D1.1203 Qualifying company

Corporate tax
Corporate tax | Commentary

D1.1203 Qualifying company

Corporate tax | Commentary

D1.1203 Qualifying company

In order to elect into the regime, the company must, for each relevant accounting period, be a qualifying company. The conditions for single companies and companies that are members of groups differ slightly in that group companies must meet one further condition in order to qualify for the patent box.

Single companies

Broadly, a qualifying company will be one which either1:


    •     currently holds qualifying IP rights (see below) or an exclusive licence2 in respect of qualifying IP rights or


    •     has held such rights mentioned in the first condition above, and is taxable in the current accounting period on income in respect of that right. That income must be attributable to events occurring wholly or partly during a period when the company was a qualifying company and had made a patent box election.

The second condition above allows a company to apply the patent box rules to income received when it would not otherwise be a qualifying company. For example, where damages for infringement of patent rights is received after the expiry of a patent, but where the company had made a patent box election at the time of the infringement.

The exclusive licence provision is likely to be particularly helpful to UK subsidiaries of foreign owned groups. Helpfully, the rules also widely define exclusivity, enabling a variety of arrangements to satisfy the definition3.

Group companies

Where a company is a member of a group, in addition to the above conditions detailed above for a single company, it

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