UK government defends patent box

The UK government department that implemented a tax break for patentees has dismissed claims from the European Commission that it could be in violation of European Union (EU) regulations.

The commission said on March 26 that it was seeking answers from the UK Treasury about its patent box scheme as well as from “several member states” that also run similar tax breaks.

Introduced in April last year, the patent box enables companies to apply a lower rate of tax to profits earned after April 1, 2013 from patented inventions, provided the patent was granted at a participating IP office such as the European Patent Office or the UK Intellectual Property Office (IPO).

The commission said that the scheme could benefit “highly mobile businesses” without triggering additional research and development activity.

But, in a statement to WIPR, a spokesman for the Treasury, the government’s finance ministry, said the patent box was introduced to support research and development and “most importantly” growth.

“We do not believe that this measure gives rise to any state aid or other EU law issues, as it is open to all companies with trading income from patents or related IP, regardless of sector,” the spokesman said.

Ireland, Luxembourg, the Netherlands, Belgium, Gibraltar and Hungary, which all operate similar schemes, are also included in the commission’s probe.

“The commission is simply gathering information at the moment. It is too early to anticipate whether this will lead to the launch of any formal state-aid investigations,” its spokesman for competition, Antoine Colombani said.

The Treasury said it will continue to work with the commission and the Organisation for Economic Co-operation and Development as they consider preferential IP regimes.