Intellectual Property - Crowe Ireland

Intellectual Property

Ireland is an attractive location in which to develop and exploit Intellectual Property (“IP”). Ireland’s tax regime is one of the most favourable and competitive in the world with regard to investment in research and development activities and the development, commercialisation and protection of the IP that comes from that investment. Ireland offers a low rate of corporation tax at 12.5% and also provides a range of tax incentives and reliefs for companies looking to develop and exploit IP.
 
IP rights and exploitation are considered valuable assets to Irish companies. Types of IP rights include patents, trademarks, copyright, design and recognised trade secrets. They may be sold, licensed, assigned and bequeathed. Irish tax legislation provides for a number of attractive reliefs in the form of capital allowances against trading income, research and development credits as well as a more favourable rate of Corporation Tax.
 
In order to qualify, companies must be carrying on a trade in Ireland and have sufficient employees with the appropriate expertise and skills required to carry out the functions of the trade.

Tax reliefs available:

  • Research & Development (R&D) Credit – R&D tax credits of 25% are available for qualifying R&D expenditure. Click on the R&D section below for further information
  • Knowledge Development Box (KDB) – KDB provides for an effective 6.25% corporation tax rate. Further details can be found in our KDB Tax section below
  • Capital Allowances – The allowances are based on the amount charged to a company’s accounts for the accounting period in respect of the amortisation of the relevant intangible asset. Alternatively, a company can opt for a fixed write-down period of 15 years at an annual rate of 7% of qualifying expenditure, and 2% in the final year. Intangible assets include the following:
    • any patents, registered design, design right or invention
    • any trade mark, trade name, brand, brand name
    • computer software or a right to use or otherwise deal with computer software;
    • any rights derived from research into the effects of a medicine or a product of any design, formula, process or invention
    • goodwill
  • Withholding Tax (“WHT”) – WHT applies to royalty payments by Irish companies to non-residents. A reduced treaty rate may be applied at source if the appropriate residence certificate has been presented to the withholding agent making the payment. The chart located on the Revenue website contains the WHT rates applicable

Credit for withholding tax on royalties

Patent royalties paid by resident companies to non-resident companies are subject to withholding tax at the 20% standard rate of income tax. Ireland’s wide treaty network can usually eliminate or reduce foreign withholding taxes on inbound royalties from treaty countries. Where foreign tax is withheld in respect of royalties paid by a foreign company to an Irish resident trading company, a tax credit may be claimed against the Irish tax payable.
 
In certain circumstances a full exemption may be available on royalty payments. One of our tax team will be able to guide you on claiming such an exemption.
  • Interest – Interest paid on loans to acquire IP is allowable as a deduction. Any interest deductions are ring-fenced and only available against income from the relevant trade. Unused interest deductions may be carried forward
  • Stamp Duty – Transfers of Intellectual Property may be exempt from stamp duty in Ireland making it feasible to transfer IP to an Irish resident company without incurring a documentary tax
Research & development tax incentives

The R&D tax credit is a valuable tax-based incentive designed to encourage investment in research and development by companies in Ireland. Since its introduction the R&D tax credit scheme has evolved to offer increased tax credit benefits to companies across Ireland, most notably the opportunity to avail of valuable cash refunds.

A 25% credit is available in addition to the ordinary corporation tax deduction at the standard rate of 12.5%. Furthermore, for loss making companies the tax credit will be refunded to the company in three instalments over a period of 33 months from the end of the period in which the expenditure was incurred. This makes the R&D credit extremely valuable for both profit and loss making companies.

Who can make a claim?

Any company can qualify for a R&D claim if they are involved in any of the following;

 Developing new or
improved products or processes.

                         Investing in technology,
including the development of new
or improved software

The industries where R&D activities are most likely to incur are:

  • Technology and Media: development of apps, tools and platforms
  • Manufacturing: development of new products and processes
  • Healthcare: development of new products, advancements in medical sciences
  • Construction: development and advancement in building systems

How we can help

  • Assist you with identifying R&D projects
  • Prepare R&D claims
  • Review of historical R&D claims
  • Assist with setting up internal procedures to capture R&D data
  • Deal with Revenue queries
  • Advice and support during a Revenue audit
 
Knowledge development Box

Knowledge Development Box - Crowe Ireland

The Knowledge Development Box (KDB) was introduced in Finance Act 2015 and applies in respect of accounting periods commencing on or after 1 January 2016. The regime is ideally suited to SMEs deriving income from technology developed in Ireland. The introduction of this tax regime aims to reward those companies who invest time and effort into legally protecting their intellectual property

The KDB applies a preferential rate of corporation tax of 6.25% to profits from qualifying assets earned by Irish companies on a specified trade. 

The amount of profits that can avail of the regime will be the proportion the profits of a specified trade bear to the total cost incurred to develop the qualifying assets.

Who can claim KDB?

If the answer is ‘’yes’’ to any of the following questions, then it may be possible to take advantage of the Knowledge Development Box regime:

  • Does the company incur expenditure in carrying out research and development activities? 
  • Do these activities lead to the development, improvement or creation of intellectual property i.e. copyrights, qualifying patents or similar protected inventions?
  • Does the company carry on one or more of the following trades;
    • Managing, development, maintaining, protecting =, enhancing or exploiting of intellectual property.
    • Researching, planning, processing, experimenting, texting, devising, developing or other similar activity leading to an invention or creation of intellectual property, or
    • The sale of goods or the supply of services that derive part of their value from activities described above.

How we can help

  • Assist you with identifying qualifying expenditure
  • Assist with the calculating the profits that qualify for KDB
  • Assist with claiming KDB
  • Deal with Revenue queries
  • Advice and support during a Revenue audits
 

Contact us:

Grayson Buckley, Partner, Tax - Crowe Ireland
Grayson Buckley
Partner, Tax
John Byrne, Partner, Tax - Crowe Ireland
John Byrne
Partner, Tax
Lisa Kinsella, Partner, Tax - Crowe Ireland
Lisa Kinsella
Partner, Tax
Andrew Whitty, Partner, Tax - Crowe Ireland
Andrew Whitty
Partner, Tax