Tuesday 20 October 2009

Irish make IP-friendly amendments to Finance Act

In "Tangible Tax Relief for Intangible Assets", written for International Law Office by Aoife Murphy and Robin Hayes (WhitneyMoore), the authors welcome changes in the Irish tax set-up that will benefit intellectual property rights owners.
They explain:

Right: Ireland is taking steps to improve the position of IP rights exploitation
* the Finance Act 2009 introduced wide-ranging tax relief on capital expenditure incurred by companies on the acquisition of intangible assets in order to enhance Ireland's appeal as a location for the development and exploitation of intellectual property; a wide range of IP now falls within the scope of Ireland's tax incentive regime for the acquisition of intangible assets, enabling companies previously not entitled to tax relief on intangible assets to avail themselves of a tax write-off.

* the definition of an 'intangible asset' which qualifies for the relief has been extended and now includes (i) patents and registered designs, design rights and inventions; (ii) trade marks, trade names, trade dress, brands, brand names, domain names, service marks and published titles; (iii) copyright and related rights within the meaning of the Copyright and Related Rights Act 2000; (iv) certain plant breeders' rights; (v) know-how generally related to manufacturing or processing; (vi) sale authorizations in relation to medicines or products of any design, formula, process or invention; (vii) rights derived from research prior to authorization, on the effects of items covered directly above; (viii) licences in respect of such intangible assets referred to above; (ix) any 'non-Irish' right similar to those outlined above; and (x) goodwill which is directly attributable to the items set out above.
The authors then detail how the relief works, explaining that where a specified intangible asset is held for more than 15 years and then sold, there is no clawback of capital allowances unless the asset is sold to a connected company which subsequently claims allowances in respect of the capital expenditure on the asset. They also mention new provisions relating to Stamp duty and the restrictions and (sadly necessary) anti-avoidance measures that seek to prevent abuse of the relief.

The authors' final word on the reforms is this:
"The absence of a wide-ranging tax relief for the acquisition of intellectual property (except for certain cases such as patents and software) was considered to be a problem for some years. It is anticipated that the changes to the tax regime will encourage more companies to develop and exploit intangible assets from an Irish base and should help to increase Ireland's portfolio of overseas investors".

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