Turn ideas into assets

Favorable tax regime for IP
Malta offers tax incentives and efficient tax structures that make it advantageous for housing IP:

Full imputation system: Corporate tax is 35%, but due to Malta's imputation system, shareholders can receive up to a 6/7 refund, reducing the effective tax rate to 5% on qualifying IP income.

Participation exemption: Income and capital gains from a qualifying holding in a foreign subsidiary can be exempt from tax if certain conditions are met.

Double tax relief: Extensive network of over 70 double tax treaties minimizes withholding taxes on royalties received.

EU Member State: As a full member of the European Union, Malta provides several legal and practical advantages.

EU directives: IP structures benefit from the EU Interest and Royalties Directive, often reducing withholding tax on payments from other EU states to Malta.

Legal certainty and protections: IP structured in Malta enjoys the protection of EU laws, including access to EU courts.

Patents: protect inventions and processes.
Trademarks: protect brand names, logos, and slogans.
Copyrights: protect original creative works (e.g., art, music, writing).
Trade Secrets: protect confidential business information

Structuring intellectual property ring-fences the asset, which protects it from any legal risks from the operating company. It also provides enhanced benefits and helps to attractive investors, licensing and opportunities to monetise the asset.

You should protect your intellectual property immediately, such as when the concept has been developed and prior to sharing it externally.  

You should assign the IP to the company, not the individuals and draft an IP assignment agreement from the company incorporation. Incorporating a separate holding company for the IP is recommended to reduce liability and streamline licensing.
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It is not mandatory, however registration provides stronger legal protections and helps to avoid infringement. Trademarks require registration for nationwide protection, however copyrights are protected upon creation but registration is needed for enforcement in court.
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Tax efficiency: The Cayman Islands offers a tax neutral landscape with 0% corporation tax, capital gains tax, income tax or withholding tax on royalties, interest or dividends. This is particularly beneficial for intellectual property assets which generate revenue through licensing.

Strong legal framework: The Cayman Islands has a robust legal environment based on English Common Law which offers a stable landscape and strong asset protection for high value IP. By placing the IP in an offshore jurisdiction, such as the Cayman Islands, and separating it from the operating company, it ring-fences the IP from any legal risks.

Ease of establishment: The Cayman Islands offers a well-regulated environment meeting international transparency standards, however does involve less bureaucratic oversight.

Favourable patent box regime: The UK offers a Patent Box regime that allows companies to apply a reduced 10% corporation tax rate on profits attributable to qualifying patented inventions and certain other innovations. This applies to profits from licensing, sales of patented products, and infringement awards. It encourages companies to commercialise and retain patents in the UK and is especially attractive to R&D-driven businesses that want to benefit from lower effective tax rates without going offshore.

R&D Tax Credits: The UK offers R&D tax relief to companies developing new technologies, these include SMEs which can receive up to 27p for every £1 spent on eligible R&D and large companies can claim under the R&D Expenditure Credit (RDEC), which provides a taxable credit. By combining R&D incentives with the Patent Box, it can significantly reduce the overall tax burden on IP-generating businesses.

Strong legal and IP protection: The UK boasts globally respected IP law which is aligned with international treaties such as WIPO and provides strong enforcement rights. The common law precedent also provides investors with confidence and commercial predictability which is particularly important for businesses with high value IP.

Strategic location & access to capital markets: The UK reputation attracts international investment and many companies choose to structure their IP in the UK to prepare for IPOs.

Robust legal environment: The USA has one of the most well-developed IP legal systems in the world and offers strong IP protection laws and enforcement mechanisms.
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Commercial advantages: Structuring IP in the USA increases its commercial value as IP tends to be value higher in the US due enforceability and market size. There are also many commercial opportunities available, the US is a hub for IP licensing and technology transfer deals. It also boasts an established M&A market, ideal for companies wishing to attractive investors.

Tax incentives: Companies can benefit from U.S. R&D tax credits by conducting and structuring qualifying activities in the U.S. Several business friendly states in the US also offer tax advantages for structuring IP.

Market proximity and strategic alignment: Structuring IP in the US boosts investor confidence for US venture capitalist firms and IP structured in the US can benefit when engaging with federal R&D funding or public procurement.