IP Boxes from a European, Liechtenstein and Swiss Perspective

Beschreibung

The tax treatment of income derived from intellectual property (“IP”) is currently in the spotlight and receives a great deal of policy attention. This is because income derived from IP generally is highly mobile and IP boxes are designed to make jurisdictions more attractive for relevant income in this respect. IP boxes provide an incentive on the basis of reduced tax for undertakings to retain and commercialise existing intangibles as well as to develop new innovative products and processes protected by relevant IP rights in a jurisdiction, or to perform services. This hence encourages undertakings to locate value added in form of high-value jobs associated with these functions in the jurisdiction. In doing so, IP boxes can make investments in innovation more attractive compared to other investments.Against this backdrop, an increasing number of jurisdictions without IP box regimes consider tax policies providing incentives to encourage undertakings to retain intangibles in those jurisdictions once created or developed.Most recent research findings acknowledge that IP boxes stimulate some new innovation and incentivise undertakings to create more patentable technologies. It follows that in the long run reduced taxation of profits from intangibles by means of IP box benefits is likely to inspire undertakings to invest more in R&D. This will lead to a greater number of IP rights and in particular an increase in valuable IP rights, which may produce significant benefits for an economy. Countries and territories subject to this treatise, such as Belgium, Liechtenstein, Luxembourg, the Netherlands, the Swiss Canton of Nidwalden and also the United Kingdom, have implemented IP box legislation.