The Patent Box
The Patent Box allows companies to apply a lower 10% Corporation Tax rate on profits arising from patent exploitation. New legislation came into effect from 1 April 2013 that allows companies to apply the lower Corporation Tax rate (on a phased basis) to profits attributable to patents and other qualifying intellectual property, such as medicinal or botanic innovation rights.
Companies can use the Patent Box if they own or exclusively license-in patents granted by the:
- UK Intellectual Property Office
- European Patent Office
- The following countries in the European Economic Area: Austria, Bulgaria, Czech Republic, Denmark, Estonia, Finland, Germany, Hungary, Poland, Portugal, Romania, Slovakia, and Sweden.
HMRC’s guidance on the Patent Box includes sections on:
- Overview of the Patent Box regime
- Reduced CT rate for profits from patents
- Qualifying companies
- Relevant IP profits
- Relevant IP losses
- Supplementary issues.
The use of the Patent Box has recently been referred by the EU Code of Conduct Group for discussion by the Council of Finance Ministers (ECOFIN) meeting on 10 December 2013. However, for the time being there are no changes and companies can rely on the current rules.