Change to patent tax law urged in light of EU demand

A patent expert has warned that if the Irish Government removes the proviso in its patent tax law whereby patents registered in Ireland are free of income tax if the research and development (R&D) was carried out in Ireland, as the EU has asked it to do, the floodgates would open and the country would be “in desperate trouble”.

Last week the European Commission formally asked Ireland to amend legislation where tax exemption of received patent royalties is granted only if the research leading to the patent was carried out in Ireland. The commission said the provision is incompatible with the freedom of establishment and the free movement of services guaranteed under European law.

It claims the law dissuades Irish companies and individuals from contracting out research to institutions established elsewhere in the EU or in the EEA (European Economic Area) and dissuades Irish undertakings and individuals from setting up research centres in other member states, thus infringing their freedom of establishment.


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