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The Proliferation Of Patent Boxes

By Lori-Ann Johnson

Patent box is the catchy shorthand label that has been given to the tax incentive programs for intellectual property assets that have recently sprung up all over the world. While it may be descriptive of the British system (i.e., election into the tax program requires the ticking of a box on their tax form, and their tax incentives apply only to patent and patent associated intellectual property), it is hardly descriptive of most tax regimes in other nations. Only three nations limit their tax incentives to profits derived from patents and patent related assets: the United Kingdom, France and Belgium. See , European Commission Taxation Papers, Working Paper N. 57 “Patent Boxes Design, Patents Location and Local R&D” (2015) Tables 1&2.

Patent Box regimes should more appropriately be termed IP boxes or innovation boxes, because most nations allow one to obtain a lower tax rate on profits derived from IP assets other than patents, including trademarks, designs and copyrights. A few even accept know-how and trade-secrets. For example, trademarks can be included in Hungary, Malta and Cyprus, while designs and models can be included in China, Spain and Portugal. Id.

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