The discussion document on controlled foreign companies produced by HM Treasury at the end of January includes proposals for a variation on the UK exit tax to apply for intellectual property assets moved overseas.
26
Jan 10
UK: CFC discussion document published
HM Treasury has published the discussion document on the future of taxation of controlled foreign companies. Of particular interest to IP are the questions on how they should treat overseas companies with IP, proposing to distinguish between those that actively manage the IP and those that passively receive it. The effect would be to ensure that UK parent companies are not taxed on the profits of IP holding subsidiaries in certain circumstances (to be defined!)
The document simply asks questions at this point, rather than suggesting any particular line of thought. In particular, it seeks responses on what constitutes active management of IP – this is likely to be an interesting area of discussion, as many of the characteristics of active management would seem to reflect well-managed investment IP activities as well.
21
Dec 09
UK: Tax Case: Prolab Nutrition Europe Limited TC00269
Prolab Nutrition Europe (TC00269): the customs value of goods for import duties includes any royalties and licence fees paid as a condition of sale (Article 29(1)/Article 32(1) of Council Regulation 2913/92 (the Community Customs Code). The court held that payments for exclusive distribution rights are not royalties or licence fees for the purposes of determining customs value.
18
Dec 09
US: IRS cost-sharing adjustment overruled
Veritas Software Corp. v. Commissioner (US case 133 TC 14): The U.S. Tax Court has held that the IRS’s $1.675bn adjustment to a cost sharing buy-in payment received by Veritas Software Corp. from an Irish affiliate was “arbitrary, capricious, and unreasonable”.
The tax court also confirmed that Veritas’ use of the comparable uncontrolled transactions method (albeit with some adjustments imposed by the court) was the best way to calculate transfer pricing on the buy-in payment.
09
Dec 09
UK: Pre-Budget Report IP
The UK Pre-Budget Report today had a couple of IP moments – overall potentially useful, but really just not trying hard enough. It’s another missed opportunity, doing little or nothing to support the majority of IP-focussed business.
Continue reading →
02
Dec 09
UK: tax and innovation
The Treasury has today announced that the Chancellor will provide a further update on tax and innovation in the Pre-Budget Report on Wednesday 9 December 2009, and released slides (link to 1.6Mb powerpoint presentation) from a presentation to a business-government forum in late October.
27
Nov 09
India: satellite use fees are royalties
India, 16 October 2009: consideration paid by telecasting companies to satellite companies was for the use of a “process” and so was a royalty under Indian tax law even though the process was not “secret.”
26
Nov 09
UK: VAT on intellectual property transfers and licences
The VAT rules on the place of supply of services – which includes the transfer and licensing of intellectual property – are changing from January 1st, 2010. The practical effect of this is relatively limited for intellectual property, as the rules are changing to make the VAT implications for other services more closely aligned to the rules that already apply to intellectual property. The principal changes are the legislation references.
23
Nov 09
India: cap on royalties removed
India has approved (on 5 November) a proposal to remove the current cap on royalties paid for overseas technology transfers.