Patent Box Regime (Deduction) Rules

The Government of Malta has by means of Legal Notice 208 of 2019, recently published new rules, introducing a patent box regime on qualifying intellectual property (IP).  The deduction is applicable to qualifying income derived from qualifying intellectual property on or after the 1st January 2019. 

For the purpose of the rules, qualifying IP means:

  1. a patent or patents, whether issued or applied for, or where the issue of the patent is still pending and extensions of patent protection.  If such an application is subsequently rejected, it will be considered not to be a qualifying IP from the beginning; or

  2. 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

  3. utility models; or

  4. software protected by copyright under national or international legislation;

  5. other IP assets as are non-obvious, useful, novel and having features similar to those of patents, to the satisfaction of Malta Enterprise (ME).  This shall be determined through a transparent certification in terms of Guidelines issued by ME. This applies only in respect of a small entity.

A small entity is defined by the rules as an entity having a gross revenue from all its IP assets of not more than €7.5m as a stand-alone and a turnover of less than €50m on a group basis calculated on an average five year period.

Marketing-related intellectual property assets including brands, trademarks and trade-names,  shall  not  constitute qualifying IP.

The Patent Box Regime deduction shall be calculated by means of the following formula

95% X (Qualifying IP Expenditure / Total IP Expenditure) X Income or Gains derived from Qualifying IP 

How can we help?  

For further information, please contact one of the firm’s tax partners, Stephen Balzan on [email protected] or Elaine Camilleri [email protected]. ACT can help you understand the changes to the tax rules and how these can impact your business.   

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on [email protected]. 

 

Corporate Taxation
in Malta

Maltese companies are subject to tax at the rate of 35% on their world wide income and capital gains.   Malta grants various fiscal incentives to both companies and their shareholders upon distribution of a dividend.  Malta is a membe...

Learn More

Setting up a Company
in Malta

Setting up a company in Malta is a relatively straight forward procedure and can be set up within 2 working days, provided we are in receipt of all the information, funds and due diligence documentation we need. The Act that regulates Malte...

Learn More

Taking up Residence
in Malta

Warm climate, friendly people, excellent communication infrastructures, low criminality and many other features of the Maltese islands have made Malta an excellent destination for people to take up residence in. Moreover low rates of taxati...

Learn More

Remote Gaming
in Malta

Malta was the first EU Member State to specifically regulate the remote gaming industry in 2004 and has ever since established itself as one of the prime jurisdictions for remote gaming operators. The Malta Gaming Authority (“MGA”) is the regulatory of gaming in Malta. The success o...

Learn More

Payment Institutions
in Malta

Malta has become a destination of choice for the setting up of Payment Institutions (also referred to as Payment Services Providers or PSPs).  A number of advantages has contributed to this success, mainly but not limited to the fiscal incentives granted not only to the payment institutions ...

Learn More

Electronic Money Institutions
in Malta

Malta has recently seen an increase in the number of Electronic Money Institutions (EMIs) looking to set up their operations in Malta.  This has been largely due to the growth in the e-commerce and the i-gaming industries.  Such EMIs are regulated by the Financial Institutions Act and t...

Learn More

Initial Coin Offering (ICO) Services
in Malta

Malta has always been on the forefront of technology and innovation.  In the past months, a number of initiatives have been launched, aimed at establishing an innovative and attractive regulatory framework for entities operating in blockchain (and distributed ledger technologies), virtual cu...

Learn More

Prospects Services of a Corporate Advisor
in Malta

‘Prospects’ is a new platform set up by the Malta Stock Exchange in line with its commitment to open up new capital market opportunities, create economies of scale and to afford businesses more competitiveness and sustainability.  Through ‘Prospects’, SME’s wil...

Learn More

Assistance to Family Businesses
in Malta

Malta has recently introduced legislation to encourage good governance in the management of family businesses, to assist family businesses to operate their business in an efficient way and to assist such family businesses to transfer their business from one generation to the other.  Malta is...

Learn More

Members of