by the taxpayer (nexus ratio). Trademarks and marketing assets are excluded.
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)
Ready to structure your ip regime?
First reply within 24 working hours, from a named adviser. Firm quote within 48 working hours once the scope is defined. NDA on request before any confidential document.
Official sources and verification
This page is published under the editorial responsibility of Mickaël LOC for Financial Services Luxembourg (business permit 10077274). The rules cited should be checked against competent authorities and the circumstances of the case.
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.
Request a quote: IP regime
First reply within 24 working hours, from a named adviser. NDA on request before any confidential document.