"... The referral of the UK Patent Box to the EU Commission ... was seemingly put into the long grass, but it looks like interest by the Commission has now been rekindled. The HM Treasury’s recent report on tackling aggressive tax planning shows that the UK Government believes that the UK Patent Box is not in violation of the EU code. Nevertheless, as the report states, the Government is seeking:
The European Commission's interest is not confined to the UK: patent boxes are reported to be offered in one form or another in nine European countries but this blogger can name only eight (seven of which are in the EU and therefore legitimate targets for the Commission): Belgium, France, Ireland, Luxembourg, the Netherlands, Spain, Switzerland and the UK. Can anyone let us know the ninth? (China also has them, but it's not in Europe ...)“a better understanding of what constitutes substance … so as to effectively address those instances where preferential regimes do present an opportunity to shift profits. This will give certainty to the operation of legitimate tax regimes, such as the UK’s Patent Box, which is currently under consideration in the FHTP [Forum for Harmful Tax Practices], and the Government believes that most of the activities currently qualifying for the UK Patent Box would meet any such substance test.”The “substance” refers to the substantial activity that must occur in a jurisdiction by a company to legitimately benefit from a preferential tax regime. Clearly, the Government is still set to defend the Patent Box ..."