License box

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The license box (also patent box or IP box for intellectual property box , occasionally IP box regime (IBR) and, since 2015, Knowledge Development Box (KDB) ) is used in tax law - especially in corporate tax law - to denote the possibility of dividing income from intellectual property rights separately to be shown and taxed lower than other income. The license box is seen on the one hand as an instrument in international tax competition and on the other hand as an instrument for promoting research and development .

To the subject

The word license stands generally and abbreviated for income from intellectual property rights . Such income does not necessarily have to result from research and development activities. In particular, this may include rights to trademarks and the income from their use. The exact definition is given in the national tax laws.

The word part box (Engl. = Box ) indicates that such earnings are summarized computationally in a separate category, are reported and taxed.

OECD definition of a license box

After more and more states had introduced license boxes in the most varied of forms since 2000, a discussion began in the EU and the OECD about more uniform regulations, which should also lead to a majority of states classifying them as non-harmful tax practices. In November 2014, the finance ministers of Germany, Wolfgang Schäuble , and Great Britain, George Osborne , presented a coordinated concept for the design of license boxes. At the meeting of the G20 countries on 15./16. November in Brisbane this proposal was approved. The “Forum on Harmful Tax Practices” of the OECD dealt with this proposal at its meeting from 17 to 19 November 2014. In 2015, the OECD published an Agreement on Modified Nexus Approach for IP Regimes as the result of the “OECD / G20 Base Erosion and Profit Shifting Project - Action 5” . At the end of 2015, the OECD published the “Final Report” for the 5th measure of the BEPS project, which contains the further elaborated rules on which the OECD members and the G20 countries have agreed.

The main points of the very complex regulation are:

  • only revenue based on patents and similar protected rights may be privileged - Revenue from trademark rights (trademark fees) are not
  • Tax privileges for income from IP rights require substantial activity to create intellectual property in the state that privileges the income for tax purposes, d. H. Simplifies that license income may not be given tax preferential treatment if there is no research activity in the country (modified nexus approach)
  • the extent of the privilege depends on the proportion of research and development expenses in relation to a company's total expenses

On the basis of this definition, 16 IP regimes have been identified worldwide that do not fully or partially meet the criteria of non-harmful tax practice. The corresponding states are now to ensure that from July 2016 the group of previously privileged persons will no longer be expanded and that from July 2021 the IP regimes will be adapted in accordance with the OECD requirements.

Distribution of the license box in Europe

According to the knowledge of the federal government, the following states are currently granting reduced tax rates on income from patents (BT-Drs. 18/1238, as of September 2013).

Country Effective tax rate on license income (in percent) Regular tax rate (in percent) Year of introduction
Belgium 6.8 34 2007
France 15th 33.33 2000
Liechtenstein 2.5 12.5 2011
Luxembourg 5.72 29.63 2007
Malta 0 35 2007
Netherlands 5 25th 2007
Portugal 11.5 23 2014
Switzerland, Canton of Nidwalden 8.8 12.60 2011
Spain 10 30th 2008
Hungary 9.5 19th 2003
United Kingdom 10 22nd 2012
Cyprus 2.5 12.5 2013
Table added
Italy 15.7 31.4 2015
Ireland 6.25 12.5 2016

The controversial purpose of these tax breaks is to channel the taxes of especially multinational companies more into their own country and possibly to use them here to promote research. The study explains: “On the one hand, intangible assets such as patents, trademarks, copyrights and process innovations are a key contribution to value creation. On the other hand, intangible assets often have no clear geographical point of contact. Multinational companies use this flexibility to shift profits to low-tax countries using tax planning models. "

The OECD wants "stuff like" gaps in corporate taxation and a project has Beps ( " base erosion and profit shifting ") placed in the fifth measure, the Forum harmful tax practices ( Forum on Harmful Tax Practices - FHTP ) with the design busy of license boxes. This is to prevent competition between the federal states for low taxation (which is seen as unfair from a centralist point of view).

When the forum started in 1998, only Ireland had an IP box; H. the IP box has now been designed as an alternative instrument.

