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Like most areas of law, Intellectual Property can appear daunting and complex. There are a great many practice areas, subjects and procedures. The SH&P “A-Z” Intellectual Property glossary is a free and easy to use glossary of legal terms commonly used and associated with IP. We hope that it will help you better understand this topic. All of the entries include contact details for SH&P expert advisers. Alternatively, you can request a free, no obligation, IP Consultation and Review here if you require more information or have a particular issue you would like us to help you with.
|VAT is chargeable on the supply of certain goods or services made by a person who is required to be registered for VAT in accordance with the size of the business.
The grant of a patent, design or trade mark licence is a taxable “supply of services” for VAT purposes and is made if the supplier is domiciled in the UK. Subject to complex rules on “international supply” (where IP licensing forms part of a larger transaction, it may be possible in order to simplify matters to identify a “single source of supply”), a licensor who is a taxable person and belongs in the UK must charge VAT on royalties received from a UK-based licence, regardless of whether the payments are for use at home or abroad. VAT rules apply to assignment transactions in the same way that they affect licencing.
Income tax does not apply to assignments because the consideration payable is normally classed as capital rather than income. However, capital gains tax will apply if either the owner is UK resident or formally resident as if the mark is used in a UK trade carried out through a UK branch or agency.