In a welcome move which the Irish Government had flagged in the budget, Ireland's latest Finance Bill introduces a scheme of capital allowances (tax depreciation) on capital expenditure incurred by companies on acquiring certain specified intangible assets. These provisions allied to the 12.5% corporate tax rate and the recent improvements made to Ireland's R&D regime mean that Ireland should continue to be well placed to attract businesses looking for a centre for IP creation and exploitation.
Definition Of Intangible Assets The definition of intangible assets is widely drafted and includes the acquisition of, or the license to use:
any patent, registered design, design right or invention any trade mark, trade name, trade address, brand, brand name, domain name, service mark or publishing title any copyright or related right within the meaning of the Copyright and Related Rights Act 2000 certain supplementary protection certificates for medicinal products certain supplementary protection certificates for plant protection products certain plant breeders' rights know-how, generally related to manufacturing or processing any authorisation required in order to sell a medicine or product or any design, formula, process or invention for the purpose it was intended any right derived from research, prior to authorisation, on the effects of items covered directly above any licences in respect of an intangible asset referred to above any "non-Irish" rights similar to those outlined above goodwill to the extent that it is directly attributable to the items set out above At the moment there are opportunities for tax relief for know-how and scientific research. However, the new rules widen the scope of intangible assets to include brands and trademarks.
Operation Of Relief Companies carrying out a trade will be entitled to claim a deduction for the capital costs of acquiring specified intangible assets. The tax deduction is available for offset against income generated from exploiting IP assets or as a result of the sale of goods or services that derived the greater part of their value from the IP.
The legislation does however provide both for restrictions on the level of tax deductions which may be claimed by a company in any given year and for ring fencing provisions which restrict the ability to claim relief against unrelated income.
The legislation requires that activities relating to the management, development or exploitation of...