Commission calls for change to Irish patent tax legislation
The European Commission has formally requested a change to Irish tax legislation, which provides an exemption on patent royalties only if the research and development (R&D) that led to the patent is carried out in Ireland. According to the Commission, the current tax law provision is 'incompatible with the freedom of establishment and the free movement of services.' It argues that such a provision dissuades Irish companies from contracting out research to institutions established elsewhere in the EU or in the EEA (European Economic Area), since these institutions would not benefit form the tax break. It also acts as a disincentive to Irish undertakings that wish to set up research centres in other Member States, thus infringing upon their freedom of establishment. The Irish Government will have two months to respond to the formal request, after which point the Commission may decide to refer the matter to the European Court of Justice.
Countries
Ireland