FISCAL

Patent Box, a tax incentive that rewards knowledge creation

October 2014.- The Patent Box is an R & D tax incentive for any company developing and releasing specific intangible assets for exploitation. It consists of a 60% rebate in corporation tax of net income from the sale or transfer of these intangible assets. Intangible assets are understood as patents, industrial designs, utility models and know-how.

Patent Box Application requirements

  • The entity should have created the release or sold assets (at least 25%). 
  • The transferee should apply the usage rights or exploitation to an economic activity. 
  • There should be a transfer agreement between the two companies. 
  • Accounting records should be available

Advantages of using Patent Box

  • Any type of business can benefit from the incentive. 
  • It is compatible with other grants and tax deductions for R&D&i. 
  • It is applicable in companies of the same group. 
  • You can take advantage of the incentive regardless of the date of creation of the intangible assets.
  • It is independent of the company tax base. 
  • There is no time limit for implementation.

Example of Patent Box use

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Company A in the automotive industry, centralizes the company groups’ R&D activity. It has developed a new welding technology. The development cost of that intangible asset is € 500,000. It releases exploitation rights to Company B..

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Company B of the same business group, and in the area of manufacturing, buys the rights to use the welding technology from Company A, amounting to 750,000 €.

For Company A, net income from this assignment is € 250,000 (revenue - cost of development).

Patent Box:60% reduction in the corporation tax on net income from the release of the rights to exploit the developed asset. . 

Application Patent Box

Net income from the sale of assets: € 250.000

Patent Application Box: (-60%): € -150.000

Corporate tax base: € 100.000

Corporation tax (30%): € 30.000

Without applying Patent Box

Income transfer of assets: € 250.000

 

Corporate tax base: € 250.000

Corporation tax (30%): € 75.000

 

Marc Duran

Head of Incentives Advisory Unit
Invest in Catalonia