Corporation Tax Act 2010 section 357GB

Application of this Part in relation to partnerships

Section 357GB sets out how the Patent Box regime applies where a trade is carried on by a partnership that includes one or more corporate partners (i.e. companies within the charge to corporation tax).

• The Patent Box rules apply to a partnership broadly as they apply to a single company, but elections are made individually by each corporate partner rather than by the firm, and only affect that partner's share of profits
• The firm meets the development condition for a qualifying IP right if either the firm itself has carried out qualifying development, or a corporate partner holding at least a 40% share in the firm's profits or losses meets the condition
• Small claims treatment provisions are adapted so that the test for associated companies is applied by reference to each electing corporate partner's own associated companies, rather than by reference to the firm
• Where a corporate partner is party to an arrangement that produces a return economically equivalent to interest, that partner's share of the firm's trade profit or loss is calculated as though no Patent Box election had been made