Patent Box summary

In a bid to encourage research and development in the UK in the pharmaceutical and biotech industries, the UK government introduced the Patent Box regime which became effective from 1 April 2013 and effectively seeks to tax those profits of a company derived from exploiting qualifying patents at an effective corporation tax rate of 10%.

However, within a year of the Patent Box being introduced, the UK faced strong criticism that it was not compliant with the OECD rules and the rules of the Patent Box came under scrutiny by the OECD Forum on Harmful Tax Practices (“FHTP”) and in particular the German government, which forced the UK to announce that it would withdraw the existing Patent Box regime for new claims from 30 June 2016 and be replaced with a new regime which was not considered to contravene the OECD’s new international framework for preferential tax regimes for IP that has been introduced as an international standard.

This document provides a brief summary on what the Patent Box is and how you may benefit from it.