Which countries have Patent Box?

Your company (or another group company) must also have undertaken qualifying development for the patent….these countries in the European Economic Area:

• Austria.
• Bulgaria.
• Czech Republic.
• Denmark.
• Estonia.
• Finland.
• Germany.
• Hungary.

How do patent boxes work?

But what is a patent box? A patent box is a tax measure that provides special tax treatment for profits generated from intellectual property (IP). They theoretically encourage businesses to hold IP onshore, instead of offshoring it to jurisdictions where tax rates are lower.

How do I claim Patent Box tax relief?

How to claim Patent Box tax relief. To claim you need to elect into the Patent Box scheme and need the patent to have been granted. This must be done within 2 years after the end of the accounting period which contained the relevant profits and income.

How is Patent Box deduction calculated?

To calculate the Patent Box deduction, we use the formula given in the legislation; Relevant IP profits (RP) are multiplied by the main rate of Corporation Tax (MR) minus the special rate of Corporation Tax (IPR, ultimately 10%) divided by the main rate of Corporation Tax i.e.

Why is it called patent box?

The ‘patent box’ tax incentive, named after the ‘patent’ box that you tick in your tax return, allows companies to pay a lower tax rate on income generated through the commercialisation of patented technology. The idea of a patent box is not new, and was considered by the Federal Government in 2015.

Why is it called a patent box?

What is the R&D tax credit?

The Research and Development (R&D) Tax Credit is a government-sponsored tax incentive offered to companies who create or improve a product or process in the course of their business. The credit dates back to 1981, when it first became available to taxpayers on a temporary basis.

How do I claim R&D tax relief?

You can make a claim for R&D relief up to 2 years after the end of the accounting period it relates to. You can claim the relief by entering your enhanced expenditure into the full Company Tax Return form (CT600). You can then use the online service to support your claim.

Can you claim Patent Box and R&D tax credits?

Can R&D Tax Credits and the Patent Box scheme be used simultaneously? Although the two schemes are unique, they can certainly be combined. R&D can definitely attract tax credits and, second, the profits from patents coming directly as a result of R&D can be taxed at a lower percentage.

How does the UK patent box work?

The UK Patent Box scheme was introduced in April 2013 and allows UK companies to elect to pay a reduced rate of corporation tax on profits derived from the exploitation of patents and certain other types of intellectual property such as supplementary protection certificates (SPCs) for pharmaceutical products.

What is patent box tax?

A patent box is a special very low corporate tax regime used by several countries to incentivise research and development by taxing patent revenues differently from other commercial revenues. It is also known as intellectual property box regime, innovation box or IP box.

When was the Patent Box introduced in the UK?

The Patent Box regime introduced in April 2013 provides tax relief for UK companies exploiting certain qualifying intellectual property (IP) rights. The regime effectively provides for a 10 per cent tax rate on qualifying profits derived from UK or EU patents.

How long does patent box need to be maintained?

The figures are calculated on a cumulative basis and records will need to be maintained for up to 20 years. Companies which carry out all R&D in-house and have acquired no IP rights should have no reduction in the amount available for Patent Box relief.

What is the tax rate for patent box?

It is necessary to carry out a multi-step calculation to determine the amount available for patent box relief. An additional deduction is claimed in the company’s tax computation to give an effective tax rate on qualifying intellectual property profits of 10%.

Where are patents excluded from the patent box?

The regime notably excludes patents granted by patent offices in France, Spain, Italy, the US, and Japan. The benefit of the Patent Box is available through legal ownership of the patent or through holding an exclusive licence to commercially exploit a patent.