Industrial Property and Corporate Tax Act: Patent Bo


The Patent Box is a legal figure that aims to boost the economic growth of companies through intangible assets such as patents, drawings or models, plans, formulas or secret procedures.

The Patent Box enables the reduction of a high percentage of the income to be included in the tax base (immediate tax exemption) from the transfer of the right to use or exploit such intangible assets.

Under no circumstances shall income from the transfer of the right of use or exploitation, or of the transmission of trademarks, literary, artistic or scientific works, including cinematograph films, personal rights capable of being assigned, such as image, software, industrial, commercial or scientific equipment rights, or any other rights or assets other than those listed in the previous section entitle reduction.

Its implementation in Spain is regulated by Chapter V, Article 23 of Corporate Tax Act 27/2014, of 27 November, as amended on 1 July 2016, date on which the new Patent Box regulation in Corporate Tax.

Until 1 July 2016, the percentage of reduction of the income to be included in the tax base was 60%, subject to the requirement that the licensor or seller has generated at least 25% of the assets.

According to the new wording of Article 23 of the Corporate Tax Act, income from the transfer of the right to use or exploit patents, drawings or models, plans, formulas or secret procedures, in addition to rights over information relating to industrial, commercial or scientific experiences, shall be entitled to a reduction in the tax base of the percentage obtained by multiplying by 60% the result of the following coefficient:

COEFFICIENT =

Direct CREATION costs of the intangible asset of the transferor + SUBCONTRACTING costs UNRELATED to the company


CREATION costs of the intangible asset of the transferor + SUBCONTRACTING costs
(related and unrelated) + costs arising from the ACQUISITION of the intangible asset

The amount of the numerator of the coefficient will increase by 30 percent, provided that the numerator does not exceed the amount of the denominator.

In the previous coefficient financial costs, amortization of property and costs that are not directly related to the creation of the asset must not be included. The result of the previous coefficient can never exceed 1.

According to this formula, the larger the denominator is, that is to say, the indirect costs arising from subcontracting with related third parties or acquisition with respect to the total creation costs, the less the reduction applicable to the transferor company will be.

The aim of this is for those taxpayers who provide proof that they have directly developed an inventive step to be those who benefit most from the tax reduction rather than those who merely order or buy from third parties in Spain or abroad, the fruit of such inventive step.

The new legislation provides an extended, transitional regime, which means that for income obtained from the transfer or sale of intangible assets made up to 30 June 2021 the previous version of the law may be applied and, for income obtained from licences, the version of the law in force at the time of signing the contract may be applied.

More information:

www.boe.es/buscar/act.php?id=BOE-A-2014-12328&b=33&tn=1&p=20151030#a23