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Tax Tips August 2017

6.25% Knowledge Development Box

The Knowledge Development Box regime enables companies carrying out research and development (R&D) activities to tax the profits arising from those activities at an effective rate of 6.25%.

The KDB is a welcome addition to Ireland’s suite of tax offerings.  This comprises the 12.5% trading rate for companies, the 25% R&D tax credit system, which is cash refundable and tax depreciation for intangible assets.  The addition of the KDB further reinforces Ireland’s offering to attract and

incentivise innovation intensive sectors and businesses.

What is a Knowledge Development Box (KDB) Certificate?

A KDB Certificate is required for small companies which have assets in the form of intellectual property (IP) equivalent to a patentable invention.

Intellectual property for small companies is defined as:

“…. inventions that are certified by the Controller of Patents, Designs and Trade marks as being novel, non-obvious and useful”

The “Knowledge Development Box (Certification of Inventions) Act, 2017 (commenced on

19th May 2017) empowers the Controller of Patents, Designs and Trade Marks to provide the necessary certification.   The Controller will issue a KDB certificate if he is satisfied that all requirements of Part 2 of the KDB Act are met.  On receipt of a certificate, a company will be in a position to make a claim for tax relief to Revenue.

In order to apply for a KDB Certificate you should have the following information:

  1. Have you completed a sworn statutory declaration that your company is a relevant company for the purposes of the KDB?
  2. Does your company have a qualifying asset i.e. an invention which is the result of R&D which you consider to be patentable but have not patented?
  3. Does your company have qualifying expenditure and qualifying profits arising from the invention?
  4. Have you a full clear and accurate description of the invention?
  5. Do you know the date the invention began to be used, produced or marketed?
  6. Have you obtained an opinion from a patent agent attesting that the invention is novel, non-obvious and useful up to and on the date it began to be used, produced or marketed?