Beginning April 2013, businesses operating within the UK (e.g. those to which corporation tax is applicable) will be eligible to participate in the proposed Patent Box initiative. The goal of the Patent Box initiative is to create a tax regime which incentivises businesses to develop and exploit IP (namely patents) within the UK.
Like European counterparts such as Belgium, France, Luxembourg, and the Netherlands, the UK Government will apply a reduced rate of corporation tax (10% instead of the current 24%) on global profits attributed to patents and some other forms of IP. Businesses of all sizes will be able to benefit from the program and there are a variety of ways in which patent contributions can be generated. For instance, profits attributed to patent protected products, royalties from licensed patents, or proceeds from the sale of patents are just a few of the qualifying areas.
Embedded in the broader legal and tax conversations about what the initiative covers, is the less often discussed aspect of the strategic IP steps businesses should begin thinking about to maximize their near and long term value from participating in the program. With the start of the program only 8 months away, UK businesses would benefit from a proactive and systematic approach to measuring and directing the contributions of their patent portfolio to their business activities.
Fig 1: Preparing for the Patent Box - Short and long-term IP management strategies
Over a series of articles in June 2012, we will explore particular IP management strategies that will help businesses prepare for the Patent Box by:
The Patent Box initiative is an exciting offering for businesses operating in the UK; one that can provide significant long term technical, business, and financial value. By considering the implications of the Patent Box program now, businesses will be able to put in place the necessary processes to measure, communicate, and build a sustainable IP program supportive of this initiative.
Note: ipCapital Group provides neither tax nor legal advice. For consultation on these matters, please seek assistance from your tax or legal professionals.
For more information, please contact ipCG Team (firstname.lastname@example.org).