Patent Box Regime (Deduction) Rules

The Government of Malta has by means of Legal Notice 208 of 2019, recently published new rules, introducing a patent box regime on qualifying intellectual property (IP).  The deduction is applicable to qualifying income derived from qualifying intellectual property on or after the 1st January 2019.  For the purpose of the rules, qualifying IP means: a […]

Written By ACT Team

On October 22, 2019
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The Government of Malta has by means of Legal Notice 208 of 2019, recently published new rules, introducing a patent box regime on qualifying intellectual property (IP).  The deduction is applicable to qualifying income derived from qualifying intellectual property on or after the 1st January 2019. 

For the purpose of the rules, qualifying IP means:

  1. a patent or patents, whether issued or applied for, or where the issue of the patent is still pending and extensions of patent protection.  If such an application is subsequently rejected, it will be considered not to be a qualifying IP from the beginning; or
  2. assets in respect of which protection rights are granted in  terms  of  national,  European  or  international legislation,  including  those  relating  to  plants  and  genetic material and plant or crop protection products and orphan drug designations; or
  3. utility models; or
  4. software protected by copyright under national or international legislation;
  5. other IP assets as are non-obvious, useful, novel and having features similar to those of patents, to the satisfaction of Malta Enterprise (ME).  This shall be determined through a transparent certification in terms of Guidelines issued by ME. This applies only in respect of a small entity.

A small entity is defined by the rules as an entity having a gross revenue from all its IP assets of not more than €7.5m as a stand-alone and a turnover of less than €50m on a group basis calculated on an average five year period.

Marketing-related intellectual property assets including brands, trademarks and trade-names,  shall  not  constitute qualifying IP.

The Patent Box Regime deduction shall be calculated by means of the following formula

95% X (Qualifying IP Expenditure / Total IP Expenditure) X Income or Gains derived from Qualifying IP

How can we help?  

For further information, please contact one of the firm’s tax partners, Stephen Balzan on [email protected] or Elaine Camilleri [email protected]. ACT can help you understand the changes to the tax rules and how these can impact your business.  

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on [email protected].