Article Title

The Copyright Box Model


Intellectual property law is territorial in nature. That is why intellectual property assets have always been favorites among international tax planners. Rapid appreciation, even faster transfer times, and a somewhat vague standard for appraisal and valuation make for an interesting field of play. Transfer the assets to a low tax jurisdiction before the appreciation begins, and you find yourself with a large income stream that is taxed at a low rate. Miss the beat, and you have a large tax hit. For these reasons, many nations have followed the lead of Ireland in providing for so-called “patent box” schemes. These tax incentives provide lower tax rates for corporations who agree to develop intellectual property in the host country. With global IP royalties over $300 billion in 2014, a tax savings of a few percentage points quickly adds up. But patents are not the only IP assets that can be developed and licensed. Recently, the Dutch government realized this and expanded their “patent box” regime and renamed it the “innovation box.” While most of the world has focused on the interesting planning and development opportunities afforded patents and so-called “high-tech startups,” this Article will discuss the opportunities afforded by the lowerhanging fruit of copyrights and copyright royalties. This Article suggests that copyrights are a lower-hanging fruit, and that by providing incentives for copyright development, developing nations will spend less and reap more benefit. Part I will discuss a short history of the patent box. Part II will ask why a copyright box might be preferable. Parts III and IV will discuss criticisms of box schemes, and then look at the OECD’s BEPS project in more detail. Part V will examine what issues will govern the design and implementation of a copyright box.