On October 22, 2015 the HMRC and the HM Treasury opened a Public Consultation titled: “Patent Box: substantial activities”. The consultation regards intended changes to the design of the UK Patent Box to comply with a new international framework for preferential tax regimes for intellectual property (IP) set out by the OECD in its BEPS project (Action 5). The consultation will run from October 22, 2015 to December 4, 2015.
According to the consultation document, The consultation sets out the Government’s preferred approach, within the new international framework, and seeks views on how this will affect businesses. Where alternative approaches may be possible the consultation document also seeks views on these.
The subjects discussed in the consultation document include a.o.:
· Introduction
o The UK Patent Box
o The BEPS process
o Substantial Activity in IP regimes
o The Nexus Fraction
· New International Framework
o Income and profits
o Applying nexus to profits: streaming
o Joint development
o Expenditure
o Timing of expenditure
· Establishing the R&D base for Nexus
o Tracking and Tracing
o Overall approach
o Company history
o Composition of the nexus fraction
o Rules for calculating the nexus fraction in particular circumstances
· Transitional issues
o Grandfathering
o Transitional Rules
o Acquisitions after 1/1/16
Next to the Consultation document the HM Revenue & Customs also attached a document it calls “Patent Box: substantial activities flowchart” to its announcement regarding the opening of the public consultation.
Click here to be forwarded to the Consultation Document as available on the website of the HMRC, which will open in a new window.
Click here to be forwarded to the flowchart as attached to the announcement of the HMRC.
Click here to be forwarded to the final report on BEPS Action 5 which was published by the OECD on October 5, 2015 as available in the OECD iLibrary, which will open in a new window and which might be interesting to study in this respect.
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