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| Why are Intelletual Property Right Strategies and Tax Planning Overlapping Issues? |
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Royalties paid by a subsidiary to the mother company are treated as expenditures. They may reduce the overall tax burden. Patents can also be activated as assets. They may substantially influence the balance sheet. Double taxation agreements reduce the withholding of taxes and the proper "channelling" of royalties and dividends keeps the total tax burden low. Different rates of withholding taxes for "know how" royalties, dividends, interest or patent royalties will influence the profitability of any intra-company stream of payments. |
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| Licensing, franchising and joint ventures all involve tax consideration. Intellectual property rights regarding taxation are a complex legal area with many aspects. |
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