Malta’s Patent Box Regime

On the 13^th August 2019, Malta issued the Patent Box Regime (Deduction) Rules, 2019 which sets out the conditions for deductions to be claimed against income derived from a qualifying IP as per article 14(1)(p) of the Income Tax Act (‘ITA’).

In accordance with the following formula provided for in Rule 4, the beneficiary could take a 95% deduction on the income generated from the Qualifying IP:

As per Rule 2, ‘qualifying IP’ means:

(a) a patent or patents, whether issued or applied for, or where the issue of the patent is still pending and extensions of patent protection, so however that in the case of a patent which has been applied for and is pending, but where the application is eventually rejected, such patent shall cease to constitute qualifying IP ab initio; or

(b) (i) 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 (ii) utility models; or (iii) software protected by copyright under national or international legislation;

(c) in respect of a small entity, other intellectual property assets as are non-obvious, useful, novel and having features similar to those of patents, to the satisfaction of the Corporation, which shall determine this through a transparent certification process in terms of guidelines issued by the Corporation.

It is important to note that marketing- related intellectual property assets including brands, trademarks and trade-names shall not constitute a ‘qualifying IP’.

Finally, Rule 7 provides an exhaustive list of documents and calculations to be sent to the Commissioner for Revenue, including a copy of a confirmation issued by Malta Enterprise describing the qualifying IP, confirming the qualifying IP is in existence and confirming the amount of qualifying IP Expenditure.

For further information on the above Rule get in touch with us on [email protected]