Malta as Patent, Copyright and Trademark Box

Malta as Patent, Copyright and Trademark Box

01 June 2016
Tax free royalties from international IP rights

What has a trusted platform for international intellectual property (IP) to offer? Well, it is all about protecting, managing and commercialising ideas and innovations across the whole IP value chain. In this respect Malta offers very interesting opportunities for companies and individuals to exploit their IP assets.

Maximising IP Asset Value

Whether referring to patents, trademarks, copyrights or designs, the common character of such assets is that they have a growing value for international business and thus become more and more important for companies and individuals alike.

Building on its experience in corporate structuring and tax planning, Malta has benefitted from the trend to separate the core business form the holding and management of IP rights in order to allow their full exploitation.

An IP holding company may be incorporated as a normal private or public limited liability company, which can hold, licence and market any type of intellectual asset. It can enter into licence and franchise agreements with other persons wishing to exploit these rights and as well acquire IP rights from third parties.

Malta Tax exemptions on patents, copyrights and trademarks

Malta has run a Patent, Copyright and Trademark Box regime, whereby royalty income arising from such intellectual property rights is exempt from taxation, meaning that the effective tax rate is 0%.

This has applied to qualifying patents and copyrights since 2010 and since 2013 also to trademark rights.

The incentive is administered by Malta Enterprise and the Inland Revenue Department, issuing an Entitlement Certificate for tax exemption with a validity of up to three years.

Scheme currently closed

Malta Enterprise has now informed that the deadline for the submission of applications under this scheme has been set on 3rd June 2016. In other words, the scheme will be closed by this date. It is not clear at the moment, whether and when the scheme will be reopened for applications.

We advise our clients about registration, company structuring and tax consequences concerning IP rights under the relevant International and Maltese Laws.

Tax Refunds

Even though the respective tax exemption scheme does currently not apply, Malta may still be an attractive destination for an IP holding company, since the shareholders of such company may be eligible for a substantial tax refund (either of 6/7 on regular commercial income, resulting in an effective tax of 5% or of 5/7 in the case of passive royalty income, resulting in an effective tax of 10%).

Typical industries In the IP sector

Who regularly needs IP advice? Typical clients include brand owners in a wide range of industries, ICT and gaming companies, internet and e-commerce players, inventors and software developers, pharmaceutical companies, artists, photographers, writers, authors and fashion designers as well as traditional industries like manufacturing, robotics and home furnishings.

Malta – the Innovation Centre in the Med

Malta’s vision to not only focus on tax-related incentives for companies bringing their IP to Malta, has led to the country’s considerable efforts to create the right environment for IP right holders to register their assets in a transparent and speedy process, raise capital through securisation and commercialise the IP.

Additionally Malta has successfully being fostering sectors like ICT, life sciences and the creative industries. This includes infrastructure facilitating research and innovation as well as the construction of respective industry and design clusters. To sustainably further strengthen Malta’s position as a centre for innovation in the Mediterranean will be one of the major challenges both of government and the involved industries themselves including the IP support services such as legal firms.

Registration of IP Rights in, or through Malta

Malta is a member of all the major organisations and treaties in the field of intellectual property. Applications for patents and designs must be filed with the Office of the Comptroller of Industrial Property. As a result of Malta being a member of the European Patent Convention and the Patent Co-Operation Treaty as well as of the Agreement for the creation of a Unitary Patent, applications for patents under these regional and international agreements can also be made to the Office of the Comptroller in Malta, indicating the countries for which the patent is sought. An application for a trademark must also be filed with the Industrial Property Registrations Directorate. European trademark and design registrations can be obtained from the EU Intellectual Property Office (EUIPO).

Especially to German speaking clients we at Kresse International do offer a holistic approach of taking care about their IP issues, from initial guidance to the IP registration, from licensing agreements and the protection of IP including domain names to negotiation and out of court settlements.