Tax and IP

Here’s an article from Thomson Reuters which British clients might find interesting.

The UK recently promulgated new legislation that cuts the corporate tax rate on income derived from patented technologies. A new paper published by Thomson Reuters identifies specific strategies companies may implement to benefit from the tax advantages associated with this new legislation and it is well worth a read.

In a nutshell, the key strategies discussed in the paper include the following:

• Portfolio Alignment: A comprehensive patent portfolio audit, patent-to-product mapping and gap analysis must be conducted, enabling companies to demonstrate links between their IP portfolios and the specific UK-taxable revenues derived from each component part.

• File Today for Yesterday’s Tax Relief: Claims to “Patent Box” relief may be back-dated for up to six years. If, for example, a company files a patent on May 1, 2013, and it is granted in 2019, the company could add a deduction in 2019 for the intervening six-year period during which the patent was being processed. This may be sensible given the gradual application of the legislation .

• Consider Licensing, Not Just Selling: A company that sells a patented product to its customer can only claim relief on the single sale. However, by licensing a patent to the customer, the customer may also be able to claim “Patent Box” rights and the upside shared.

Bear in mind that IP tax is a complicated affair and it is best to discuss with your IP attorney in conjunction with a tax specialist in the relevant jurisdictions.