Luxembourg has completed a broad range of new tax law changes designed to streamline its structure and encourage economic growth. In place now is an 80 percent tax exemption on income derived from intellectual property (IP) as well as capital gains realized on the disposal of such intellectual property. Also changed now are withholding tax rates on dividends distributed to parent companies resident in countries that have signed a double tax treaty with Luxembourg (such as the United States and Canada). This was reduced to zero, under certain conditions. Additionally, the corporate income tax is decreasing, from 22 percent to 21 percent, which results in a consolidated corporate tax rate of 28.59 percent when combined with the Luxembourg City municipal business tax. Together with the abolition of the capital tax duty in early 2009, these additional tax reforms demonstrate confidence in the future and assure that Luxembourg remains an ideal location for holding companies, IP and corporate financing activities.
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