Moisan Legal P.C. Blog

Thursday, August 13, 2015

What are "IP-Box" Regimes?

By: Aaron Riedel

What is it?

Generally speaking, an “IP-Box” regime (sometimes called an “Innovation-Box”) is a country’s grant of a low tax rate on profits made from a company’s intellectual property. The intellectual property covered can include patents, copyrights, and trademarks, depending upon the country. There are also “Patent Box” regimes that are specifically for patents (one of which is specifically discussed below). These tax rates are set by each country and can vary, but even be as low as 5%. Ireland was the first country to create a patent box regime in 2000. Since then, other countries, such as China, Spain, Netherlands, and Belgium, among others, have enacted their own versions.

Why is it important?

Many companies make significant profits off the licensing and transfer (sales and assignment) of their intellectual property. Technology, software, and pharmaceutical companies are just some examples of big industries that count IP revenues as a large portion of their profits, specifically those made from their patent holdings.

Countries create patent box (or IP-Box regimes) to stimulate tax revenues, create jobs, and lure sectors of ever-growing industries that rely upon their IP for profits.

New U.K. Patent Box Regime:

In 2013 the United Kingdom enacted its own Patent Box regime, which will grant a 10% tax rate on profits made from patent holdings located within the U.K. Broadly, the U.K. Patent Box is meant to grant this favorable tax rate for a company’s activities that stimulate job growth. Companies have to elect to opt into the Patent Box; they are not automatically granted the favorable tax rate.

GlaxoSmithKline is one large company that recently has announced that is moving patent holdings to the U.K. to take advantage of the tax break.

Will There Be a U.S. IP-Box Regime?

Support for a U.S. IP-Box regime is growing. U.S. Congressmen Charles W. Boustany Jr., from Louisiana, and Rep. Richard E. Neal, from Massachusetts, announced an impending draft of a discussion on creating a broad IP-Box for certain types of intellectual property at a tax rate of 10% instead of 35%, which is what the United States’ general corporate tax currently is.

For any questions related to intellectual property, you may contact Aaron Riedel at

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