Reduction in patent box tax relief?
The UK has settled its dispute with Germany over patent box relief.
The regime was intended to encourage high-tech businesses to commercialise their intellectual property in the UK and charge a reduced tax rate on the resulting income.
Some countries thought the tax break amounted to harmful tax competition.
The agreement should stop companies from artificially shifting profits to benefit from patent box relief. It is likely to restrict the tax break to R&D carried out in the UK, a much tighter test than the existing rules.
However, the impact will be reduced by “grandfathering” provisions that are set to preserve current rules for a number of years.
Unfortunately all this means more uncertainty and probably complexity.
Date: 28th November, 2014
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