Tax Update: Irish 6.25% Knowledge Development Box

On 22 October 2015 the Irish Finance Bill was published. Besides country-by-country reporting, it provides draft legislation of the first OECD modified nexus intellectual property box.  As widely anticipated, the tax rate applying to eligible income under the new regime will be 6.25%. Gains from the disposal of IP remain taxable at 33%.

Scope of KDB

Despite speculation that the Irish KDB would be limited to income from patents linked to research and development conducted in Ireland, the box is slightly more generous and indeed, driven by the pharmaceutical and technology focus of the Irish economy.  It applies to arm's length income derived from qualifying expenditure in the EU by a company liable to Irish corporation tax from;