Fiscal benefits and patents

Patents are increasingly used as a tool for making money. But did you know that since January 1, 2007 the grant of a patent can bring fiscal benefits?

 

Grant of a patent

You can protect a developed product or process by applying for a patent. In this patent application your patent attorney describes your product or process and files the patent application at a patent office, such as the Netherlands Patent Office. Your Dutch patent application will be granted automatically after 18 months. The grant of the patent can be accelerated upon request.

It is also possible to get a Dutch patent by applying for a European patent. A European patent is not granted automatically. The patentability of a European patent application is examined by the European Patent Office. Consequently it generally takes more time before a European patent is granted.

The granted patent gives you the right to stop third parties from using, manufacturing or selling the product or using the described process. Alternatively you can offer a license to third parties.

 

The patent box ("octrooibox")

As of January 1, 2007 the law "Werken aan Winst" (loosely translated as "Work on Profit") has become effective. This law introduces a patent box that reduces the corporation tax rate from 25.5% to 10% !

A number of conditions must be fulfilled to qualify for the aforementioned tax benefit.

An important condition is that the patent is granted after January 1, 2007. It is not sufficient to have a filed patent application that is not granted yet. The special tax rate is applicable to turnover that is to a larger extent contributed by the granted patent.

Furthermore you have to be liable for corporation tax in the Netherlands and you must have developed the product or process (the intangible asset) yourself. The patent box is not applicable to purchased technology and purchased patents. The product or process itself may be developed abroad though.

There is both a lower limit and a higher limit for the turnover to which you may apply the reduced tax rate of 10%. Both limits are determined by the costs for developing the product or process. The lower limit for the turnover is 1 time the development costs. The higher limit for the turnover is 4 times the development costs.

The patent box is optional and can be applied on a per patent basis. You may choose when to apply the patent box.

 

Our advice

When you are developing a new product or process, you are advised to contact us to explore the possibility of filing a patent application. Such patent application may be a Dutch patent application to ensure that the patent application will be granted. Having a granted patent is one of the conditions to qualify for the reduced corporation tax rate.

You can also contact your tax consultant for more information about the law "Werken aan Winst". If required we can refer you to a tax firm with specific expertise on the patent box.