INTA Releases ‘Report on the Taxation of Trademarks and Complementary Rights in Europe’

INTA recently released its Report on the Taxation of Trademarks and Complementary Rights in Europe, which focuses on the tax implications within the trademark life cycle in the European Union, Switzerland, and the United Kingdom. The report provides brand legal practitioners with a clear understanding of tax policy as it relates to trademark and complementary rights issues, and a framework to strengthen their collaboration with tax professionals.

INTA unveiled the report during the Association’s 2022 Annual Meeting Live+, which took place virtually and in person in Washington, D.C., USA, April 30–May 4. INTA’s Research Advisory Council and Commercialization of Brands Committee collaborated on the report, and an INTA Project Team partnered with PricewaterhouseCoopers (PwC) to prepare the report.

Looking at the roles of trademark and tax professionals, respectively, the report illustrates how the two groups can foster a more productive and collaborative relationship through the trademark life cycle. The report provides brand professionals with a solid foundational understanding of the tax issues linked to trademarks and complementary rights, making it easier to know when to consider such issues and when to contact a tax specialist.

“There can be a lot of tension if the tax and the trademark attorneys are not talking early in the process. I would encourage trademark attorneys to engage with tax professionals and the accounting profession continually,” said Jeff Marowits, president, client services at Keystone Strategy (USA), a member of INTA’s Research Advisory Council, Global Transactions and Tax Subcommittee, and a lead author of the report.

The report’s other lead author, Scott Phillips, managing director at Epsilon Economics (USA) and a member of INTA’s Research Advisory Council, noted: “Trademark professionals and tax professionals often use ownership in two different senses, without really knowing it until they get involved.”

Recognizing the need to reconcile the different views of trademark and tax practitioners on trademark-related issues, the report sheds light on the various nuances that should be considered when determining the taxation of trademarks. For example, even if trademarks are defined as assets, they will not be recognized as assets on the tax or accounting balance sheets unless acquired or transferred.

The report also compares the tax implications of licensing and trademark transfer, discusses how royalty payments are taxed, and provides an overview of projected trends in the EU.

With its broad application, the report supports two of the three strategic pillars of INTA’s 2022–2025 Strategic Plan: to support the development of intellectual property (IP) professionals, and to promote and reinforce the value of brands.

In recent years, INTA has focused on the evolving role of trademark practitioners into brand professionals—or from specialist to generalist. This involves both expanding one’s substantive knowledge and establishing more effective relationships with internal stakeholders, including colleagues in finance and accounting.

In a related development, during the 2022 Annual Meeting Live+, INTA’s Board of Directors adopted a Board Resolution on International IP Accounting Standards, establishing INTA’s position that “accounting standards should not require a blanket exclusion of trademarks and complementary IP that are developed in-house from recognition as assets on corporate balance sheets.”

This marks the first time that the Association has established a position through a Board Resolution for advocacy with stakeholders outside the IP industry or government. Through this Resolution, INTA can engage the accounting and finance communities with the goal of finding agreement on updated standards for IP reporting that are fit for the intangible economy.

This Board Resolution likewise aligns with INTA’s 2022–2025 Strategic Plan and is an early but critical accomplishment of the IP Reporting for Brands Presidential Task Force convened at the start of the year by 2022 INTA President Zeeger Vink.

An executive summary and full report are available online. The full report is available to INTA members only.

Although every effort has been made to verify the accuracy of this article, readers are urged to check independently on matters of specific concern or interest. 

© 2022 International Trademark Association