The royalty agreement implies. Royalty license agreement

Royalties - license payments (payments for the use of intellectual property (copyrights for works of literature, art or science, patent, trademark, etc.))

This word came to us from the English language, where r oyalties means royalties. In Russia, the term “license payments” is more often used. Yes, Art. 1235 of the Civil Code of Russia, regulating, paragraph 5 defines:

“Under a license agreement, the licensee undertakes to pay the licensor the remuneration stipulated by the agreement, unless otherwise provided by the agreement.”

The essence of a license agreement is that according to it, one party - the holder of an exclusive right (licensor) grants the other party (licensee) the right to use the intellectual property within the limits provided for by the agreement.

Example

The Alpha company owns the patent for the invention. Under the licensing agreement, she granted the right to Beta to use this invention for commercial activities. For the use of the invention, Beta pays license fees (royalties).

The royalty amount can be set as a fixed payment or as a payment depending on the volume of sales of products manufactured using the intellectual property. Sometimes a mixed option is used - a fixed fee and a fee based on sales volume.

Regulatory regulation

Tax Code of the Russian Federation (TC RF)

Expert commentary

The term royalty, literally translated from English, means license fees. Royalties are often mentioned in Double Taxation Agreements between Russia and other countries. These agreements also specify the meaning of the term “royalty”.

For example, Article 12 of the Agreement between the Government of the Russian Federation and the Government of the Republic of Cyprus dated December 5, 1998 “On the avoidance of double taxation in relation to taxes on income and capital” indicates:

“The term “royalty” as used in this article means payments of any kind received as consideration for the use or grant of the right to use any copyright in works of literature, art or science, including motion pictures and recordings for radio and television broadcasting, any patent, know-how - how, computer programs, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, or for the use or right to use industrial, commercial or scientific equipment."

The use of licensing agreements with payment of royalties is often used in international tax planning. In most international agreements between Russia and foreign countries, royalties are taxed only in the country of their recipient (the owner of the intellectual property). Accordingly, through royalties you can transfer funds to a foreign country without withholding income tax.

Examples of countries with which, by agreement, the tax rate when paying royalties is set at 0%:

It should be noted that the term “royalty” is often found in Russian legislation, along with the term “license payments” as a synonym. For example, in Art. 271 of the Tax Code of Russia states - “in the form of license payments (including royalties) for the use of intellectual property objects.”

At the same time, from an economic point of view, license payments are divided into royalties and lump sum payments, where:

Royalty- a license fee, which is paid in the form of certain parts from the profit (revenue) received by the licensee (buyer of licenses) as a result of using the license.

Lump sum payment- a license fee, which is paid in the form of an agreed flat sum.

The above types of license payments are described in paragraph 15 of Rosstat Order No. 367 dated August 19, 2011 “On approval of statistical tools for organizing federal statistical monitoring of the number, remuneration of workers and science.”

Corporate income tax

For corporate income tax, an organization paying license fees (royalties) has the right to recognize them as other expenses on the basis of paragraphs. 37 clause 1 art. 264 Tax Code of the Russian Federation.

License payments paid to foreign copyright holders relate to income from sources in the Russian Federation (clause 4, clause 1, article 309 of the Tax Code of the Russian Federation). Accordingly, a Russian organization must also withhold corporate income tax as a tax agent (the provisions of double taxation agreements should be taken into account).

The copyright holder pays VAT on the amount of license payments, and the payer of the payments has the right to deduct VAT.

If the copyright holder is a foreign organization that is not registered with the tax authorities, then the VAT is withheld and paid to the budget by the Russian payer of license fees (Article 161 of the Tax Code of the Russian Federation). He also has the right to deduct VAT amounts (clause 3 of Article 171 of the Tax Code of the Russian Federation).

Important court decision

The Company has entered into licensing agreements with foreign organizations that are copyright holders of beer trademarks to grant the right to use these marks. Licensing agreements were concluded by the Company on the terms of payment of license fees in the amount of 4.5 to 10 percent of the income received from the sale by the Company of beer produced under the named trademarks.

Having the intention of organizing the production of beer on the territory of the Russian Federation, the Company entered into a supply agreement with the Manufacturer, according to which the Manufacturer agreed to supply the company with the entire volume of products produced by it under trademarks, the right to use which belongs to the company.

