there are 3 separate (but interconnected) issues - IP holding structure - R&D expensing - tax treatment of intangibles
I'll comment on the first two ... most multinationals have a holding structure where ownership of registered IP (patents, copyright, mastheads) etc are in a convenient forum. This is for strong legal enforcement as only owners can enforce legal rights. They then license to operating entities, perhaps on a sale (to holding)/lease-back arrangement with arms-length pricing. R&D comes in the form of grants (non-repayable), tax rebates or subsidies (cash or voucher). So what some companies try to do is make sure that R&D activities are done in high-cost jurisdictions to minimise operating (and thus taxable) income, This factor is reduced in low-tax jurisdictions such as HK or Singapore. In general, industrial policy (note country specific) is to use tax offsets rather than grants as then it avoids leakage to non-domestic firms. This is a response to base erosion / profit shifting so countries like the US has sophisticated (read complicated) transfer pricing rules. This creates headaches for SMEs who lack the resources of MNCs to optimise the international structure but need to navigate the regulatory and accounting systems for intangibles. One structure I've personally seen is a UK holding company (optionally Hungarian, Swiss or Begium) with international rights (eg AU operations) and a US specific sister firm. The HoldCo grants licenses to all the international non-US subsidiaries (google commissionaire model). However the UK patent box regime has recently been disputed by Germany and will quite likely be replaced this year, ditto for the Netherlands innovation scheme as general EU tax overhaul. I haven't seen anything specific for Australia, most US firms, especially life sciences, seem to take an M&A approach and just capitalise the expense. This may differ if an operational restructure (PaaS/SaaS) is envisaged so I'd be curious to see who has gone down this route (Atlassan?). Lawrence http://www.linkedin.com/in/drllau On Tuesday, 15 March 2016 12:35:43 UTC+8, Alex North wrote: > > Hi beachers, > > A question that I hope some of you have answered for your own companies. > We <http://dssrt.com/> have a US parent company that raised US$ and an AU > subsidiary. We would prefer to hold IP in the parent. We intend to build a > majority of our engineering team in Sydney, one reason for which is to make > good use of the Australian R&D tax incentive. How have you, or a company > you're involved with, structured this for best outcome? > > Variables at play include which entity makes the R&D claim, how money is > transferred to the subsidiary (loan, capital, income, ...), and probably > others. > > There seem to be some unexpected tax traps, so I'd prefer accounts from > companies that have actually done it. I'm sure they'll be useful for many > others in the future, and of course I'm happy to report back whatever we > implement. > > Alex > -- -- You received this message because you are subscribed to the Silicon Beach Australia mailing list. Vist http://siliconbeachaustralia.org for more Forum rules 1) No lurkers! It is expected that you introduce yourself. 2) No jobs postings. You can use http://siliconbeachaustralia.org/jobs To post to this group, send email to silicon-beach-australia@googlegroups.com To unsubscribe from this group, send email to silicon-beach-australia+unsubscr...@googlegroups.com For more options, visit this group at http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en --- You received this message because you are subscribed to the Google Groups "Silicon Beach Australia" group. To unsubscribe from this group and stop receiving emails from it, send an email to silicon-beach-australia+unsubscr...@googlegroups.com. For more options, visit https://groups.google.com/d/optout.
