In this week’s REWIND of international business news, we are talking about intellectual property. We have Louboutin continuing its battle to be sole purveyor of red bottoms, the EU strengthening the rights of intellectual property owners, generic drug makers settling up with Pfizer and Takeda Pharmaceutical for patent infringement, and the U.S. Patent Trial and Appeal Board’s first decision under guidelines of the covered business method post-grant reviewing proceedings of the Leahy-Smith America Invents Act.
In “Why Think Luxembourg for Intellectual Property (IP) Management Rights?,” Stephan Le Goueff, a partner with our Meritas affiliate LG@vocats, explains Luxembourg’s tax treatment of royalty income generated in the license of software. Namely, Luxembourg offers an 80% tax exemption on royalties revenues generated by trademarks, patents, or copyrights on software received by a Luxembourg company, subject to certain conditions. The exemption reduces the effective tax rate for such revenues to less than 6% and the capital gain made from the transfer of such IP rights also benefits from the same 80% exemption. “Repatriation of the profits from Luxembourg to its mother company can be made, in most cases, without negative tax consequences,” explains Stephan.
In the SEA M&A Liquidity Advisor Newsletter, I am discussing what business owners should know about I-9 audits.
Unless you’ve been hunting in the Outback for the last few years, you should be deeply aware of government’s concern regarding the employment of undocumented workers. In fact, the Department of Homeland Security Immigration and Customs Enforcement (ICE) has dramatically stepped up its audit and enforcement activity, otherwise known as I-9 audits. The number of I-9 audits multiplied over the past decade, rising from three audits in 2004 to 3,004 in 2012. I-9 audits used to be random, but now they are more often the result of disgruntled former employees complaining to ICE.
This week in international business news, we cover Japan’s Sony possible divestiture of its consumer electronics division, the European Commission’s potential investigation of Chinese network-equipment makers, and the fallout from the discovery that Bloomberg reporters had access to sensitive information of financial service companies.
The Government Accountability Office was asked to review the Internal Revenue Service 2009 Offshore Disclosure Program and issue a report on its findings. The report, IRS Has Collected Billions of Dollars, but May be Missing Continued Evasion, GAO-13-318 (March 27, 2013), can be found here. The report describes the nature of the noncompliance of taxpayers who participated in 2009 OVDP and addresses the extent to which the IRS has used the 2009 OVDP to battle taxpayer noncompliance in failing to file the FBAR and declare offshore income. It also discusses the IRS’ continued efforts to bring noncompliant taxpayers into the U.S. taxing system.
We missed a week, but we’re back. This week in international business, we cover news on German/French relationship, President Obama’s upcoming visit to Mexico and Costa Rica, and on a lighter note, international baby name registries.
The American Tax Relief Act of 2012, signed into law by President Obama, breathed new life into a languishing Section 179 equipment expense deduction for businesses. Without ATRA 2012 (aka the “Fiscal Cliff Bill”), the Section 179 write off would have dropped from US$139,000 to $25,000 for 2013. Not only does Section 179 now raise the limit to $500,000 for technology and other equipment purchases made in 2013, but it also applies retroactively to such purchases made in 2012. The beauty of the Section 179 deduction is that a business may deduct the full Section 179 amount, now $500,000, in one year rather than over the typical depreciation MACRS schedule for equipment/hardware which is five years. The total purchase price of technology (including software) and equipment that can be placed in service before a reduction in the $500,000 is triggered is now $2,000,000. Purchases beyond that amount is subject to normal depreciation rules. Both new and used equipment qualify for Section 179. Rules for determining eligible Section 179 Property can be found here.