Intellectual Property

Italy: Decree issued on urgent measures on tax matters

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The Council of Ministers of Italy enacted a Law Decree No.50 with an effort to meet the European Union (EU) demands of extra budget deficit cuts. The Decree was published in the Official Gazette on 24 April 2017 and provides urgent measures on tax matters.

The Decree excluded trademarks from the definition of intellectual property to comply with OECD Base Erosion and Profit Shifting (BEPS) Action 5 recommendations. Taxpayers wishing to take advantage of the patent box regime need to make an election by the end of the first financial year for which the regime is to apply. The election remains in force for five years-the year in which the application is filed and the following four financial years.

According to Decree the definition of normal value with the concept of arm’s length will be modified to be more aligned with Organisation for Economic Co-operation and Development (OECD) principles. The new definition formally endorses the OECD standard by providing that intercompany transactions are determined based on the conditions and prices that would have been agreed in comparable circumstances between independent parties acting at arm’s length.

Also, corresponding adjustments are now allowed for the conclusion of tax audits performed under international cooperation procedures, where the results are agreed by the tax authorities involved. Now it is also possible to obtain a corresponding adjustment through a specific application filed by an Italian taxpayer where a final adjustment has been made based on the arm’s-length principle in a country which has a double tax treaty in place with Italy that allows an acceptable level of information exchange.

Vietnam: VECITA requests procedure to review goods on e-commerce websites and applications

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The Vietnam E-Commerce and Information Technology Agency (“VECITA”) published a notice on 20 April 2017 on its web page aiming to promote the authentication of information on counterfeit, prohibited or restricted infringing goods on e-commerce websites.

Within the framework of the notice VECITA requests following procedures:

-Assessment, review and elimination of posting of infringing goods on e-commerce platforms;
-Procedures to prevent the posting and removal of information about infringing goods from e-commerce platforms (like blocking by keywords such as “falsification”, “super fake”, etc.); and
-Implementing procedures to handle requests and reports from brand owners or from regulatory authorities on posts on websites concerning infringing products or other illegal business practices.

The notice also provides that non-compliance with the requests for information from dealers and organizations having e-commerce platforms will result in penalties ranging from VND 40 million to VND 80 million in accordance with Article 83 of Decree 124/2015/ND-CP which regulating penalties for administrative violations in commercial activities, production and trading in counterfeit and banned goods, and protection of consumer rights.

Belgium: innovation income deduction bill gazetted

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On 20 February 2017, the bill on a new innovation income deduction replacing the abolished patent income deduction was gazetted and the Belgian parliament adopted it on 2 February 2017. The new innovation income deduction applies retroactively from 1 July 2016.

Belgium: Parliament adopts draft bill on innovation income deduction

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On 2 February 2017, the Belgian parliament adopted the new innovation income deduction, which will replace the abolished patent income deduction. The new innovation income deduction applies retroactively from 1 July 2016. Furthermore, on 2 December 2016 the government of Belgium formally pronounced and on 16 December 2016, the Council of Ministers approved and presented to the parliament the announced new innovation income deduction which will replace the abolished patent income deduction.

Belgium launches broader innovation deduction

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The Government of Belgium formally pronounced the innovation deduction as the successor of the Belgian patent income deduction on 2 December 2016. The new regime is intended to increase the competitiveness of the Belgian economy while complying with the requirements of Base Erosion and Profit Shifting (BEPS) Action Plan 5 of the Organisation for Economic Co-operation and Development’s (OECD’s).

The scope of the new innovation deduction is not limited to patents, but will be extended to other IP rights, including copyright protected software. In accordance with the proposal, the income qualifying for the incentive will also contain capital gains. The incentive can be applied as of the year in which the IP right is requested. The deduction rate is increased to 85% of the net qualifying IP income. This results in an effective tax rate of 5.10%. The innovation deduction will retroactively apply as of 1 July 2016. It replaces the patent income deduction which was previously abolished as of 1 July 2016 with a 5-year grandfathering period until 2021.

Russia: No VAT on foreign IP sales

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Intellectual property means the rights or license for copyrights, trademarks and patents to apply. According to the Federal Tax Service, the sales for Intellectual Property (IP) by a foreign company to a Russian company for apply outside of Russia falls outside of the possibility of Russian VAT. The Russian tax authorities established that IP rights’ transactions come under the rules of place of supply of services. This rule supports the EU VAT Directive rules, which deems that IP exploitation is a condition of a service and is taxable in customer’s location. The reverse charge may be applied to companies whether this is in another EU country and if it is outside of the EU, then it is outside the scope of VAT.

Luxembourg: Challenges european commission on Tax Information Injunctions

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Luxembourg is to challenge the European Commission in the Court over tax rules that are alleged by the Commission to benefit only specific types of entity. These provisions may be contrary to the state aid provisions in the European Union. The Luxembourg government has expressed doubt about the legality of the European Commission’s request for further details on certain of its rules in relation to companies. Although the Commission has previously requested information on Luxembourg’s intellectual property rules and provisions for advance rulings to be sent to it within one month, Luxembourg has not done so, and the matter will become the subject of a legal challenge.