Looking for new ways? Among the many economic advantages of Luxembourg are the many opportunities to be found in the field of research, development and innovation. Much effort has been put into developing an R&D-friendly setting for businesses, science and technology development and IP.

Traditionally, Luxembourg had been a country of steel mills and agriculture. However, over the recent years many initiatives, private and public, have worked together to create a new outlook for the challenges of a global economy. Indeed, in the 2012 Global Innovation Index, Luxembourg ranks 11th of 141 countries - which is the best score among its neighbours, and 6 ranks higher than in the 2011 index.

In order to guarantee a sustainable economic future, the government has confirmed its commitment to research, development and innovation by considerably increasing public investment in the field, as well as by the establishment of the University of Luxembourg in 2003. This young institution is already active on the international research scene, showing a strong orientation towards applied research and business collaboration, similar to that of Luxembourg’s specialised Public Research Centres. 

Together with Luxinnovation, the national agency for research and development, their mission is to foster R&D activities, to encourage technical and scientific cooperation as well as technology transfer between the public and private sector and to stimulate the development of new economic activities.

The main national player in the field is the Ministry of the Economy and Foreign Trade which gives advice and support to companies and research institutions, thereby facilitating their access to knowledge, financing, technologies and business opportunities.

Luxembourg is equipped with an impressive toolkit of measures and incentives, which continue to attract regional and international investors.

The common incentives framework grants aid of up to 25% of R&D investment. However, on specific matters the level of aid can be higher. New direct incentives, along with the maximum level of aid on specific matters, include:

• a specific regime for technical feasibility studies (up to a maximum of 75% of total investment),
• a specific support to the creation of young innovative companies (up to a maximum of 1 million €),
• a specific incentive for advisory services focused on innovation (up to a maximum of 200,000€),
• a specific regime for innovative approaches related to corporate organisation and services activities (of between 15% and 35% of total investment).

As Intellectual Property (IP) is key to every innovative company, Luxembourg has also put into place an interesting fiscal environment for IP. Income from patents, trademarks, design, models or software copyrights benefit from tax reductions. Capital gains generated on IP are also exempt up to a rate of 80%. Furthermore, on 1 January 2009, net wealth tax was abolished on qualifying IP.

At the heart of innovation

Over recent decades, these measures have impressed many international high-tech companies, some of whom have based major European R&D operations in the Grand Duchy. They were attracted by a skilled multilingual workforce, a location at the heart of Western Europe and a government willing to consider and support innovative ideas.