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Following various changes to Guernsey Intellectual Property Laws, which began in 2005, Guernsey is now a very attractive jurisdiction for the organisation of intellectual property. Benefits include flexible legislation, TRIPS compliance, a pro-active dedicated IP office and, as a result, potentially effective tax planning opportunities.
A pro-active IP office in Guernsey has been established specifically for the purpose of providing a system of registration for trademarks and re-registration of intellectual property instruments, particularly patents granted by reputable national and/or supra-national offices.
Guernsey is one of only a few traditional offshore jurisdictions that is fully TRIPS compliant (Trade Related Aspects of Intellectual Property Rights). Guernsey is also seeking recognition from the World Intellectual Property Organisation and is applying for membership of the various international conventions, treaties and protocols, including Berne and Madrid.
The general concept of a tax efficient intellectual property structuring scheme often involves the transfer of existing intellectual property rights to a holding company located in a jurisdiction that offers an attractive tax regime for the exploitation of these rights.
Guernsey offers the following tax planning opportunities:
-The opportunity to accumulate royalties in a tax efficient environment.
-No capital gains or inheritance taxes.
-Non-Guernsey source income is exempt from Guernsey corporation tax (from 2008 in fact all corporation tax in Guernsey will be reduced to zero, with the exception of deposit taking banks).
-No withholding tax on payments to shareholders.
Guernsey is a leading jurisdiction for the use of Protected Cell Companies (PCCs). Under PCC legislation the assets of one cell are not available to the creditors of another cell. This may be of particular relevance to certain classes of intellectual property, such as IP based investment funds and technology exploitation vehicles.
It may not always be attractive to have direct IP licensing from a Guernsey company due to potential withholding taxes. This is because currently Guernsey does not have an extensive network of tax treaties.
It could therefore be appropriate to include a subsidiary or conduit company within the structure. Switzerland is an attractive option as taxes on out-going revenue are generally zero-rated, and in-bound revenue may be mitigated with respect to withholding taxes by double taxation treaties with other countries.
For more information
Pleases contact John Nelson at Dixcart Trust Corporation Limited.
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