Finance Act, 1973

Exemption from tax of income from patent royalties.

34.—(1) In this section—

“a qualifying patent” means a patent in relation to which the research, planning, processing, experimenting, testing, devising, designing, developing or similar activity leading to the invention which is the subject of the patent was carried out in the State;

“income from a qualifying patent” means any royalty or other sum paid in respect of the user of the invention to which the qualifying patent relates and includes any sum paid for the grant of a licence to exercise rights under such patent;

“resident of the State” means any person who is resident in the State for the purposes of income tax and who is not resident elsewhere; a company shall be regarded as a resident of the State if it is managed and controlled in the State.

(2) A resident of the State who makes a claim in that behalf and makes a return in the prescribed form of his total income from all sources, as estimated in accordance with the provisions of the Income Tax Acts, shall be entitled to have any income from a qualifying patent arising to him on or after the 6th day of April, 1973, disregarded for all the purposes of the Income Tax Acts, and of the enactments relating to corporation profits tax.

(3) Where, under section 92 of the Patents Act, 1964 , or any corresponding provisions of the law of any other country, an invention which is the subject of a patent is made, used, exercised or vended by or for the service of the State or the government of the country concerned, the provisions of this section shall have effect as if the making, user, exercise or vending of the invention had taken place in pursuance of a licence and any sums paid in respect thereof were income from a qualifying patent.

(4) Where any income arising to a person is, by virtue of this section, to be disregarded, the person shall not be treated, by reason of such disregarding, as having ceased to possess the whole of a single source within the meaning of section 75 of the Income Tax Act, 1967 .

(5) For the purpose of arriving at the amount of income to be disregarded under this section for all the purposes of the Income Tax Acts, the Revenue Commissioners may make such apportionments of receipts and expenses as may be necessary.

(6) The relief provided by this section may be given by repayment or otherwise.

(7) The provisions of Schedule 4 and of paragraph IX of Schedule 18 to the Income Tax Act, 1967 , shall, with any necessary modifications, apply in relation to exemptions from tax under this section.