1. Dutch Legal and Tax Issues relating to IP
when entering the Brazilian Market
Dutcham’s 6th Technical Brazil Seminar
Rotterdam, 14 March 2012
2. Today’s Agenda
• Summary of the Dutch Legal Framework
• Summary of the Dutch Tax System
• Different Entry Scenarios
• Closing Remarks
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3. Summary of the Dutch Legal Framework 1/2
• Registration of patents, trademarks, models and designs. Without
registration, there is generally no protection.
• No registration required from copyrights. However, product must be
recorded (e.g. in writing, video, audio).
• Company trade names cannot be registered.
• Registration duration varies from 5 years (designs), to 10 years (for
trademarks), to 20 years (for patents) to 70 years (for copyrights).
Renewals possible.
• Assignment of IP rights must be done in writing. No formalities for the
licensing of IP rights.
• Enforcement of rights is included in Dutch law and harmonised based
on EU Directives (e.g. 2004/48/EG).
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4. Summary of the Dutch Legal Framework 2/2
• Some differences between the Brazilian and the Dutch legal system:
– Registration process generally takes 2-3 months and there is an
emergency registration procedure that takes a number of days.
– The Netherlands generally qualifies trade secrets as know how,
which cannot be protected by a patent. This should be protected
through contractual relations only.
– Formalities for the licensing of IP rights (under discussion in Brazil,
but in any case registration for international licenses).
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5. Summary of the Dutch Tax System 1/2
• Dutch Corporate Income Tax:
– Profits, i.e. income less expenses, are generally taxed at 20%-25%
rate (2012). Tax payable can be limited by crediting foreign
withholding taxes.
– Two tax incentives have recently been introduced to stimulate the
Dutch “knowledge-based economy”:
• The R&D “Innovation” Box (as of 2010): Relevant for
companies that own and exploit IP rights. Ensures that income
resulting from innovation is taxed at a reduced corporate tax
rate of 5% (instead of 20%-25%).
• The R&D Deduction (as of 2012): Relevant for companies that
develop IP. Costs (other than employment costs) and expenses
attributable to R&D give rise to an addition 40% deduction, i.e.
a net tax saving of 8 to 10%.
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6. Summary of the Dutch Tax System 2/2
• Dutch VAT:
–19% taxation of goods and services. Transfer and licensing of IP are
treated as services. Not Dutch VAT on such invoices to Brazil.
• Dutch Wage Tax:
–Standard withholding by employers (on behalf of employees) on salaries
paid. Progressive rates up to 52% apply.
–WBSO: A tax benefit on R&D-oriented employment costs. Companies
that have a so-called WBSO certificate are allowed to receive a rebate
(60%, 42% or 14%) on part of the costs.
• Withholding Taxes:
–The Netherlands only levies a 15% dividend tax, but no withholding tax
on royalties or interest paid to other companies. Royalties received from
Brazil attract a tax sparing credit.
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7. Different Entry Scenarios
• Dutch IP licensed to BrazCo
• Royalty Free License
• Contribution of IP Rights
• Sale of Products including IP
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14. Scenario 4: Sale of Products (including IP) 2/2
WHT = 0 Products
BrazCo Indirect = 400 DutchCo
BrazCo P&L: DutchCo P&L:
COGS: - 1,000 Internal Sales: + 1,000
Tax effect: 350 Tax effect: - 250
Tax Sparing: 0
Total Tax Effects: 350 – (250 - 0) – 400 = - 300
To be considered in more detail:
•Are the import duties higher than WHT?
•Should we distinguish a separate royalty?
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15. Concluding Remarks
• Dutch and Brazilian legal systems are comparable at first
glance, however, there are some differences in terms of
registration (e.g. timing) and enforcement (e.g. seizure by
customs).
• Brazilian tax system (mainly WHT and indirect taxation) impact
intragroup IP structures, however, there are also opportunities if
structured correctly.
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16. Thank you for your kind attention.
Bart H.C.M. le Blanc, MBA
tax lawyer, member of the L&L Brazil desk
T: +31 10 224 66 53
E: bart.le.blanc@loyensloeff.com
