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Changes to the Spanish Patent Box regime
Law 14/2013 amended Article 23 of the revised Corporate Income Tax Law, in relation to the licensing and transfer of intangible assets carried out on or after September 2013. Taxand Spain discusses the important changes this law introduced.
Just as under the previous regime, the assets which qualify for incentives are as follows: patents, drawings or models, plans, secret formulas or processes, rights on information concerning industrial, commercial or scientific experience. The scope of application of incentives is now extended and can also be applied to income from the transfer of intangible assets (between entities not formed as part of the same group of companies according to Article 42 of the Commercial Code). The previous regime only applied to the licensing of intangible assets.
The reduction rate is increased to 60% although the base to which it applies is income, rather than revenues. This is quite standard in Europe and is similar to the incentives applied in the Netherlands, Belgium etc.
The quantitative limit subject to reduction has been removed. This is a new update as the previous regime established the limit on the use of the incentive at 6 times the cost of creating the intangible asset. It is now also required for the licensor to have created the intangible asset licensed or transferred, incurring at least 25% of the total cost of creating it. It is required for the licensee not to reside in a tax haven (unless it is an EU territory and there are valid economic reasons for the transaction).
Mario Ortega Calle
T. +34 91 514 5200
Also published in Thomson Reuters' Taxnet Pro, 4 April 2014
While there are quite a few updates to the Spanish Patent Box regime, several aspects remain the same:
- It is still required for the licensee to use the rights of use or operation of the intangible asset in the pursuit of an economic activity
- Where the asset license also includes ancillary services, the consideration relating to those services must be differentiated
- The licensor must have the necessary accounting records to be able to determine the revenues and expenses relating directly and indirectly to the intangible assets licensed/transferred
- The application of the incentive must be taken into account to determine the international double taxation tax credits