On 26 June 6 speakers of the Seminar “Everything about Taxes In Transactions Involving Royalty and Software for Enterprises” presented the most recent and the most interesting cases for the new attendees. The intensive and heated discussions took place in a welcoming hotel “Kozatsky”. You may get acquainted with the agenda of the seminar here: https://synergy.ua/ru/seminar-vse-o-nalogax-pri-operaciyax-s/.

Let us consider in more detail the questions that were raised by the participants during the seminar. Just like we promised, we publish the answers to them.

The first presentation of Yuliia Matsiuk, the Senior Associate of Synergy IP Law Agency, was an overview of the world of intellectual property objects protection. Many questions have been raised concerning trademarks protection:

«Whether it is possible to extend the list of classes of goods and services after registration of a trademark

As the scope of protection of a mark for goods and services is determined by its representation and the list of goods and services the alteration of a representation or of goods and services entered into the register after registration of a trademark will lead to the registration of a new trademark.

«How to ensure the protection of a trademark in the United Kingdom considering its withdrawal from the European Union

The European Union trademark (EUTM) will cease to have effect in the territory of the United Kingdom just after the “Brexit”. It is expected that it will be possible to transform the EU trademarks into British trademarks but this question remains open. While choosing the EU trademark for ensuring legal protection of a trademark in the United Kingdom, we recommend to pass additionally the similar registration in the UK through the Madrid system or under the national registration procedure.

«Whether or not there is a need to register know-how as intellectual property object

In order to acquire legal protection of know-how as intellectual property object there is no need to register it. The ground for granting legal protection of know-how is ensuring of a secrecy order. For the protection of know-how the owner of rights should ensure a secrecy order for know-how and its observance by third parties (for example, by persons who were made aware of this information by virtue of their official position or while on duty, by contracting parties etc.).

The section of the seminar moderated by Anna Kravchuk, Partner of Synergy Agency, was dedicated to the Ukrainian realities of taxation of royalties and the issue of beneficiary of a payee. Here in some interesting questions regarding the presentation of Anna:

«What are the peculiarities of royalty payment in favor of the people’s deputies – the members of the Verkhovna Rada (the Parliament of Ukraine

The members of the Parliament are physical persons who own intellectual property objects. The companies paying royalties in favor of people’s deputies are obliged to deduct personal income tax in the amount of 18% from the payable amounts + 1,5% of military fee. Such companies are tax agents with regard to rights holders and are obliged to file quarterly a reporting form 1ДФ. At the same time, the member of the Parliament is obliged to reflect his revenue received from transactions with intellectual property objects in his declaration for the year by indicating the amount of the revenue and from whom it was received.

For example, Anna provided figures from the declarations of certain peoples’ deputies. Among them, one of the most creative person is Mykhailo Mykhailovych Poplavsky, who received 26 millions of UAH in 2017 for the use of his intellectual property objects (127 works, 7 patents and 48 trademarks). That’s who he is, “young eagle”.

«How to check a beneficial owner: whether he really is doing business, how to confirm carrying on business and payment of taxes in resident country

It is necessary to request supporting documents that are the evidence of doing business. It could be documents on payment of taxes, extracts from the registers, certificates of the state authorities, even the documents on payment of housing and communal services at the address of the location of company office etc.

Anastasiia Radomska, Associate of Synergy IP Law Agency, told about export and import of royalty: repatriation tax, inclusion of royalty to the customs value as well as tax consequences of transactions with software products.

«Whether or not there is a need to include royalty for the use of a trademark at the imported goods to the customs value of goods

The Law does not oblige to conclude a license agreement and to pay royalty for the import and distribution of goods with a trademark in Ukraine (the international principle of exhaustion of rights to industrial property objects is still in force in Ukraine). But if such agreement with a rights holder is concluded, the supervisory authority will insist on the inclusion of such royalty to the customs value of goods that leads to the increase of the amount of a value added tax and customs payments. It is necessary to take that into account while taking a decision on the conclusion of a license agreement .

Let me remind that you may ask your questions regarding taxation of transactions with intellectual property in the comments or personal messages at the page of the seminar in Facebook: https://www.facebook.com/VseORoyalty/, and we will publish our answers or will discuss these issues during the next workshop.

Press-Service of IP Law Agency “Synergy”

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