Malta introduced patent box deduction rules, which allow taxpayers actively involved in the development and exploitation of IP to opt for the application of special rules on calculating deductions (“Patent Box Deduction”).
Income and expenses which fall under the definition of ‘Qualifying IP’ will be eligible for the Patent Box Deduction. Such Qualifying IP include the following intangibles (if these are granted legal protection in at least one jurisdiction):
- non-patent IP protected by legislation
- orphan drugs legislation, utility model and software protected by copyright
- IP assets that are non-obvious, useful, novel and that have features similar to those of patents (available to small entities only, i.e. entities with group turnover of up to €50 million and gross IP revenue of up to €7.5 million).
It is important to note that marketing-related IP assets such as brands, trademarks, and tradenames do not fall under the Qualifying IP definition and hence may not benefit from the patent box deduction. Furthermore, companies which activity consists solely of holding and marketing IP without development will not benefit from the patent box deduction either.