Luxembourg, situated between Germany, France and Belgium, with an area of 2,586 km² and a population of 576,000 inhabitants (1 January 2016), is one of the smallest Member States of the European Union. The size of the Luxembourg economy and of its local market greatly exceeds that of the country itself, due to its strategic geographic position, the ongoing development of its foreign relations and its integration into broader economic areas.
Luxembourg is a recognised and reliable financial and political partner, within Europe and internationally, and is an integral part of one of the largest economic and monetary areas in the world.
In an effort to become the partner of choice with respect to the knowledge economy, the Luxembourg government issued an important circular (Income Tax Circular (LIR) No. 50a / 1) on 5 March 2009 to clarify the application of the favourable law on intellectual property in Luxembourg.
The key feature of the intellectual property law is that it provides an 80% exemption on royalties and capital gains derived from many types of intellectual property.