McCreevy reinforces tax privileges for patents in Ireland

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During his tenure as finance minister of Ireland, Charlie McCreevy further strengthened the tax exemptions which have turned Ireland into a tax haven for patent revenues in the European Union. In particular, transfer of IP rights was made tax-free. While the tax exemption policies were labelled as measures designed to foster R&D investment in Ireland, it is clear from the figures that Ireland is mainly being used as a hub for international transfers. We have here collected some facts which need to be analysed further.

2004-02-04 Stamp Duty Exemption for IP Transfers

http://www.auril.org.uk/webpages/LES%20News%20Mar%2004.doc

< SNIP >

1. Finance Bill 2004 - Stamp Duty Exemption for
   • Intellectual Property Transfers

   On 4 February 2004, Minister McCreevy published the Finance Bill, 2004. As was anticipated in the Budget, the Finance Bill currently includes an exemption from stamp duty on transfers of intellectual property, and it provides that the exemption will apply where a transfer of intellectual property involves one of the following: (a) any invention, patent, supplementary protection

   • certificate, trade mark, domain name, registered design, copyright (and related rights) or design right,
   (b) any plant breeders' rights under the Plant Varieties
   • (Proprietary Rights) Act 1980,
   (c) any application for the grant or registration of
   • anything within paragraph (a) or (b),
   (d) any licence or other right in respect of anything
   • within paragraph (a), (b) or (c),
   (e) any rights under the law of a country, territory,
   • Stateor area outside the State, that correspond or are similar to those within paragraph (a), (b), (c) or (d),and
   (f) goodwill, to the extent that it is inherent in
   • anything within paragraph (a), (b), (c), (d) or (e).
   LES had made submissions to the Minister in respect of the desirability of removing the charge to stamp duty to IP transfer, and welcomes the imminent amendments to the law. LES has also made submissions to the department as to the nature and scope of the exemption framed in the Bill.

McCreevy signs of IP pricing policies

Here he signs off on a couple of pricing policies for exclusive rights. Could be significant policy, but I didn't read it.

http://www.irishstatutebook.ie/ZZSI433Y1997.html

http://www.irishstatutebook.ie/ZZSI403Y1999.html

This is another rule, by McCreevy himself, eliminating some sorta tax on interest and royalties.

http://www.finance.gov.ie/Viewtxt.asp?fn=/documents/Publications/legi/si72103.htm&StartDate=1+January+2004

McCreevy Abolishes Stamp Duty On Intellectual Property Transfers

http://www.tax-news.com/asp/story/story.asp?storyname=14322

• McCreevy Abolishes Stamp Duty On Intellectual Property Transfers by Robin Pilgrim, LawAndTax-News.com, London 05 December 2003

  Irish Finance Minister, Charlie McCreevy's decision to remove stamp duty on transfers of intellectual property (IP) has been welcomed, although there is some confusion as to the likely extent of the measure. Currently, purchasers of intellectual property such as patents, copyrights, and trademarks are obliged to pay stamp duty at a rate of 9% on the gross value of the IP in question. However, concern has been expressed about the fact that Mr

  McCreevy made no mention of goodwill (the most common type of IP on which stamp duty is currently paid) in his budget speech on Wednesday, suggesting that it may not be included in the exemption. The estimated costs of the measure, predicted to be around 300,000 euros over one year, provide support for suggestions that goodwill may not be included. Speaking with regard to the stamp duty exemption following the unveiling of his financial statement, the Finance Minister explained that: "There will be consultations with relevant bodies about the scope of the provision before publication of the Finance Bill."

R&D Tax Credit comes into effect

Is the R&D tax credit spoken of at the following link significant?

http://www.arthurcox.com/dynamic/publications/Techbrief%20-%20Technology%20Group%20bulletin,%20June-July%202004.pdf

< SNIP >

• R&D Tax Credit comes into effect

  The Minister for Finance, Mr. Charlie McCreevy TD, has signed a Commencement Order bringing into effectthe new research and development (R&D) tax credit. In the Finance Act, 2004 the Minister provided for a 20%tax credit for additional expenditure on R&D that can be set against a company's corporation tax liability. TheOrder made by the Minister for Finance appoints 1 January 2004 as the effective date for the operation ofthe provision.Meanwhile, the Minister for Enterprise, Trade and Employment Mary Harney, has announced themaking of Regulations for the purposes of providing detailed guidance on what activities constitute R&Dactivities for the purposes of the tax credit. These Regulations will have effect from 1 January

Figures from Irish Patent Office

Above that is the following interesting passage:

