The Key Tax
Advantages of Ireland as an Intellectual Property Location
from the exploitation of intellectual property where the portfolio of intellectual property is actively managed by an Irish resident company is taxable at the corporation tax rate that applies to trading income, 12.5%.
Active management includes development, marketing and promotion and licensing of rights to third parties for the use of the intellectual property. A corporation tax rate of 25% applies to non-trading income.
A ‘best in class’ Knowledge Development Box (KDB) was introduced by the Department of Finance in 2016. If a company qualifies for KDB, it may be entitled to a deduction equal to 50% of its qualifying profits. This means its qualifying profits may be taxed at an effective 6.25% rate.
Tax relief is available for the capital expenditure incurred on intangible assets used for the purposes of a trade of the company. The tax write-off is available in line with the standard accounting treatment (companies must prepare accounts under IFRS or Irish GAAP) or, alternatively, companies can opt for a 15 year fixed write down of 7% per annum and 2% in the final year. This relief is available where the intangible asset is acquired from either a foreign affiliate in certain circumstances or a third party acquisition. (Relief is capped at 80% of trading income and there is a clawback of this relief where the intellectual property assets are sold within 10 years).
Tax relief of up to 37.5% can be obtained on qualifying incremental research and development expenditure (R&D). A tax credit of 25% is available on qualifying research and development expenditure in excess of base year expenditure (2003), for companies establishing in Ireland after 31 December 2003 all qualifying R&D expenditure incurred should qualify for the R&D credit. The tax credit is in addition to the standard corporation tax deduction available at 12.5% for qualifying expenditure.
There is no withholding tax on patent royalties paid to a foreign company which is resident in another EU Member State or country with which Ireland has a double taxation treaty in place.
Where no tax treaty is in place unilateral relief for foreign tax suffered on royalties received from abroad is available.
Exemptions can be availed of that allow dividends to be paid by an Irish resident company free from Dividend Withholding Tax including where the recipient is resident in an EU Member State or in a country where a double taxation treaty with Ireland is in place or to a company that is not resident in an EU Member State or
double taxation treaty country but is controlled by a resident in an EU Member State or double taxation treaty country and where dividends are paid to a listed company.
The Irish Government offers a range of financial support/grants for R&D carried out in Ireland.
Cafico International provides the following services in assisting with IP migration
- Company incorporation services
- Tax registration and administration services
- Procurement of professionally qualified resident directors
- Company secretarial services and the provision of a registered office or business address
- Day to day management and administration services
- Bespoke financial reporting and accounting services
- Treasury and cash management services
- Bank account opening, reconciliation and administration
- Assistance with R&D grant applications.
Regarded as a key gateway to the European market consisting of over 500 million consumers, Luxembourg is an ideal location for furthering international expansion thanks to its central location within the EU. The conduction of business in Europe is perfectly facilitated by the high standard of infrastructure within the Grand Duchy of Luxembourg. This affords multinationals with an opportunity to take advantage of the free movement of goods that is guaranteed under EU law. It has been ranked 2nd in the world in terms of its global logistics capabilities.
Another jewel in the crown of the Grand Duchy is its inclusive, multicultural society. This provides access to a very diverse, highly skilled and multilingual workforce. The accessibility in terms of communication and travel are key benefits to those looking to embark upon international expansion.
Luxembourg is also commended as being one of the most digitalised countries in the world. Its outstanding digital infrastructure enables the fields of technology to thrive. With 28 international fibre routes to main European hubs in place, data communication is a key benefit to multinationals wishing to expand their technological endeavours.
Investment in Luxembourg is further facilitated by a stable political climate, which enabled the Grand Duchy to weather the global economic crisis while maintaining a Triple A credit rating throughout the turmoil of crashing markets and credit crises.
The Government of the Grand Duchy consistently pursue pro-active economic development policy. Emphasis is given to incentivising the fields of research and development and also to the diversification of the financial sector, in the interest of promoting a healthy and flourishing economy.
The Grand Duchy has been recognised as the 3rd most globalised economy and the 11th overall most competitive. It should also be noted that Luxembourg avails of the lowest rates of VAT in the EU.