jueves, 23 de junio de 2016

Hungary amends IP regime

On 7 June 2016, the Hungarian parliament passed a tax bill that includes changes to the existing intellectual property (IP) regime, in line with action 5 of the OECD’s BEPS project (Countering Harmful Tax Practices More Effectively). The bill introduces the modified nexus approach to limit the beneficial tax treatment of intangible assets and royalty income, and will substantially reduce the scope and extent of benefits available under the IP regime.
The new rules apply as from 1 July 2016, although “grandfathering” rules provide a limited window of opportunity for companies to qualify under the current regime and maintain benefits for an additional five years.
The current IP regime offers the following benefits:

  • 50% of the income qualifying as royalties may be claimed as a special deduction in calculating the corporate income tax base, with the adjustment capped at 50% of the total accounting profit before tax;
  • The definition of royalties for purposes of the deduction encompasses a broad range of licensing income, including income from the licensing of patents and other industrial IP, know-how, trademarks, trade names, business secrets and copyrights, including “author” rights;
  • Unconditional availability of amortization expense deduction for tax purposes;
  • A “super deduction” from the corporate income tax base for certain R&D costs, resulting in a double deduction of such costs; and
  • A full exemption for capital gains realized on the alienation of qualifying IP.

Transition rules apply to assets acquired or developed before 30 June 2016, with the result that the benefits of the current regime may continue to apply for the period from 1 July 2016 to 30 June 2021:

  • To qualify for the grandfathering rules, the taxpayer must have benefitted from the IP regime in relation to the relevant IP in a tax return filed before 30 June 2016, or must be otherwise entitled to such benefits between 1 January 2016 and 30 June 2016 (if no tax return is due before 30 June 2016 in this respect).
  • For IP rights acquired from related parties during the period from 1 January 2016 to 30 June 2016, the grandfathering rules are available after 31 December 2016 only if the seller was entitled to benefit from any corporate income tax incentives related to the IP at the time of the transfer.
  • IP rights acquired from unrelated parties during the period from 1 January 2016 to 30 June 2016 are entitled to benefit from the grandfathering rules without having to fulfill any specific conditions.

IP acquired or developed after 30 June 2016 falls within the scope of the new rules.
Source: Deloitte

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