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Chapter INTM630330

Document Cited in Related
Vincent
Published date09 April 2016
Record NumberINTM630330
CourtHM Revenue & Customs
IssuerHM Revenue & Customs

The payment for use of the intellectual property may be included in a payment made for a range of goods or services. The Commentary on Article 12 of the OECD Model Tax Convention emphasises the nature of the payment is integral in determining whether there is any element in relation to IP. For a payment to be a royalty, it must be made for use of intellectual property. The principles outlined in the Commentary should be followed in determining whether in substance a payment is a royalty, regardless of any contractual provisions that may label a payment otherwise.

The Commentary also recognises that contracts can cover both the provision of services and the use of intellectual property. It prescribes that the contract should be distilled into its constituent parts by means of a reasonable apportionment or the information in the contract. The appropriate tax treatment is then applied to each constituent part of...

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