Patent Box Deduction

Overview

The Patent Box Deduction Rules, 2019 establishes a fiscal regime for income arising from patents, similar intellectual property (IP) Rights and copyrighted software.  The rules additionally provide that small companies may utilise the patent box rules on income from any intellectual property based on an invention that could be patented. 

What you'll get

A tax payer qualifying for the Patent Box deduction will be entitled to deduct a percentage of its income from taxable income. This deduction will be adjusted depending on the percentage resulting from dividing the qualifying IP expenditure by the total expenditure related to the particular IP.  

Eligibility

Any entity that has undertaken R&D and is already deriving profits from the products/services developed.

How to apply

Fill in the online application and submit. 

Documents Required

The following documents are required;

- Application Form
- Copies of any IP rights granted
- In case of copyrighted software, a confirmation from an independent system auditor who has been approved by the Malta Digital Innovation Agency, and if relevant by a technically competent  third party, that based on the information provided, the software or the relevant part  thereof, constitutes the applicant’s own intellectual creation, that resulted in the resolution of the scientific or technological uncertainty and was developed using structured techniques and methodologies.

- If the Applicant is a small entity applying in respect of IP that is not formally registered, the Applicant is required to provide the results of a patent search, conducted by an independent undertaking (3rd party) competent for carrying out such searches, such as a patent agent. The documentation should attest that the invention is novel, non-obvious and useful up to and on the date it began to be used, produced or marketed.

- CVs of employees that where engaged in the development of the IP. List the names of persons whose CV is provided and their role in the development of the IP.

- Any other sample documentation (such as time sheets, invoices, progress reports, test outcomes etc.) that helps prove that the IP was created by the Applicant using a structure research approach.
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