There are a number of features in the Knowledge Development Box (“KDB”) which are specifically included to encourage claims by SMEs. For example, larger companies are required to apply transfer pricing standards to the documentation which is required to support a claim for relief under the KDB. While SMEs will need to have records to support any apportionments made, the administrative burden placed on them is lower in recognition of their status.
In addition, while larger companies may only claim relief in respect of searched and examined patents or copyrighted software, smaller companies may be able to claim relief in respect of a third category of assets. That third category is essentially assets which are patentable, but not patented. In order to make a claim in respect of these assets, the company must apply to the Controller of Patents, Designs and Trade Marks for certification that the assets are eligible.
Last year, the Oireachtas passed the Knowledge Development Box (Certification of inventions) Act 2017 which provides for that certification. Companies cannot claim the tax relief associated with these assets until they receive certification from the Controller of Patents, Designs and Trade Marks. The Patent Office has published detailed guidance on applying for this certification:
I have been advised by the Patents Office that they have not received any applications to date in relation to the KDB certificate for SME’s. However, I would note that the KDB certificate has only been available to firms since last year, through the introduction of the KDB (Certificate of Inventions) Act 2017, and firms may yet be considering applications for the certificate. Furthermore, firms of all sizes can avail of the KDB scheme through the usual patent process.
Given the supporting documentation required, companies have a 24 month time frame available to avail of the KDB. Therefore, it is anticipated that more companies will make use of this 24 month time frame. As such, KDB claims in respect of the year ended 31 December 2016 may be claimed for the year ended 31 December 2017. Therefore, further claims in respect of the year ended 31 December 2016 may be made by September 2018.