Luxembourg IP regime to be aligned to OECD’s BEPS

The Luxembourg Intellectual Property (IP) tax regime will be aligned to the “modified nexus approach”, as per Pierre Gramegna, Luxembourg’s Finance Minister. The IP regime is expected to be modified in 2015 and to be in force no later than 30 June 2016.

This is driven by the OECD’s Base Erosion and Profit Shifting (BEPS) project, under Action 5, which, looks for substantial activities and presence for the application of favorable IP tax regimes.The “modified nexus approach” allows a taxpayer to receive benefits on IP income in line with the expenditures linked to generating that income.

Luxembourg arrangements need to be properly assessed and aligned to the new rules.