The Patent Box – Part of European Patent Reform

The United Kingdom’s Patent Box is a tax incentive to have IP protection – is it coming to America?

The UK has a tax incentive called the Patent Box. In essence, profits derived from patented technology are taxed at a very low rate – 10% – while other profits are taxed at their normal rate.

The patent box is somewhat complex, mostly to try to curb potential abusers of the system, but the net result is that companies exploiting patented technology in the UK get special tax treatment.

Patent Box tax incentives are available in Cyprus, Belgium, Hungary, Luxemburg, France, Netherlands, Spain, and the UK. The tax rates vary from 2.5% in Cyprus to 15% in France, and each country has a slightly different way of dealing with IP.

In the US, there has been a growing movement to consider a patent box.

Our European cousins have been quietly working to improve patent strength, with the soon-to-be-launched Unified Patent Court, and the centralized European Patent Office, which is widely considered to be the gold standard in patent examination.

The idea of a US Patent Box has been discussed for the last several years, and it remains to be seen if Congress will enact it. We can only hope.