769R Companies with income arising from intellectual property of less than €7,500,000.

(1) In this section—

“average overall income from intellectual property” in respect of an accounting period means the lower of—

(a)the overall income from intellectual property for an accounting period, or

(b)an amount calculated as:

A × N

where—

A is the average monthly overall income from intellectual property for the last 60 months, and

N is the number of months in the accounting period;

“company threshold amount” means €7,500,000 and where an accounting period is shorter than 12 months, this amount shall be reduced proportionately;

“intellectual property for small companies” means inventions that are certified by the Controller of Patents, Designs and Trade Marks as being novel, non-obvious and useful;

“overall income from intellectual property” means the following amounts arising to the company in respect of an accounting period—

(a)any royalty or other sums in respect of the use of intellectual property,

(b)where the sales price of a product or service, excluding both duty due or payable and any amount of value-added tax charged in the sales price, includes an amount which is attributable to a qualifying asset, such portion of the income from those sales as, on a just and reasonable basis, is attributable to the value of the qualifying asset,

(c)any amount for the grant of a licence to exploit intellectual property, and

(d)any amounts of insurance, damages or compensation in relation to intellectual property,

where that amount is taken into account in computing, for the purposes of assessment to corporation tax, the profits of a trade;

“turnover threshold amount” means €50,000,000 and where an accounting period is shorter than 12 months, this amount shall be reduced proportionately.

(2) (a) This section shall apply to a relevant company and an accounting period, where the relevant company satisfies the conditions set out in paragraph (b).

(b) The conditions required by this paragraph are—

(i)the company has average overall income from intellectual property not in excess of the company threshold amount,

(ii)where that company is a member of a group, the group has turnover not in excess of the turnover threshold amount, and

(iii)the company is a micro, small or medium sized enterprise within the meaning of the Annex to Commission Recommendation 2003/361/EC of 6 May 2003¹ concerning the definition of micro, small and medium-sized enterprises.

(3)In relation to a relevant company and an accounting period to which this section applies, this Chapter shall apply as if the definition of ‘intellectual property’ in section 769G(1) also included intellectual property for small companies.

(4)A company claiming to be a relevant company to which this section applies shall have available such records as may reasonably be required for the purposes of determining whether it is a relevant company to which this section applies and section 769L shall apply to those documents.