Transfer of IP Offshore

Transfer of IP Offshore

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I have a client who has a UK limited company for a number of years and has moved to France.  As most of the trading in France he needs to set up a French entity which will be set up with the same owners, but not as a holding co. or subsidiary according to the French tax lawyer.  

There is

1.       Some internally generated IP on a software product he has developed;

2.       Some general trading goodwill, mainly generated in France not the UK;

3.       Some web domains which would command a decent market price if sold (albeit wrapped up in the trading goodwill to an extent). Again French domains. 

I am going to take some proper advice when we get that far, but in general terms are we talking about a disposal in the UK at market value for the goodwill and all the assets?

I am aware that internally generated goodwill shifted around within the same group is generally ignored but assume if it’s going offshore there must be some legislation to not just transfer out for £1? 

Any starters for 10 on what that might be so I can mug up for an hour or so in general terms before speaking to the specialist. 

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By Portia Nina Levin
10th Nov 2015 12:04

Transfers of chargeable intangible assets between members of the same group are treated as tax neutral, provided the asset is a chargeable intangible asset both in relation to the transferor and the transferee (CTA 2009, section 775).

However, you have a transferee in relation to whom the assets will not be chargeable intangible assets, not to mention the fact that the transferor and transferee are not members of the same group.

On the assumption that there will be a separate UKCo and FrenchCo, which will be under the same ownership, then they will be related parties (as defined in section 835), meaning that any transfer between them will take place at market value for the purposes of the intangibles regime, by virtue of section 845.

You might want to consider whether you have the circumstances and can structure things to fit making a claim under section 820 or 827.

Thanks (1)
By ireallyshouldknowthisbut
10th Nov 2015 15:53

Perfect thanks PNL, there looks to be some useful provisions in that section. 

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