In addition, the Company entered into sublicense agreements with the Manufacturer on the terms of paying a royalty in the amount of 0.1 percent of the brewing company’s production income.

During the tax audit, the inspectorate excluded from the Company's expenses the difference between received and paid license fees, considering that the Company, not being a beer manufacturer, paid license fees not in its own interests, but in the interests of the Manufacturer.

The judicial authority sided with the taxpayer, noting that the Company's incurrence of expenses under licensing agreements is aimed at subsequently receiving income from the sale of brewing products produced under trademarks, the right to use of which is granted under these agreements.

At the same time, I recommend avoiding such a situation, since in this case, the taxpayer was helped by the fact that the company, under an agreement, bought and sold all the products produced by the plant, that is, it had a direct economic interest in the products produced. If there had not been such a condition in the contract with the plant, then the taxpayer would have had significantly fewer arguments in its favor.

Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated June 14, 2011 N 15093/10 in case N A40-154999/09-108-1176.

Important court decision

The tax authority has proven that the average market royalty on beverages ranges from 2 to 5%. As a result, taxpayer expenses in excess of this amount were excluded for income tax purposes.

(DECISION OF THE FAS OF THE NORTHWESTERN DISTRICT dated 06.10.2005 N A66-5524/2004).

Important court decision

The Company's balance sheet included a trademark with an actual cost of 400 rubles. This trademark was valued by the appraiser in the amount of 182,200 thousand rubles. and then contributed to the authorized capital of the LLC. Then, according to the licensing agreement, the rights to the trademark were transferred back again, with a license fee of just over 1 million rubles.

When audited by the Company's tax authority, the amount of expenses for paying license fees was excluded from expenses. The judicial authority sided with the tax authority, indicating that the company did not have any reasonable purpose and focus on generating income when transferring exclusive rights to this trademark to LLC, since on the same day another agreement was concluded between the parties - a license agreement, under which the owner of the exclusive rights to this trademark transferred non-exclusive rights to it to the applicant.

A thorough legal analysis of the documents available in the case allows us to make an unambiguous conclusion that all of the above transactions were clearly imaginary in nature, the illegal purpose of which was the unjustified receipt by the applicant of a tax benefit in the form of an unlawful reduction of taxable profit for the audited period.

DECISION OF THE FAS VOLGA DISTRICT dated November 29, 2006 in case N A65-5203/2006-SA2-41 (Decision of the Supreme Arbitration Court of the Russian Federation dated January 25, 2007 N 121/07 refused to transfer this case to the Presidium of the Supreme Arbitration Court of the Russian Federation for review in the manner of supervision) and a similar DECISION FAS VOLGA DISTRICT dated August 17, 2007 in case No. A65-5681/06-SA1-19

Important court decision

Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated October 28, 2010 N 8867/10 in case N A40-41114/09-151-229.

Decision in favor of the taxpayer

Situation

The Russian company - the J. T. I. - MP Society (hereinafter referred to as the Company) was founded by the foreign company J. T. International Verwaltungsgesellschaft mbH (Germany), part of the JT International (JTI) company (Japan) ,), which has tobacco factories on the territory of the Russian Federation, including the Petro company (manufacturer).

The main activities of the Company are the organization of production, promotion and sale of tobacco products on the territory of the Russian Federation under the appropriate trademarks.

Under a license agreement concluded with JT International S.A. (copyright holder) The Company acquired the rights to use trademarks with payment at rates of 6 - 8 percent of the cost sold on the territory of the Russian Federation. Along with this agreement, the Company entered into a “Petro” agreement with the company, under the terms of which the plant is obliged to manufacture and transfer all produced tobacco products, marked with trademarks, exclusively to the company.

The company introduced the products manufactured by the plant into civil circulation on the basis of distribution agreements for the wholesale sale of tobacco products in various regions of the Russian Federation, reflecting the proceeds received as part of income from the sale of goods (works, services).

Until 2003, royalties for the use of these trademarks on the territory of the Russian Federation were paid by the Petro company under a sublicense agreement concluded with JT International S.A. From January 1, 2003, the above scheme of contractual relationships was implemented and the Company began to pay royalties in favor of a foreign organization.

