Defined term
Patent box
Also: Innovation box · IP box · knowledge development box
A reduced tax rate on income from qualifying intellectual property.
A patent box (sometimes called an innovation box or IP box) applies a preferential effective tax rate to profits derived from qualifying patents or other eligible intellectual property. It complements up-front R&D credits by rewarding commercialization and exploitation of IP, often with nexus rules that link preferential income to substantive R&D activity (including OECD BEPS Action 5 modified nexus concepts in many regimes). Eligibility, tracking of IP income and expenses, and grandfathering rules are complex. Confirm current rates and qualifying IP definitions locally. Examples of regimes with preferential IP taxation exist in the United Kingdom, Netherlands, Ireland, and elsewhere, each with distinct statutes.
Related on the Index
Related terms
Common questions
- Does claiming an R&D credit create a patent box benefit automatically?
- No. Patent box or innovation box relief is a separate regime focused on IP income, with its own elections, tracking, and nexus requirements.
More glossary terms
Educational definition only. Not tax or legal advice. Confirm current program rules with official guidance and a qualified adviser.