Tech Suite | Cross-border structuring of IP and tax treatment

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In this episode, MinterEllisonRuddWatts’ Senior Associate Briar Richardson speaks with IP Partner Chris Young and Tax Partner Simon Akozu about some important intellectual property and tax considerations for cross-border transactions.

Chris and Simon discuss the rationales for centralising IP ownership and highlight critical factors to evaluate when structuring IP arrangements from both commercial and tax perspectives. They also address recent comments from Inland Revenue that bundled intangible property transactions are the 'highest risk category' of intangible transactions, and emphasise the need to assess the nature of IP rights being transferred.

Recent cases PepsiCo (Australia) and Country Road (New Zealand) also have potential significant impact on the characterisation and tax treatment of IP rights. Chris and Simon will discuss these in more detail in a future Tech Suite episode following on from this introduction.

[02:47] Simon highlights the critical role of tax considerations in IP centralisation, discussing key aspects such as tax amortization, attribution of taxable value, and the importance of aligning business strategies with global tax frameworks.

[04:01] Chris underscores the importance of early IP strategy planning, highlighting the need for IP audits, as well as policies and processes to identify and protect the intangible assets a business creates.

[09:15] Simon and Chris discuss the tax implications of IP characterisation within the New Zealand context. Simon highlights that accurately defining IP from the outset is crucial, as it can significantly impact tax treatment, particularly during restructures or cross border sales. 

[14:24] Chris talks about the classification of IP in a sale and purchase situation, noting how this may differ from an IP and tax perspective, with Simon noting how New Zealand tax authorities scrutinise classification in IP transfers.

[17:01] They lastly highlight the need for ongoing IP arrangements once the IP is transferred, focusing on registration, licensing, and ownership of IP rights, while considering jurisdiction-specific rules and tax implications. They also emphasize the importance of addressing licensing-back agreements and royalties, particularly in light of recent cases like PepsiCo (Australia) and Country Road (New Zealand). These cases (currently under appeal) will be covered in a future episode.

Information in this episode is accurate as at the date of recording, 3 December 20

For show notes and additional resources visit minterellison.co.