Germany

Germany has not yet introduced a license box. In 2017, Germany responded to the reduced taxation of license income in other countries by introducing a license barrier. This limits the tax deductibility of license expenses depending on the taxation in the recipient country, so that shifting profits to countries with non-OECD-compliant license boxes is less attractive. However, there are concerns about the compliance of the license barrier with constitutional and EU law.

Switzerland

In 2017, the EU drew up an EU list of non-cooperative tax areas for the first time. Switzerland - and 46 other countries - were able to avoid being placed on the black list by committing to improvements in terms of fair taxation. As a result, the Swiss government worked out the Corporate Tax Reform III , which was intended to abolish tax-privileged companies on the one hand and to maintain Switzerland's tax attractiveness by introducing internationally recognized instruments such as the patent box. The proposed law was rejected in a referendum on February 12, 2017 . The government and parliament then worked out a new reform package ( tax proposal 17 ) by the end of September 2018 , which was approved in a further referendum on May 19, 2019 with 66.4% of the votes. The law is to come into force at federal level on January 1, 2020. The federal law of December 14, 1990 on the harmonization of direct taxes of the cantons and municipalities is changed and now provides for a patent box in Articles 24a / b. “The net profit from patents and comparable rights ... is included in the calculation of the taxable net profit with a reduction of 90 percent. The cantons can provide a lower reduction. ”In addition, Article 25a allows an additional deduction for domestic research and development expenses. Article 25b, however, limits the total tax relief through the legal reform to 70% of taxable profit.

Liechtenstein

Since January 1, 2011, the Liechtenstein tax law also provides for an IP box. Income from patents, trademarks and designs registered in a domestic, foreign or international register can be deducted from 80% of the total positive income from intellectual property rights as business-related expenses, i.e. H. such income is only taxed at 20%. The effective tax burden is thus reduced to 2.5%.

Austria

In the discussion about the tax reform that came into force on January 1, 2016, the license box played a subordinate role, as there was no political chance of enforcement. However, there was an increase in the direct funding rate for research activities, which are now funded at 12% instead of the previous 10%.

Italy

On January 1, 2015, Italy introduced an IP box in tax law, which leads to a tax reduction of 50% after three years. The reduction is granted on the central and regional income tax, which will lead to an effective tax burden of 15.7% from 2017. Income from trademark rights is also privileged, which is why the regulations do not meet the requirements of the OECD.

Ireland

In the Republic of Ireland , an IP box was introduced in tax law as early as 1973, but abolished in 2010 on the recommendation of the European Commission . Since January 1, 2016, Irish tax law provides for a Knowledge Development Box (KDB) which enables an effective tax rate of 6.25% for privileged income from intellectual property rights. The new regulation is seen as the first of its kind to meet the requirements of the OECD.

Luxembourg

Luxembourg introduced a license box in 2007, but it does not comply with the new OECD rules. On October 14, 2015, the Luxembourg Ministry of Finance announced that the previous regime would end on June 30, 2021 and that as of July 1, 2016, no further companies will be able to take advantage of the license box.

literature

  • OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report , OECD / G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris. ISBN 978-92-64-24119-0 (PDF), pp. 23–36 and p. 63 [3]
  • Lisa Katharina Evers: Intellectual Property (IP) Box Regimes. Tax Planning, Effective Tax Burdens and Tax Policy Options. Dissertation, University of Mannheim, pdf
  • Lisa Evers, Helen Miller and Christoph Spenge: Intellectual Property Box Regimes: Effective Tax Rates and Tax Policy Considerations. Discussion Paper No. 13-070 of the Center for European Economic Research GmbH (ZEW), November 2013, online; accessed on September 27, 2014
  • Tom Karkinsky, Nadine Riedel: Corporate Taxation and the Choice of Patent Location within Multinational Firms. Oxford University Center for Business Taxation, 2009 online; accessed on September 27, 2014
  • Hansueli Schöchli: Effect and acceptance of the license box. In: Neue Zürcher Zeitung of May 25, 2013, accessed online on September 27, 2014 at www.nzz.ch
  • G-20 finance ministers meeting. Verdict on license boxes in October. In: Neue Zürcher Zeitung, September 21, 2014, accessed online on September 27, 2014 at www.nzz.ch
  • German Bundestag printed matter 18/1238, 18th electoral term. of April 25, 2014, answer of the Federal Government to the small question of the MPs Dr. Thomas Gambke, Kerstin Andreae, Dr. Gerhard Schick, another member of parliament and the Bündnis 90 / Die Grünen parliamentary group - printed matter 18/1125 - tax structuring via license or patent boxes online; accessed on September 27, 2014
  • Rolf Feger: The Liechtenstein IP-BOX - an attractive instrument for taxing intellectual property rights. In: Das Geldmagazin 3/2013, pp. 40–41 online on the Ospelt & Partner homepage; accessed on March 22, 2016