• i n t e l l e c t u a l p r o p e r t y t r e n d s i n 2 0 0 3 The Annual Report of the Controller of Patents,Designs and Trade Marks was published on 23rdApril 2004. The Report reveals some interesting trends in relation to filings for the various forms of intellectual property. Patents and trade marks are the most commonly known of the registrable forms of intellectual property. However there is also protection for designs and in certain circumstances the Controller has jurisdiction in respect of copyright matters. It is clear that overall the bulk of applications for all forms of registered intellectual property protection originate from Ireland, the UK andthe US. Following Ireland's ratification of the European Patent Convention in 1992, which allows for the centralised filing of patent application in Europe, it is generally acknowledged that the number of national patent applications here has fallen. The Report confirms that the number of patent applications has now stabilised at around 25% of the pre 1992 level. However the number of patent applications filed in Ireland during 2003 was 939, which is less than in the previous year and is the lowest figure since 1996. Additionally the Irish Patent Office is a receiving office for international patent applications under the Patent Co-Operation Treaty. Almost 50% of such applications were made by non-Irish applicants. The Office also administers European patent applications. There has been a 61% increase in such filings since 2002. During 2003, the Controller received 141 applications for registration of designs, in relation to a total of 274 designs. It appears that the number of Irish applicants is less than last year however. Design legislation dates back to 1927, yet it is arguably the least well known ofregistrable intellectual property rights. Since March 2002, there is also a system which allows for the protection of both registered and unregistered designs on a European Community basis. The unregistered right lasts for three years whereas the registered rights lasts for five years but is renewable. Although applications for registered Community Designs have been permissible since January 2003, only 11 applications have been filed through the Irish office. A total of 2,427 applications for trade marks werereceived during 2003 compared to 2,604 in 2002and 3,760 in 2001. Like patents, this can be explained by an increasing international focus.Thus the number of international applications designating Ireland received in 2003 was 3,739 compared to 105 in 2001. The Controller estimates that international applications account for approximately 60% of all new applications received during 2003. It is also worth noting the importance of monitoring trade mark portfolios because 3,830 trade marks were removed from the register in 2003 due to non payment of renewal fees. The Copyright and Related Rights Act, 2000 gives the Controller authority to determine disputes inrelation to the use of sound recordings in publicand he oversees the Register of Copyright Licensing Bodies, the Register of Licensing Bodies for Performers' Property Rights and the Register of Licensing Bodies for Database Rights. There are a number of legislative developments in train at present. One useful development is the proposal to establish a link between the procedure for obtaining an international trademark registration and a Community Trade

  Mark registration. In other words a Community TradeMark could be used as a basis for an international registration and vice versa. The benefit for the applicant will be reduced cost and increased efficiency. Such a development is likely to continue the move away from national applications. Businesses should be aware of the full range of intellectual property protection available and be conscious of the fact that a significant proportion of applications here are international in nature (designating Ireland) and are being made by non-Irish entities. Being aware of and reacting to international trends in intellectual property protection is a good basis on which businessescan build competitive advantage.The Annual Report can be viewed at www.patentsoffice.ie.

McCreevy Brings New R&D Tax Credit Into Force

http://www.tax-news.com/asp/story/story.asp?storyname=16649

• McCreevy Brings New R&D Tax Credit Into Force by Jason Gorringe, Tax-News.com, London 14 July 2004

  Irish Minister for Finance Charlie McCreevy has signed a Commencement Order bringing into effect the countrys new research and development tax credit. The new measure, which has an effective date of January 1, 2004, is contained in the Finance Act and makes provision for a 20%

  tax credit for additional expenditure on R&D that can be set against a company's corporation tax liability.

  Noted Mr McCreevy of the new rules: "R&D is the key to a more knowledge-intensive economy aimed at providing a sustainable long-term basis for growth in employment and incomes."

  He continued: "The tax credit for R&D will help to enhance our competitiveness as a location for new internationally mobile research-related investment, and will encourage existing overseas and indigenous firms to add research functions to their operations in Ireland or to increase their level of research activity." Meanwhile, the T??¡iste and Minister for Enterprise, Trade and Employment Mary Harney, has announced the drafting of Regulations designed to give companies guidance on what activities constitute research and development for the purposes of the tax credit.

  "The overall aim of the R&D tax credit is to encourage an increase in the amount of research and development carried out by companies and to make Ireland an attractive destination for foreign companies to commence or increase research and development," Ms Harney commented. She added: "Specifically, we are seeking to encourage activities which will contribute to an enhancement of the calibre of research and development in Ireland and create high quality jobs and opportunities for our workforce." These Regulations will also have an effective date of January 1, 2004.

McCreevy at symbolic welcoming ceremony for new "IP enterprise"

http://www.idaireland.com/news/Business%20Ireland%20HTML/BusinessIre_win03/

Lots of puff pieces on this page about "IP" enterprises, including a picture of Mr. McCreevy welcoming one new venture. Plus the following interesting passages:

Sharp increase in FDI for Ireland

• 'Ireland was the only European Union (EU) country to enjoy a sharp increase in FDI (foreign direct investment) in 2003, more than doubling its inflow to almost $42 billion from $19 billion,' says the United Nations Conference on Trade and Development (UNCTAD), whose FDI data is regarded as among the most authoritative in the world.

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