Patent box
A patent box is a reduced corporate tax rate, typically 10% in the UK, applied to profit derived from qualifying patented inventions and related intellectual property. The UK Patent Box lets a company that owns or exclusively licenses qualifying patents apply a 10% effective rate to the relevant profit, against the 25% main rate, and is meant to reward keeping research and IP in the country. The risk is at the multinational scale: large groups concentrate worldwide IP in a low-rate regime and charge royalties globally, so profit lands where little or none of the actual research happened. Ireland's equivalent, the Knowledge Development Box, rose to a 10% rate with effect from 1 October 2023.
ByLoopholeKiln EditorialPublished
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Example: a group books its global drug patents in one country's patent-box regime, then channels worldwide sales profit there as royalties, far beyond where the research was done.
Why it matters to a small business: if you hold genuine, properly granted patents, the UK Patent Box is a legitimate relief worth checking. The problem is not the relief; it is its use at scale to relocate profit away from where the work happened, which is not something a small firm can replicate.