The essence of the tax authorities' claim

Without challenging as such the right to include in other expenses associated with production and sales, payments for the use of rights to the results of intellectual activity and means of individualization (clause 37, paragraph 1, article 264 of the Tax Code of the Russian Federation), the inspectorate nevertheless excluded from the composition expenses of the company, part of the amount of paid license fees, with reference to the fact that these payments were inflated, since they were calculated by the company as a percentage of the market value of the products sold by it.

The tax authorities' claims are related to the fact that as a result of changes in contractual relationships, the amount of license payments has increased.

Until 2003, the amount of license payments was paid by the Petro Company based on the cost of the contract for the production of finished products from Petro in favor of the company. Since 2003, license fees have been paid by the Company based on the price of sales of products from the Company to distributors (that is, at a higher price compared to the previously used price).

The court's decision

The judicial authority ruled in favor of the taxpayer, indicating that the validity of expenses that reduce income received for tax purposes cannot be assessed from the point of view of their expediency, rationality, efficiency or the result obtained. Business entities independently, at their own discretion, choose ways to achieve results from entrepreneurial activity.

Consequently, since 2003, a change in the contractual structure within the holding company, which carries out both the production and sale of tobacco products through organizations acting as independent taxpayers under the legislation of the Russian Federation, and the transfer of the burden of paying license fees from the plant to the Company, caused by the need to increase the efficiency of these activities , does not contradict the requirements of tax legislation.

An enterprise, according to a license agreement, transfers periodic payments to another enterprise and records them as royalties. But during the audit, the tax inspector regards these payments as a fee for the provision of services and believes that such transactions should be subject to VAT. How to correctly draft a license agreement so that payments under it are considered royalties and not a service?

Analysts often point out that regardless of how the periodic payments paid under a license agreement are identified - services or royalties - this does not affect taxation. After all, both royalties and the amount of fees for services relate to the gross expenses of the enterprise - the income tax payer. This statement is true, but fully only in relation to VAT defaulters. VAT payers are by no means indifferent to what the periodic payment is called, because if it represents compensation for a service provided, then such payment is subject to VAT.

To understand this issue, you need to distinguish passive income from active income. Passive income is income in the form of dividends, interest on deposits, royalties, bonuses, certain types of fees, etc., which are received regardless of effort - the business simply allows someone to use its name, money, etc. for a fee. d. Income from the provision of a service, on the contrary, refers to active income, since the service provider necessarily makes efforts and performs specific actions to obtain such income. A service is a type of activity related to meeting the needs of the customer. Payment for services (administrative or marketing) provided by the licensor in connection with the sale of a license is not a royalty.

Based on this, it is undesirable for the license agreement to stipulate that the licensor takes any active actions aimed at providing services. If the State Tax Inspectorate discovers that royalty payments exempt from VAT also contain fees for services, it will apply penalties to the licensor for late calculation of VAT on the supply (sale) of services.

The legislator does not provide quantitative criteria by which it would be possible to determine where passive income ends and active income begins, therefore the licensor’s participation in the activity must become noticeable in order to recognize its income as active. The final decision on establishing the fact of provision of services under the license agreement can only be made by the court.

The parties to a licensing agreement can easily “cross the line” beyond which active income begins. For example, an enterprise has compiled a database in the form of an alphabetical list and addresses of enterprises of a certain profile, indicating specialization, cost of products and other information. The database is constantly updated and its current state is maintained. The enterprise issues permits to use the base, and the licensee makes periodic payments. The license agreement does not provide for the payment of lump sum payments; all requirements of clause 1.30 of Article 1 of the Law on Profit for identifying periodic payments as royalty remuneration are met. However, the developer did not include a search engine in the database. It was difficult for the licensee to select the information he was interested in on his own, and he several times wrote to the licensor, the compiler of the database, with a request to provide him with a selection of the information he was interested in. The licensor complied with the licensee’s request without additional payment, thereby violating the agreements reached when signing the license agreement. In fact, the licensor provided the licensee with services for retrieving data that are subject to VAT.

Often, related services are “wedged” into the agreement for the right to use a company name, logo, trademark, etc. For example, a licensor has the right to control products produced under its trademark, but no more. If the owner of the trademark is also required to provide marketing services, then it is better for these purposes to conclude a separate agreement for the provision of marketing services with VAT charged on their cost.

