- Parabolic Arc
- November 29, 2023
Luxembourg’s Bold Move into Space Mining
By Douglas Messier
Luxembourg’s announcement of its space resources initiative provides three things that companies like Planetary Resources and Deep Space Industries (DSI) need to make their dreams of mining asteroids a reality.
Legal Recognition. The United States is alone in the world in recognizing space property rights. There is some dispute over whether the law violates the 1967 Outer Space Treaty.
Luxembourg plans to “set out a formal legal framework which ensures that private operators working in space can be confident about their rights to the resources they extract, i.e. rare minerals from asteroids.”
Luxembourg also plans to work with other countries to get establish an international legal framework for these rights. The country’s location in Europe — a major space power — and as a member of the European Union are assets in this effort.
Investment. Luxembourg plans to invest “invest in relevant R&D projects and consider direct capital investment in companies active in this field.” The nation’s R&D investment will be channeled through its contribution to the European Space Agency (ESA).
This is win-win. Mining companies will need a lot of money to pursue their plans. And Luxembourg can use its investment to attract space mining companies to locate in the grand duchy.
Tax Haven. Luxembourg’s favorable tax laws have attracted major international companies eager to shield their profits from tax authorities.
“Luxembourg’s tax system allows hundreds of U.S. corporations to store massive chunks of their business outside their home countries, which cuts billions from tax bills,” according to Ivestopedia.
Luxembourg has a corporate tax rate of 21%, significantly lower than that of the U.S.,” the website reports. “In addition to low corporate tax rates, Luxembourg charges foreign corporations an extremely low tax rate to send money into and out of the country. Corporations that funnel profits through Luxembourg are charged around 1%.”
Of course, Luxembourg is not the only tax haven in the world. But, it appears to be the only one offering significant investment in space mining at the moment. And even if the Grand Caymans offered a legal framework for space property rights, who would really care? Having Luxembourg do so is far more significant.
Planetary Resources is backed by investors such as Richard Branson and Google’s Larry Page and Eric Schmidt who well understand how to structure companies to avoid taxes through off-shore companies.
Schmidt is particularly proud of Google’s efforts at avoiding billions in taxation. “It’s called capitalism,” he declared.