Luxembourg, a tax haven for startups?

Luxembourg has recently (January 2008) modified its law on intellectual property. Already known as a “Tax Haven” for E Business companies (Ebay, Paypal, Skype,… have their headquarters in Luxembourg), the new law is designed to boost the development of intellectual property business chain.

Luxembourg will propose a 80% tax deduction on the income generated by a patent, copyright on software, trademark, design or model…The effective rate will be of 5,9 % on the net IP income. It should also be noted that the 80% deduction will also be applied to the revenue generated by a taxpayer using his own patent for business purpose (relatively to the net income that would have been received if the patent was licenced to a third party). The 80% deduction will also apply to the capital gain realised on the disposal of this IP.

For startups, I think this will definitively help boost their creation in Luxembourg; slowly (hopefully) creating a viable cluster that would help sustain the development of such activities. Some of you might be interested…