Intellectual Property Rights – IP Tax Planning

What We Offer

Intellectual property (IP) and its effective operation are very important drivers for entities worldwide. International corporate structures persuade multinational corporations (MNCs) to address their valuable IP rights in low-tax locations aiming to eliminate taxation.

Businesses look constantly for solutions on developing and keeping safe company’s revenue and profits, effectively managing expenses, managing tax-related risks by IP tax planning, while gaining competitive advantages and leverage the major value from IP assets.

Patent box regimes (IP regime or IP box) provide very low corporate tax regime on income received from IP. In that means, IP income includes any license fee or royalties that the company gains from the exploitation of IP.
The aim of IP boxes is generally to provide a further motivation for companies to retain their patents and to develop innovations and technology.
A patent box laywer can help you with choosing the potential IP location as it is is of major importance not only for an effective IP management but as well for the proper operation of the entity.

The IP management functions and the exploitation of IP rights depend on several factors, such as the state’s low taxation, the political stability, the economic policies, the legal structures, the capital markets.
Thus, choosing the most efficient IP location can be extremely useful and beneficial for businesses, by means of creating strategic advantages over the competitors and of strengthening the equity in its brand.

The main purpose of global tax planning for IP is to utilize the most effective IP structure from a functional productive prospect, considering various phases of taxation in various jurisdictions and restring the needless tax inefficiency like withholding tax.
The IP compensation can be paid either via royalty payments, or be included in the product price.

In this respect, we should take in consideration the following general rules:
• Royalty payments are net of taxation (of all tax deductions and credits)
• Reduced rates of withholding taxes on royalties
• Developing and running properly the IP management operations of the company
• Consideration of tax requirements and legislation in several states regarding CFC rules
• Make assure that royalty payments will be subject to tax deduction
• Effective repatriation process
• Determination of transfer pricing is required as well as making the analysis accordingly

Following the new European and OECD regulations, establishing an IP box in Europe has become an increasingly demanding procedure. Oikonomakis Christos Global Law Firm covers the total of legal fields of IP rights and IP tax planning not only in Cyprus – where we keep offices –  but as well in all the countries that have a patent box regime.

Currently, 14 of the 28 member states of the EU have a patent box regime set up. These are Cyprus, Luxembourg, France, Hungary, Poland, Ireland, Slovakia, Lithuania, Netherlands, Italy, Portugal, Spain (Federal, Navarre and Basque Country), Belgium, and the United Kingdom. Non-EU countries such as Switzerland (Canton of Nidwalden), San Marino, Andorra, and Turkey have also set up patent box regimes.

A variety of European countries offer supplementary R&D motivations, like state support, R&D tax incentives, or several accelerated depreciation methods on R&D assets. The tax rates on relevant IP income can thus be decreased compared with these settled in the specific patent box regimes.

How Our Intellectual Property Rights Lawyers Can Help

Our law firm advises its clients in this subject matter, supporting them on the management of tax-related risks and on the internal structuring of their IP rights in all the structures of corporate law worldwide. We provide personalized services and advice for setting up licensing models, IP boxes with the associated tax-related and legal profits, and on the far-reaching protection of their intangible assets as well as the tax planning of their licensing agreements and the creation and operation of corporate entities.

Should you like to receive detailed information about our services or should you have any queries and issues reference to your company, you may contact us, and our team of Experts will be happy to assist you accordingly.

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