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Patent Box – a box of delights?

24 June 2011

The Government has issued its second consultation on its ‘Patent Box’ scheme which aims to cut the tax rate on profits generated from patents held by UK businesses to 10%.

Qualifying patents are patents granted by the UK Intellectual Property Office and the European Patent Office only. However the scheme will apply to worldwide income earned by UK businesses as well as income from the sale of qualifying patents.

The Government has acknowledged that its initial proposal that the Patent Box would only apply to all qualifying patents first commercialised after 29 November 2010 is not a workable option and has proposed as an alternative phased in transition which extends the benefits of the scheme to all qualifying patents.

These proposals are encouraging but there are still some issues around how the profits attributable to qualifying patents will be calculated. UK organisations must review the proposals carefully within the context of their own business and feedback any issues before the deadline of 2 September 2011.

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