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