INTERNATIONAL TAX PLAZA - Germany and UK agree joint proposal for rules on preferential IP regimes

(November 11, 2014)

On November 11, 2014 both the German Ministry of Finance as well as the UK Government issued press releases stating that both countries agree joint proposal for rules on preferential IP regimes.

According to both Governments the proposal is based on the Modified Nexus Approach proposed by the OECD, which requires tax benefits to be connected directly to R&D expenditures, but amends these rules to address concerns expressed by some countries and seeks to address outstanding issues in relation to qualification of expenditures, grandfathering and tracking qualifying R&D expenditure.

Both Governments furthermore state that the proposal is designed to bridge different views of OECD and G20 member countries on the application of the modified nexus approach. Germany and the UK intend to present the proposal to the OECD Forum on Harmful Tax Practices and seek formal approval by the OECD and G20 at the January meeting of the OECD’s Committee on Fiscal Affairs.

Furthermore both Governments have issued a joint statement providing a high-level description of their joint proposal. According to the joint statement the proposal is based on the following elements, which seek to address the concerns that have been raised, whilst reinforcing the nexus approach and providing safeguards against profit shifting: Uplift of Qualifying Expenditure, Closure and Abolition of IP Regimes, Grandfathering and Tracking and Tracing.

For further information click here to be forwarded to the Germany – UK Joint Statement as published on the website of the German Ministry of Finance, which will open in a new window.

For further information click here to be forwarded the press release issued by the German Ministry of finance in this respect (English).

For further information click here to be forwarded the press release issued by the German Ministry of Finance in this respect with attached a version of the Germany – UK Joint Statement in the German language.

For further information click here to be forwarded the press release issued by the UK Government in this respect.

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