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United Kingdom Update continued Patent box The Government has also proposed that a new patent box regime, based on the Dutch model, will be introduced from 1 April 2013. Although all UK resident companies (and UK branches of overseas companies) will be able to apply the regime, it is expected to be of most benefit to larger companies with significant patent and similar income. The regime would apply a reduced rate of tax on income from patents granted by the UK’s Intellectual Property Office and the European Patent Office. It may also apply to patents granted by selected national patent offices of some other European countries. In addition, the Government proposes to include other forms of intellectual property (IP) within the regime that have a strong link to R&D and high-tech activity and are subject to examination by an independent authority. These include regulatory data protection and certain plant variety rights. The reduced rate is intended to apply both to the legal owner of the IP and anyone holding an exclusive licence to exploit it commercially. However, the company concerned must have performed significant activity in developing the patented invention or its application. In addition, it must remain actively involved in the ongoing decision making connected with exploitation of the IP. The regime would cover worldwide income earned by UK businesses from inventions covered by a currently valid qualifying patent. This would include both royalties and income from the sale of any products incorporating at least one of such inventions. Companies will be free to opt in and out of the regime at any time and some companies may choose to remain outside if the prospective tax saving is small and the administration cost in identifying that saving is comparatively high. It is proposed that the rate of tax on eligible income will eventually fall to 10% by 2017 but this will be preceded by a gradually reducing rate year-on-year from 2013 onwards. For more information please contact: Jon Hills Partner - Tax services PKF(UK)LLP Accountants and business advisers T: +44 (0) 20 7065 0000 E: jon.hills@uk.pkf.com W: www.pkf.co.uk 47 // PKF International Tax Alert All Regions Issue 8 November 2011
USA Update Update on Reporting of Specified Foreign Assets As a result of 2010 tax legislation, US individuals with interests in “specified foreign financial assets” must attach a disclosure statement to their personal income tax return for any year in which the aggregate value of such assets is greater than $50,000 (or higher value as the IRS may prescribe). In addition, this disclosure requirement applies to any domestic entity formed or availed of for purposes of holding, directly or indirectly, those same specified foreign financial assets. A US individual includes: ■ A US citizen ■ ■ A resident alien of the United States for any part of the tax year. A nonresident alien who makes an election to be treated as a resident alien for purposes of filing a joint income tax return. “Specified foreign financial assets” are: (1) depository or custodial accounts at foreign financial institutions, and (2) to the extent not held in an account at a financial institution, (a) stocks or securities issued by foreign persons, (b) any other financial instrument or contract held for investment that is issued by or has a counterparty that is not a US person, and (c) any interest in a foreign entity. The IRS has developed Form 8938, “Statement of Specified Foreign Assets” as a mandatory filing to report these assets. A draft version of this form was released in June 2011 and most recently draft instructions were released at the end of September 2011. The draft instructions provide for various asset value thresholds dependent upon categories such as an individual’s filing status and whether or not the person is living in the United States. Within each category there is a higher reporting threshold dependent upon asset values at any time during the year. The first threshold is more than $50,000 for financial assets held on the last day of the tax year and more than $100,000 for assets held at any time during the year by unmarried taxpayers and married taxpayers living in the US and filing separate returns. These thresholds increase to $100,000 and $200,000 respectively for married filing jointly taxpayers if they are living in the US. Bona-Fide residents of a foreign country or taxpayers who 48 // PKF International Tax Alert All Regions Issue 8 November 2011
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