Income Tax (Trading and Other Income) Act 2005 section 597

Licences connected with patents

Section 597 explains how patent licence transactions are treated for tax purposes, by equating them with purchases or sales of patent rights under sections 587 to 596.

  • Acquiring a patent licence is treated as a purchase of patent rights
  • Granting a patent licence is treated as a sale of part of the patent rights
  • Granting an exclusive licence is treated as a sale of the whole of the patent rights
  • An exclusive licence means one that excludes all others, including the grantor, for the remaining life of the patent

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