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Two residents of Bermuda establish a UK private limited company that does business in the UK. The UK company establishes a subsidiary in Luxembourg that
Two residents of Bermuda establish a UK private limited company that does business in the UK. The UK company establishes a subsidiary in Luxembourg that owns intellectual property that is licensed in the US. Luxembourg has a favorable regime for the taxation of intellectual property resulting in an effective corporate income tax rate of 5 percent. What's the rate of tax on the royalties paid from the US to the Luxembourg company? Why?
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