World-renowned for its extensive financial sector, Luxembourg is also home to a growing ecotechnology sector.
Leveraging on Luxembourg’s favorable business environment, nearly 200 Luxembourgish companies are serving many sectors by improving energy efficiency, water efficiency, materials efficiency, etc.
Ecotechnology companies are supported in Luxembourg by 28 public agencies and six research institutes. The Luxembourg Government actively supports this development through a large set of environmental and eco-innovation measures, including the attractive Luxembourgish tax regime.
Two laws are considered as milestones in this sector: (i) The law of 5 June 2009, which introduced a series of incentives to help facilitate the aid application procedures; and, (ii) The law of 18 February 2010, which displayed different forms of investment schemes that may give rise to public aid.
The National Agency for the Promotion of Innovation and Research, known as Luxinnovation, provides companies with information, assistance and advice on innovation and R&D in Luxembourg. Additionally, the Luxembourg EcoInnovation Cluster helps companies develop sustainable capabilities through innovative materials and better use of natural resources. The agencies offer contacts and information by working as intermediary for developing public-private partnerships and by networking at both national and international levels, while also giving access to various specialized support services relating eco-innovation.
Coinciding with the promotion of ecotechnologies, the Luxembourgish government has also positioned the country as a very attractive location for the ownership of corporate intellectual property ("IP") assets.
Since 2008, Luxembourg has one of the most attractive frameworks for IP in the world. The Luxembourg IP tax regime provides for an 80% exemption on royalties and capital gains derived from many types of IP. Companies benefiting from the regime are subject to an effective tax rate as low as 5.84% on qualifying “net” IP income (gross revenue from the IP less directly related expenses, depreciation and write-downs). Qualifying IP rights extends to patents, trademarks, service marks, designs, models, internet domain names and software copyrights. Thanks to various tax incentives, Luxembourg is also a top-choice destination to develop R&D activities. Additionally, Luxembourg does not levy withholding tax on royalties related to patents, trademarks and know-how.
Beyond the tax aspects, Luxembourg has developed its IP standards and participates in all the major IP treaties and conventions, hence companies compete in a business environment respectful of IP rights. The process of registration and validation of patents is also notably easy.