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Germany calls for EU patent box regime ban

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11th Jul 2013
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The German finance minister’s call for an EU-wide ban on patent box tax regimes is at odds with other countries’ views on the tax, according to a patent box specialist.

Caroline Hunt, director at firm Crowe Clark Whitehill hit back at Wolfgang Schaeuble after he asked EU finance ministers to review the impact of such regimes on attracting corporate investment.

“Schaeuble’s comments are at odds with many of Germany’s European counterparts, who are encouraging innovative and technology-led businesses and giving them the option to be based in a jurisdiction that offers different tax incentives,” she said.

Speaking as the OECD prepares to present its programme for CT avoidance reform at the G20 on 19 July, the German minister said patent box regimes were not in the spirit of EU anti-discriminatory rules.

The minister is facing pressure from other German finance ministers to seek to address the fiscal balance of German patents going to the UK to take advantage of the regime.

UK patent office figures show that the UK’s regime, which has been in place since 2011, attracted 27% more German patents to the UK in 2012 than in 2011.

Pharmaceutical companies, such as GlaxoSmithKlein, have recently said the regime encouraged them to build new British plants and hold their patents in the UK.

Reuters reported Shaeuble as saying: “We have to look at this practice and discuss it in Europe. That’s no European spirit. You could get the idea they are doing it just to attract companies.

Richard Asquith, head of tax at TMF Group, said that the UK’s scheme, in place since 2011, has been a 'big hit'.

“It is not the best scheme in Europe, but combined with the rapidly falling UK corporation tax rate, due to drop to 20% by 2015, it makes the UK very much the front runner for European hi-tech investment,” he said. 

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