Spain is one of the countries in Europe that lowers the tax rate to the lowest level for assets derived from intellectual property or patents. Specifically, the tax rate under the Patent Fund Regulations, also known as Intellectual Property (IP) or Patent Fund Regulations, is a 10% reduction over the general corporate tax rate, which is currently 25%.
Thus, according to data from the Tax Foundation, a North American organization that specializes in tax policy, Spain will be on par with France, the United Kingdom and Turkeyexcept that the last country has a lower corporate tax (20%).
Only Slovakia was in the lead, with a patent rate of 10.5%., a country where the reduction is based on a lower corporate tax base (21%). In addition, our country is distinguished by the fact that the tax rate for the patent systems of the Basque Country and Navarra is 7.2% and 8.4%, respectively.
at the moment, 13 out of 27 countries in the European Union have a patent box systemAlong with six other European countries. Tax rates range from 1.75% in Malta to the highest in the entire continent, the aforementioned 10.5% in Slovakia. Italy eliminated its patent fund in 2021, and instead offered a 230% discount on costs associated with research and development.
This, the Tax Foundation defines, represents a move from an income-based benefit (the patent box) to one focused on investment or spending (the super deduction). San Marino was the last country in Europe to abolish its two intellectual property regimes in 2022.
In the tax authorities, they point out that the most common types of intellectual property that are chosen are patents and copyrights, and that the aim of patent funds is to encourage and attract local and international research and development. Encouraging companies to create intellectual property in the country.
“The patent fund is a tax incentive that consists of reducing the corporate tax base,” explains Rubén Jimeno, director of the research service at REAF (Registro de Economistas de Asesores Fiscales), affiliated with the General Council of Economists in Spain. On income resulting from the transfer of patents and other intangible assets created by the company within the framework of innovative activity).
Jimeno points out that the Patent Fund was created in 2008 (Law No. 16/2007, July) “and since then It underwent up to three modificationsWith the previous reduction of 50% increasing to the current reduction of 60%. Although this tax advantage is still lower than other neighboring countries.”
This expert draws attention to the fact that this tax is applied less frequently in Spain than in other countries “because Practically 99% of the Spanish business fabric is made up of SMEs Small, medium and micro enterprises, and large companies are the ones that have the economic capacity to invest in research and development, and thus apply tax benefits.”
In line with the above, Jimeno explains that “we must take this into account in Spain There is a discount on research, development and innovation associated with the patent fund, that is, the tax incentive for research, development and innovation, upon entry, will be the deduction; The tax incentive for the Patent Fund will be at exit, when the product resulting from R&D and innovation is already patented.”
The Director of the Rural Studies Department draws attention to the fact that if the tax benefits for the year 2023 are taken into account, The state loses only 1% due to this tax incentiveSince, on some corporate tax benefits amounting to 5,697,120 million euros, the reduction due to the Patent Fund was only 51,360 million. “It is very insignificant. Perhaps because it affects only a few companies and there is another tax incentive linked to the patent fund, such as the R&D+I deduction, it is still lower than those regulated by other countries.”
fidelity to the territory
Economist Francisco de la Torre points out that “these incentives, called patent funds, rather than seeking to conduct research and development, which has its own incentives, They seek for companies to locate their intellectual and industrial property in the territory“.
De la Torre comments: “Ultimately, through these systems, multinational companies limit this income to certain territories, often tax havens, which means, among other reasons, that the companies that generate the most profits in the world are , specially, Those that pay the lowest effective global tax rate. “Spain has a patent box system, but in the end it is very difficult to compete with much smaller countries that offer ridiculous effective rates, or even, as in the case of Bermuda, simply no corporate tax.”
In his opinion, “instead of continuing this race to the bottom, very large companies are paying less and less, which is as it should be.” The pursuit is more international cooperationWhich, at least, does not make the most transferable, such as intellectual property, the one that pays the least taxes.
Additional discounts
Tax incentive derived from intellectual property on corporate tax In Spain it is complemented by a discount regulation on research, development and innovationwhose Article 35 provides deductions for research, development and technological innovation activities.
Discounts that vary depending on each assumption. For example, if R&D expenses in the tax period are greater than the average of those incurred in the previous two years, 25% discount up to the mentioned average, as well as 42% on excess.
also There is an additional deduction of 17% from the amount of employee expenses, and 8% from investments in fixed assets Tangible and intangible, excluding buildings and land, provided that they are exclusively affected by research and development activities. Technological innovation expenses are deducted by 12%.
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