Patent Box – or how to get the tax man to boost your profits

Dear {subscriber_first_name}

“Everything that can be invented has been invented” – so went the somewhat sweeping statement attributed to Charles H. Duell, Commissioner at the US Patent office in 1899. Actually, there is no evidence that anyone at the patent office ever said anything quite so foolish, which is just as well as each year growing numbers of new patents continue to be filed and granted. The growth in patents is in part due to the fact that applied inventiveness is being increasingly recognised, rewarded and encouraged – in some places, even by the tax man!

The reason government is getting involved is because of the belief that the successful economies of the future will be based increasingly on innovation enabled by Intellectual Property (IP). With this in mind, a number of countries have recently developed new tax incentives to spur the commercialization of R&D. These incentives or “patent boxes” (so-called because there is a box to tick on the tax form) allow corporate income from the sale of patented products to be taxed at a lower rate than other income. Eight nations (seven in Europe along with China) have enacted patent box regimes to encourage firms to patent or produce other related innovations. A ninth country, the UK, is set to put in place the incentive in 2013. To give you some idea of the potential size of the benefit, in 2017 when the scheme fully rolls out in the UK, tax on company income could reduce from 23% to as little as 10% for qualifying organisations. All UK taxed revenues related to ownership of a patent or the exclusive licence of a UK or European patent will be allowable. In my view, the concept of patent box will spread further still – for example, I’ve recently been reading about a lobby in the USA to introduce a similar scheme.

So it would seem that there is an opportunity for companies with a strong applied IP portfolio to gain significant extra bottom line benefits. We have a track record in helping organisations to generate and exploit new IP – in particular patents. Click here to find out how our Directed Open Innovation approach takes you step-by-step from a problem or need statement to a patentable solution.

If you want to find out more about patent box and what it could mean for your company, please feel free to contact me.