International tax ― intellectual property planning

By Tolley
International tax ― intellectual property planning

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • International tax ― intellectual property planning
  • Choice of jurisdiction
  • Transfer pricing
  • Withholding taxes
  • Transfer of intellectual property from the UK
  • Ongoing UK tax consequences

This guidance note outlines some tax considerations in relation to international intellectual property planning. The objective of intellectual property planning is usually to minimise tax on royalty income, eg by holding the intellectual property in a group company which is not resident in the UK.

In addition to tax matters, practical matters must also be considered such as where intellectual property is legally registered.

Choice of jurisdiction

Royalties may be subject to a low rate of tax in a number of countries, including:

  • offshore jurisdictions such as Jersey or Guernsey which have low headline rates of tax (0%), as does Ireland (12.5%)
  • Malta which has a low effective rate of tax (6% after payment of dividends)
  • many European countries, including Belgium, Netherlands, Cyprus, Ireland and Luxembourg, have special rates of tax applicable to royalties and other income from intellectual property

    These rates may be subject to conditions. For example, the special rate of tax in Belgium only applies to income from

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