UK tax aspects of cross-border IP structuring—exploitation of IP
Produced in partnership with Anne Fairpo of Temple Tax Chambers
UK tax aspects of cross-border IP structuring—exploitation of IP

The following Tax practice note produced in partnership with Anne Fairpo of Temple Tax Chambers provides comprehensive and up to date legal information covering:

  • UK tax aspects of cross-border IP structuring—exploitation of IP
  • Realising IP profit in the UK
  • IP licensing profits generally
  • Patent box profits
  • Realising IP profit elsewhere
  • How should profits be extracted?
  • CFC risks
  • VAT considerations

This Practice Note sets out the UK perspective on various tax issues that should be taken into account in deciding how an innovative IP business with global ambition might be structured. The points below are generic and effectively assume a blank canvas; restructuring an existing IP-ownership set-up will obviously require a tailored approach (especially in the context of joint ventures or consortia), but the following points will still be likely to need consideration.

As part of the UK's bid to become one of the world's most attractive environments for innovation and enterprise, several tax benefits are available to incentivise the UK-based development and exploitation of IP, including:

  1. •

    R&D tax reliefs

  2. •

    the patent box

  3. •

    business asset disposal relief (formerly entrepreneurs' relief)

  4. •

    amortisation deductions for purchases of intellectual property by companies

  5. •

    for smaller companies:

    1. ◦

      the enterprise investment scheme, and

    2. ◦

      the seed enterprise investment scheme

The focus of this Practice Note is on businesses which exploit IP. Please also see Practice Note: UK tax aspects of cross-border IP structuring—development and acquisition of IP which sets out generic considerations for businesses developing and/or intending to acquire IP. Those considerations may also be relevant.

Realising IP profit in the UK

IP licensing profits generally

When licensing IP to a foreign licensee in order to derive a royalty income stream from the asset, licensors should be aware of any withholding taxes in the licensee’s

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