Ireland’s Department of Finance on January 14 published a consultation document on a proposed “knowledge box” tax regime that will provide for a special lower rate of tax on income from intellectual property. The government did not disclose the proposed tax rate.
The Irish government also said that it will adhere to OECD and EU limits on preferential IP tax regimes when crafting its plan.
Last month, Finance Minister Michael Noonan had suggested that Ireland may not support the modified nexus approach under development by the OECD in connection with its work on action 5 the OECD/G-20 base erosion profit shifting (BEPS) plan. According to the consultation document, though, Ireland will follow OECD and EU norms to “provide certainty to industry about the sustainability of the incentive.”
The consultation asks seven questions focusing on the design and implementation of the knowledge box, including what types of assets should be considered functionally equivalent to patents and thus qualify for relief, and the method the regime should use to track income to qualifying expenditures.
Ireland first announced its intention to adopt a knowledge development box on October 14, 2014, the same day it announced that it would close the “double Irish” corporate tax loophole by requiring all companies registered in Ireland to also be tax resident. The knowledge box incentive is seen as a key part of the country’s new strategy to attract foreign investment.
The consultation will run until April 8.
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