Spain’s modified "patent box" regime is now in effect.
The most important developments – which became effective September 29 – are the following:
1. The exemption on revenues from granting the right to use certain qualifying IP rights has risen to 60 percent of the net income. This exemption covers the net income, after amortization and depreciation, of the IP asset. (Formerly, this exemption was 50 percent of the gross income.)
2. Qualifying conditions are eased as this regime now applies to entities that participate in at least 25 percent of the IP cost. (Previously, 100 percent participation was necessary.)
3. Exemption is extended to capital gains deriving from the transfer of IP assets to unrelated parties.
4. The new regulation eliminates the limitation on income deriving from IP rights in excess of six times the asset’s base cost. Under previous regulations, the patent box regime was not applicable to the excess.
5. The new regulation provides the possibility to request from the Spanish administration agreed prior assessments of income derived from IP assets. These agreements may also refer to asset qualification.
6. Regarding entities under Spain’s consolidated tax regime, as an exemption to the general rule, transfer pricing documentation is required for transactions within the group that benefit from the patent box regime.
7. The new regulation eliminates the rule under which the income and costs derived from lease of IP assets within the group were not excluded in calculating the group’s taxable base.
Please note that under the Spanish patent box regime, qualifying IP rights are comprised of certain technological IP, patents, secret formulae or processes, designs or models, plans or information concerning industrial, commercial or scientific equipment. Royalties from any other source (such as trademarks or software) are expressly excluded from this regime.