Tax Treatment of Royalty Profits

  • -

According to the new tax regime, 80% of “Royalty Profit” generated from such Intellectual Property will be exempt from corporation tax.  The remaining 20% will be subject to the normal corporation tax rate (currently 12.5%)

For the purpose of determining the “Royalty Profit” the law allows the deduction from the resulting royalty income of all expenses incurred wholly and exclusively for the production of royalty income.

It is important to stress that the favourable tax treatment also covers the profit from any future sale of the Intellectual Property Right. This will allow the owners of the Intellectual Property Rights not only to enjoy tax benefits on the income generated from the use of such right but also provides for a tax efficient exit route in the future.