Reduced Corporation Tax - How to get inside the Patent Box
April 26, 2013
The introduction of the Patent Box now enables companies to apply a lower rate (eventually 10%) of Corporation Tax to worldwide profits earned after 1st April 2013 from their patented inventions. In this article, we look at the criteria a company must pass in order to take advantage of the Patent Box.
A company can benefit from the Patent Box if it owns or exclusively licenses-in patents granted by the UK Intellectual Property Office, the European Patent Office, and the patent offices of: Austria, Bulgaria, Czech Republic, Denmark, Estonia, Finland, Germany, Hungary, Poland, Portugal, Romania, Slovakia and Sweden. This list includes some notable omissions (such as the U.S.A.) due to differences in patent law and quality of patent examination. The company must be liable to pay UK Corporation Tax to take advantage of the Patent Box. Additionally, the company must be one of: • The proprietor of the patent. • The exclusive licensee of the patent • A company that has acquired the patent • A company in a group of companies • A company who has been involved in a partnership, joint venture or a cost sharing arrangement with the proprietor. Another criterion for qualification is the 'development condition'. The aim of the development condition is to limit the Patent Box to companies which have been properly involved in the innovation lying behind the patent or the application of the patented invention. However, if the company is in a group, another group company can satisfy the development condition. The definition of qualifying development requires: • creating, or significantly contributing to the creation of, the patented invention; or • performing a significant amount of activity to develop the patented invention, any product incorporating the patented invention, or any process incorporating the patented invention. In addition to the 'development condition', a company must satisfy the 'active ownership condition' which requires that a company must be involved in the planning and decision making activities associated with developing or exploiting substantially all of its qualifying IP portfolio. Where a company satisfies the development condition only because of the activity of a fellow group company, that company must show that it plays an active role in managing the qualifying IP rights it holds. Relevant activities include: • Deciding on whether to maintain protection in particular jurisdictions • Granting licences • Researching alternative applications for the innovation • Licensing others to research alternative applications Here at Swindell and Pearson Ltd, we have been closely following the development of the Patent Box and are able to help you maximise your benefit of the Patent Box. In particular we offer the following services: • We can review your patent portfolio to help you determine which of your products and processes are protected by patents and are therefore eligible under the Patent Box. • We can carry out an I.P. audit to determine whether there are any patentable products or processes owned by your company. Where you have a new product or process, we can assist you by drafting a patent application for your invention. • We can prosecute your patent application to ensure that you obtain suitable protection to utilise the Patent Box. We are also experienced at accelerating the grant of patent applications. • We offer a renewal service to help you maintain your patents in force. If you would like to discuss the Patent Box further, please contact your usual patent contact at Swindell and Pearson Ltd. If we are not yet working together, please contact Lee Thould, I.P. Director at [email protected], who will be happy to discuss the Patent Box with you.
Swindell & Pearson has been helping businesses and individuals protect and defend their ideas, innovations and brands for over 130 years. With its head office in Derby, the firm also has offices in Stoke, Wolverhampton, Stafford, Sheffield and Burton. To find out how Swindell & Pearson can help you with any intellectual property requirements please get in touch via [email protected] or by telephone on 01332 367 051.