Ireland – An Ideal Location For Intellectual Property Trading Companies – Capital Allowances- Part 2

Apart from a highly skilled, English speaking workforce; membership of the E.U.; an excellent standard of living for employees seconded to Ireland; a large network of international routes and a successful track record of investment, research and development from United States corporations there are many advantages to setting up Intellectual Property Trading companies in Ireland. 

The main focus of this article is the tax advantages which can be summarized under the following headings and viewed in Parts 1 through 4 on TaxConnections Worldwide Tax Blogs:

1.  Corporation Tax – Part 1
2.  Capital Allowances – Part 2
3.  Research & Development Relief – Part 3
4.  Withholding Tax – Part 4
5.  Stamp Duty and Summary – Part 4


Capital Allowances are available for capital expenditure on the creation, acquisition and/or licence to use certain “specified intangible assets” which includes:

1.  Copyrights
2.  Patents and registered designs
3.  Trademarks, brands, domain names and service marks
4.  Computer software
5.  Know How (related to commercial, industrial or scientific experience)
6.  Goodwill to the extent that it is referable to the “specified intangible asset.”
7.  Plant Breeder’s Rights
8.  Secret Processes or Formulae
9.  Applications, grant or registration of copyrights, patents, trademarks, etc.

Qualifying capital expenditure can be written off against 80% of the income generated from the “relevant trade” (income from developing, exploiting or managing the Intellectual Property) in either of two ways:

1.  In line with the amount charged to the company’s profit & loss account  for the accounting period in respect of depreciation or amortisation or
2.  Over a 15 year period.  A rate of 7% will apply for years 1 to 14 and a rate of 2% will apply for year 15.

A point to keep in mind:

A clawback of capital allowances claimed will arise if the IP is sold within ten years of its acquisition.  In other words no balancing allowance or charge event will arise if the intangible asset is sold ten years after the date of acquisition provided the intangible asset is not acquired by a connected company which is entitled to a tax deduction under this section.

Since founding Accounts Advice Centre in Dublin in 1996, Claire McNamara has established a reputation for successfully advising businesses, corporate and personal tax clients. Her knowledge spans various sectors and her experience includes corporate transactions, inheritance tax planning, International Tax Treaties, personal tax as well as advising on issues affecting non domiciled individuals and offshore clients. She constantly delivers a value added service and efficient tax management solutions to high net worth private clients, property owners, executives, entrepreneurs, entertainers and members of various professions.

As a Chartered Tax Adviser, Claire has considerable experience in professional practice and will personally help you to deal with all your tax affairs competently, professionally and successfully. She has also lectured extensively in taxation on courses for the main professional accountancy qualifications including A.C.C.A., A.C.A. and C.P.A. and is actively involved in preparing students for the Irish Tax Institute’s CTA qualification.

Claire has effectively handled a number of Revenue Audits and Appeals on behalf of her diverse client base and has successfully negotiated solutions resulting in substantial differences to the eventual tax liability, surcharge and penalties.


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