Web links

Individual evidence

  1. ↑ Deviating from this: "The designation 'patent box' comes from the box in the tax form that must be ticked if such income exists." On the DIW homepage
  2. ↑ Germany and Great Britain submit a joint proposal for patent boxes. Press release from the Federal Ministry of Finance on November 11, 2014; accessed on March 22, 2016
  3. ↑ OECD / G20 Base Erosion and Profit Shifting Project. Action 5: Agreement on Modified Nexus Approach for IP Regimes pdf on the OECD homepage; accessed on March 22, 2016
  4. ↑ see OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report , OECD / G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris. ISBN 978-92-64-24119-0 (PDF), pp. 23–36 [1]
  5. ↑ see OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report , OECD / G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris. ISBN 978-92-64-24119-0 (PDF), p. 63 [2]
  6. ↑ see Lisa Evers, Helen Miller and Christoph Spenge: Intellectual Property Box Regimes: Effective Tax Rates and Tax Policy Considerations. Discussion Paper No. 13-070 of the Center for European Economic Research GmbH (ZEW), November 2013, p. 8, online; accessed on September 27, 2014
  7. ↑ Alexander V. Schinzing, Tax Saving Corporation: IP box privilege for intellectual property rights (license income, patents, copyrights) - TSC - found a company abroad and save taxes. In: taxsavingcorp.com. Retrieved March 16, 2016 .
  8. ↑ Schäuble: "Yet this should not be a general tax shelter for corporations, but it would have targeted revenue from its own patented research in their own country will be encouraged." Www.welt.de
  9. ↑ Lisa Evers, Helen Miller and Christoph Spenge: Intellectual Property Box Regimes: Effective Tax Rates and Tax Policy Considerations. Discussion Paper No. 13-070 of the Center for European Economic Research GmbH (ZEW), November 2013, online; accessed on September 27, 2014
  10. ↑ see BEPS on the OECD homepage
  11. ↑ see § 4j Income Tax Act on dejure.org; accessed on May 20, 2019
  12. ↑ for a discussion on this see Jürgen Lüdicke: What is the license limit against? and Jürgen Brandt: Compatibility of the so-called license barrier with the principle of taxation based on performance and with the fundamental freedoms under Union law. In: DER BETRIEB No. 26 of June 30, 2017
  13. ↑ Federal Act on Tax Reform and AHV Financing (TRAF) of September 28, 2018
  14. ↑ Article 25d also provides for relief through a deduction for self-financing.
  15. ↑ s. Sweeper
  16. ↑ Industrial Association (editor): FAIR taxation. A new tax concept for Austria. The industrial association's concept for structural reform Archived copy ( memento of the original from April 30, 2015 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / www.iv-net.at
  17. ↑ Ordinance of the Federal Minister of Finance on the criteria for determining eligible research and development expenditure (expenditure), for research confirmation and for the preparation of expert reports by the Österreichische Forschungsförderungsgesellschaft mbH (Research Premium Ordinance)
  18. ^ Lecture to the Council of Ministers. Tax reform 2015/2016, p. 4
  19. ↑ Three quarters of the research premium goes to large companies. In: Der Standard from August 31, 2015; accessed on March 24, 2016
  20. ^ Proposed legislation for Italian Patent Box regime on the PWC homepage; accessed on March 24, 2016
  21. ↑ s. Evers p. 4
  22. ↑ Kevin Doyle: Knowledge Development Box on www.bdo.ie; Retrieved on March 23, 2016 ( Memento of the original from March 25, 2016 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / www.bdo.ie
  23. ^ Geoffrey Scardoni: Abolition of Luxembourg IP box regime , DLA Piper Publications; accessed on March 23, 2016