Reform of Patent Box regime on its way

The UK and German governments have agreed a joint proposal which may result in the abolition of the UK’s Patent Box regime in its current form. The main theme of the proposal is that preferential tax regimes for intellectual property (IP) should require substantial economic activities to be undertaken in the jurisdiction offering the tax break, by requiring tax benefits to be connected directly to expenditure incurred in the jurisdiction on research & development (R&D) in developing the patent or product.  The UK Patent Box regime currently permits companies to apply a lower rate of corporation tax on qualifying worldwide profits which are attributable to patents and similar forms of IP even if the IP was created and/or developed outside the UK, provided that the IP was developed by a company in the same group as the company claiming the lower tax rate.  The relief came into force on 1 April … Continue Reading ››