EC claims Patent Box is discriminatory

by Calum Fuller

More from this author

18 Oct 2013

  • Comments
European commission

THE PATENT BOX breaches the code of conduct for business taxation, according to the European Commission.

According to the EC, the Patent Box, which provides R&D tax reliefs to UK companies, breaches a code of conduct that aims to prevent countries from operating policies that result in harmful tax competition.

The policy has proved popular since coming into effect in April, with major pharmaceuticals business GlaxoSmithKline set to relocate 150 oveseas research projects to the UK in order to take advantage of the scheme.

The commission has raised concerns in the past that the policy is "poorly targeted at incentivising research...because the policy targets the income from a successful idea and not the underlying research activities".

It adds much of the benefit will accrue to large, profitable firms that earn the majority of income from patents.

Chief among its concerns over the Patent Box is that it may grant tax advantages without requiring any real economic activity in the UK if, for example, where a firm owns the intellectual property in the UK but conducts research and commercialisation in other countries.

Moreover, the commission said, the rules for determining eligible profits are deemed to depart from internationally accepted principles. In contrast to other countries, the UK Patent Box does not require profits to be associated with individual patents.

The commission's assessment will be discussed by member states at a meeting of the Code of Conduct Group on 22 October. The UK government is likely to argue the policy does not breach the provisions. If the commission upholds the claim, the UK government will come under pressure to amend the policy.

Visitor comments

blog comments powered by Disqus

Add your comment

We won't publish your address

By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication

  • Send


Financial Planner

The Ministry of Defence Surgeon General’s (SG) Finance Department, Lichfield, Staffordshire, Permanent, Full Time, £ £30,008




Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials


Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you



Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.


iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.