International tax ― intellectual property planning

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Corporation Tax

Guidance

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 registered patents, and in Luxembourg does not apply to

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Anne Fairpo

Barrister

With effect from 1 June 2021, Anne Fairpo is a judge of the First-tier Tribunal sitting in the Tax Chamber. She was previously a fee-paid judge in the same Chamber. Her contributions to LexisPSL Tax and TolleyGuidance were written before her full-time appointment and are her personal view as she is not authorised to write on behalf of the Tribunals Service or the judiciary. Until April 2021, Anne was a tenant at Temple Tax Chambers. She was called to the bar in 2009 after 15 years as a solicitor. Anne’s experience and expertise covers UK and international corporate tax planning and disputes, having acted for a range of clients from small owner-managed businesses to listed multinationals, as well as having advised on intellectual property taxation and UK-US cross-border tax planning, with regard to both direct and indirect tax matters

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