Richard Boyd Barrett
Question:64. Deputy Richard Boyd Barrett asked the Minister for Finance the amount of tax relief foregone by the provision for patent income relief; and if he will make a statement on the matter. [42352/12]
View answerWednesday, 3 October 2012
Questions (64)
Written answers
I am advised by the Revenue Commissioners that the tax relief for patent income and related distributions was abolished in Budget 2011, with effect from 24 November 2010, providing an estimated saving to the Exchequer in a full year of €50 million. The exemption provided under section 234 of the Taxes Consolidation Act 1997 (TCA), applied to income received by an individual or company from a qualifying patent. A qualifying patent was a patent in relation to which the research, planning and development work leading to the patented invention was carried out in the State or in another country that is part of the European Economic Area. The exemption was subject to a limit of €5 million on the aggregate amount of patent income qualifying for relief in any one year. An exemption was also provided, under section 141 of the TCA, for dividends or other distributions paid by companies from tax-exempt patent income.
The decision to abolish the relief was made following consideration of a recommendation to this effect in the Report of the Commission on Taxation. The Commission on Taxation was of the view that the exemption for patent income was not an effective measure in incentivising enterprises to engage in research and development activities in Ireland and that it had been used as a tax-efficient means of remunerating employees and directors.