U.S. TAX IMPLICATIONS OF OFFSHORE MIGRATION OF INTELLECTUAL PROPERTY
In honor of Tax Day 2016, The TMCA provides a brief overview of the challenges of transferring intellectual property offshore, as well as early planning opportunities available to avoid these challenges.
Intellectual property is essential in today’s technology-driven society. U.S. companies that create, develop and sell this IP are facing increasing incentives to transfer their intangible assets out of the reach of the U.S. tax regime to foreign countries offering attractive “innovation box” tax rates and other incentives. However, the transfer of IP from the U.S. to foreign jurisdictions is subject to increasing scrutiny by tax authorities. In the last few months, the U.S. Department of Treasury has issued new rules evidencing accelerated efforts to deter outbound transfers of IP. These new rules, and other pre-existing rules, make such transfers increasingly difficult without incurring adverse tax consequences. Early tax planning is necessary to ensuring the sale and use of IP in foreign jurisdictions remains tax-efficient.