Financing, investment and government support
Does the government provide any incentives or support programmes to promote fintech innovation in your jurisdiction (eg, tax incentives, grants and regulatory sandboxes)?
Luxembourg has the lowest level of value added tax in the European Union, and its effective corporate tax ranks among the most favourable in Europe. Accelerated depreciation and tax credits, applied to qualifying investments, add to an attractive tax climate, thus helping start-ups and facilitating return on investment.
Further, Luxembourg offers an attractive environment for IP management, including an absence of withholding tax on royalty payments and an extensive network of double tax treaties.
To encourage R&D activity, Luxembourg offers a tax incentive that provides for an 80% exemption of certain types of IP-related income (or of deemed IP-income if a taxpayer creates intellectual property for its own use), as well as capital gains realised on the disposal of such intellectual property.
A wide range of financial aid is available to support R&D activities in both the public and the private sector.
The Luxembourg House of Financial Technology – a partnership between the public and private sectors – was established in 2017. It aims to foster innovation within and drive the technological evolution of Luxembourg’s financial services sector. It offers start-up incubation as well as co-working spaces, and brings together innovators, investors, financial institutions and research institutions.
Has the government concluded any international cooperation agreements to promote and facilitate the cross-border expansion of fintech businesses?
Luxembourg and Belgium have signed a memorandum of understanding which aims to work on collaborative initiatives and further promote the fintech industry across Europe for the benefit of the whole industry.
Financing and investment
What private financing and investment schemes are available and commonly used for fintech start-ups in your jurisdiction?
Private financing or investment may be available from dedicated investment funds, banks and financial institutions, global venture capital and business angel investors.
Start-ups can also combine private funding with public funding schemes for research, development and innovation. In addition, fintech companies can obtain funding from the €150 million Luxembourg Future Fund and the Digital Tech Fund. Incubator and accelerator facilities also offer physical space designed to foster business development and provide invaluable networking opportunities.
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