Patent Box qualification

Introduction

Patent Box is an attractive relief for qualifying companies with qualifying IP.

There are primarily two areas to consider:

• Does the IP qualify?
• Does the Company qualify?

We consider both areas below.

What IP qualifies?

The relevant income needs to arise in respect of a patent granted by:

• UK Intellectual Property Office;
• European Patent Office; or
• A specified EEA country

Other than that, patents issued in other countries – for example in US – do not qualify for Patent Box relief.

Qualifying Companies

General

The Company must also meet two main conditions:

• Ownership Condition; and
• Development condition

Ownership condition

The IP must be under:

• Current ownership – In other words, the Company owns the qualifying IP or has an exclusive licence to it in an area; or
• In some cases, where it was previously owned – and was in the patent box when the Company previously owned it / had the exclusive licence.

There is a further condition – the ‘active ownership condition’ that must be satisfied for claims by a group company

Development condition

The second condition is that the Company must satisfy the development condition.

Here, it must have either:

• Created or significantly contributed to the creation of the IP; or
• Performed a significant amount of activity for the purpose of developing the IP

If you have any queries about this article, the Patent Box, or tax matters generally then please do get in touch.