Do you want to value your company’s intangible assets while saving money on Corporation Tax payments? The treasury offers advantages for the assignment and transfer of intangible assets.
Patent Box is a tax incentive that reduces the taxable basis of the Corporation Tax by up to 60% of the income earned for the assignment or transfer of rights of use or certain intangible assets.
This tax system is endorsed by the European Directive 2003/49/EC which promotes the creation, operation and transfer of competitive knowledge among businesses. By comparison, the OCDE/G20’s BEPS project also establishes a common framework and stability for the application of the incentive in the core of the European Union, as each country establishes its requirements and the scope of the incentive’s application via their respective tax regulations.
What are the requirements for the application of the incentive?
a) That the assignee uses the rights of use or operation for the development of an economic activity and that the results thereof do not materialise in the supply of goods or rendering of services by the assignee which may generate deductible tax costs for the assignor, as long as, in the case of the latter, said entity is related to the assignee.
b) That the assignee does not reside in a tax-free territory or country, or any location classified as a tax haven.
c) If a contract includes the rendering of consultancy services, it must differentiate the corresponding remunerations related thereto.
d) That the entity makes the relative accounting entries available to determine the income and direct costs corresponding to the assets which are subject to assignment.
Technical analysis, identification, definition and classification of eligible intangible assets in accordance with the existing regulations.
Identification of existing transactions and new transactions both to companies within the group and third-parties (contractual framework, agents involved in the operation, compliance of existing regulation requirements, …)
Assessment and valuation of income associated to the assignment and transfer of intangible assets during the fiscal year: Transfer Cost research for related operations and the value of third-party operations.
Cost analysis of the intangible asset creation (R+D+i costs, conceptual development, design engineering etc. )
Presentation of the different tax savings circumstances: calculation of revenue and tax basis reductions. Revenue shall be understood as being the positive difference between the income of the respective tax year which stems from the rights of use or operation of the assets and the amounts deducted therefrom, in accordance with the application of article 12.2 of this Law, and by those costs in the tax year which are directly related to the assigned asset.
Legal support for the development of the contractual framework of the operations.
Creation and compilation of certified documentation (evidence) of the operations related to the assignment or transfer of intangible assets.
Creation of a Patent Box dossier for each operation, explaining the compliance with the requirements of article 23 of the LIS, valuation, contractual framework, evidence, etc.
Consultancy work for the supply of insurance mechanisms when considering those parts necessary for the application of the incentive;
AEAT related consultations
Prior Valuation Agreements and/or classification (Royal Decree 634/2015)
Tax Administration action.
Tax inspection support.