Budget 2021: A change in Ireland’s taxation scheme for Intellectual Property

The Budget has introduced a change in Ireland’s Intellectual Property taxation scheme which took effect from 14 October 2020. Under the change, companies who move their intellectual property outside of Ireland or sell it on after holding it here for five years will face a clawback on any capital allowances they have claimed.
Prior to this change, the clawback only affected companies who decided to move their intellectual property within five years. However, it is important to note that this new regime only applies to new intellectual property moved to Ireland and doesn’t apply to intellectual property already here.
On a more positive note, the Knowledge Development Box tax regime has been extended for a further two years until 31 December 2022 (it was due to expire at the end of this year). This regime provides for a reduced effective corporation tax rate of 6.25% in respect of income arising directly from certain qualifying intellectual property assets.
For more information on this topic, please contact Niamh Gibney at ngibney@reddycharlton.ie or Elaine McGrath at emcgrath@reddycharlton.ie