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Bloomberg BNA’s Patent, Trademark and Copyright Journal: Tax Incentives for Intellectual Property

Rod S. Berman’s article, “Tax Incentives for Intellectual Property,” was published by the Bloomberg BNA Patent, Trademark and Copyright Journal on July 29, 2016. An excerpt follows:

In the increasingly global world economy, the United States and other countries face an increasing challenge in attempting to remain attractive jurisdictions for the development and relocation of intellectual property and other “mobile” assets of large multinational entities. Countries seeking to encourage regional research and development have implemented tax deductions and credits incentivizing domestic research and development expenditures (See, e.g., Internal Revenue Code section 41 (providing an income tax credit for qualified research expenditures); Marc Melnico, “China Clarifies R&D Super 150 Percent Tax Deduction Rules,” Patent, Trademark and Copyright Journal (Jan. 21, 2016) (discussing China’s recent expansion of its deduction for domestic research and development expenses. (91 PTCJ 800, 1/22/16)).

Tax incentives targeted at the commercialization of intellectual property, so called “patent boxes,” have also become increasingly popular in recent years among countries seeking to attract and retain the jobs, technology and revenue streams that accompany this intellectual property. In its simplest form, a patent box provides for a lower effective rate of taxation on income streams generated by patents and other favored intellectual property as compared to income from other sources. Taxpayers in the jurisdiction implementing the patent box regime are thus incentivized to develop and retain intellectual property domestically, rather than developing the intellectual property abroad or transferring existing intellectual property abroad so that the resulting revenue streams are subject to tax in lower-tax jurisdictions.


Download the PDF: Tax Incentives for Intellectual Property