Stuck with patents?

Following the abolition of Ireland's patent income exemption (November 2010), a number of inventors are restructuring how they do business.  In many cases, patents are being transferred out of personal ownership into a company to avoid the payment of royalties to individuals resulting in tax, PRSI and universal social charge at 53%.

However, it is not widely known that the sale of a patent is treated for tax purposes as an income tax event not the disposal of an asset subject to capital gains tax.  Consequently, any consideration paid by a company for the acquisition of a patent from an individual may trigger significant tax exposure for the individual.  This has knock on consequences for advisors unfamiliar with IP tax law who may unwittingly expose themselves having given bad tax advice.

Similar issues exist for companies transferring patents within a group although these are often easily solved.

For more information on how this could affect you contact Derek Andrews at Andrews Tax Consulting: direct line : 01-544 4434 mobile : 087 9000133 email : derek@andrewstax.ie