The Patent Box & Inheritance Tax in Spain

10 May 2016
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Taxlinked (TL): What are some of the most interesting features of the Spanish Patent Box tax regime?

Marilo Pardo Serrano (MPS):
  • The Spanish patent box (PB) is a special tax regime with the form of an intangible asset income deduction.
  • Under the PB, 60% net qualifying income derived from granting the right to use or exploit certain intangible assets is exempt from Spanish Corporate Income Tax (CIT), while the remaining 40% is subjected to the normal CIT tax rate of 25% (28% in 2016).
  • The PB also applies to net capital gains derived from the transfer of intangible assets (exclusively if entities are not related parties).
  • PB benefits Spanish Companies or Spanish permanent establishment (PE) of foreign companies.
  • The types of intangible assets included in the PB are:
    1. Patents;
    2. Drawings or models;
    3. Plans;
    4. Secret formulas or process, and;
    5. Rights to information concerning industrial, commercial or scientific experience (know how). Technical assistance is excluded.

TL: How does it compare to other patent box regimes in the region?


TL: How has the approval of the BEPS package affected Spain’s Patent Box tax regime? What is the Spanish government doing to fall in line with BEPS 15 Actions?

  • With regards to BEPS actions, the new PB regime in force as of July 2016 decreases the tax benefit to licensors that outsource or buy the intangible assets through the following formula:
  • In that sense, the higher the outsourcing with related parties with regards to the total expenses, the lower the tax benefit.
  • However, the new PB previews a transitional elective regime that allows taxpayers to apply the earlier PB (60% exemption on net qualifying IP without any restriction) until June 2021 and for IP licensed before July 2016.

TL: Is there a possibility in Spain for non-residents to recover inheritance tax?

  • Yes, Spanish non-residents are able to recover the inheritance tax duly paid in the past with the occasion of a mortis causa acquisition.
  • This possibility brings cause from the judgment of the Tribunal of Justice of the European Union released on September 2014, which states that Spanish Inheritance Tax breaches the European Community Law principles since it treats in a discriminatory manner inheritors non-residents in Spain.
  • Currently, the Spanish tax office is returning back the money paid by non-residents who have started a procedure before the Spanish Tax Authorities in order to recover the taxes overpaid.
  • There is a limit of 4 years to make a claim from the time of the inheritance.

TL: Are there any other tax-related topics that are currently trending in Spain?

MPS: Yes, tax obligation to inform about assets located abroad (form 720) for Spanish residents has been refered to the European Union Court of Justice for considering that its sanction regime is disproportionate and unrelated to the tax reporting obligation, besides not being in line with the principle of prescription of tax liabilities.

TL: Any other thoughts you would like to share with our community?

MPS: Yes, we propose to community members to encourage their clients to recover the Spanish IHT because they have not only the opportunity to get back the money really paid but also the late interests on the amount due, which is a great financial decision.