In connection with the above, here are some summary rules that it is advisable for the parties to license agreements to observe:

1. The licensor's obligations towards the licensee should be minimized.
2. The agreement should be called the “License Agreement”, and the periodic payments should be called royalties.
3. The licensor’s obligations should not include: provision of marketing services; providing the licensee with free advertising; provision of space at the licensor's exhibitions; drafting and sending letters to promote goods and services on behalf of the licensee.
4. The licensor's obligations should avoid including compensation for the licensee's expenses.
5. The licensor's right to quality control shall not include its provision of marketing and management services.
6. Referring to any party as an “agent” should be avoided.
7. The license agreement must indicate that the parties do not intend to conduct joint activities.
8. All additional documents (correspondence, protocols, etc.) must not contradict the terms of the license agreement. Therefore, you cannot draw up minutes of a meeting on joint actions of the parties, send letters to each other about the provision of any services, etc.

Royalty- this is a remuneration paid to the licensor in the form of percentage deductions or fixed amounts from the cost (sale price) of products sold by the licensee, manufactured under the license.

The essence of royalties is expressed in the formula:

that is, the royalty is the ratio of the part (D) of additional profit paid to the licensor from a unit of products manufactured under a license () to the selling price of these products (Z).

Thus, royalties contain the same components - profit and sales price, the determination of which is difficult, as was already noted when considering the first valuation method. But the fact is that in international trade in licenses, the size of royalties is determined not by calculation, but empirically - by using the average royalty amounts established in world practice for various industries, the so-called standard royalties. For a given royalty amount, the amount of additional profit per unit of products manufactured under license will be:

Taking this into account, the formula for the estimated license price used in the first method can be presented as follows:

С р = В · Т · ∆П · Д = V · Z · R,

where V = B · T is the volume of products produced under the license for the entire period of validity of the license agreement.

It is obvious that the applied calculation parameters have different values ​​for each year of the license agreement. Taking this into account, the estimated license price on a royalty basis is:

,

where V t is the volume of expected production under license in year t (pieces, kg, etc.);

Z t – selling price of products manufactured under license in year t;

R t – royalty amount in year t (%);

T – validity period of the license agreement.

This method of calculating the price of a license is the most common in the international trade of licenses and, like the first, is based on determining the share of profits from the use of the license that the licensee must pay to the licensor. As noted above, both methods are based on common parameters that determine their identity. However, the introduction of royalties into the calculation can significantly increase the reliability of protecting the commercial interests of partners under a licensing agreement.

Thus, to determine the amount of payments under a license, it is necessary to establish: the validity period of the license agreement; volume of products produced under license; unit price; royalty base and rates. The following must be kept in mind.

The volume of production is estimated based on the licensee's intended production under the license for the entire term of the contract and for each year separately. The sources of such assessment are:

Fixed production volume, if specified in the license agreement;

Expert assessment of the licensor’s specialists on the possible volume of production by the licensee of products under the license in the established territory;

Data from the licensee on the volumes of production planned by him under the license;

Production capabilities of the licensee;

The market needs of the contract territory for licensed products, taking into account its capacity and the activities of competitors.

When determining the volume of production, it should be taken into account that in the first years of development of production there may not be any production under license. In subsequent years, production volume increases and reaches maximum values. At the final stage, a decrease in production is possible due to the obsolescence of the innovation and possible problems with the sale of products.

The sales price is the price of licensed products delivered from the manufacturer's warehouse, minus packaging, insurance, taxes and other non-production costs.

The estimated selling price is determined based on:

Competitive prices for similar products from Russian and foreign commercial enterprises;

Price lists or offers of domestic or foreign manufacturers of similar products, taking into account adjustments for quantity, differences in product characteristics.

To determine the selling price of a new product that has no analogues on the world market, you can use the export efficiency coefficient (K e), which is calculated in the relevant industry for similar products:

where is the average domestic wholesale price for similar products in the industry;

Average export price for these products in the industry.

uh,

where is the internal price of products manufactured under license.

The prices of components and other parts not subject to the license are deducted from the estimated selling price. For the calculation, prices are taken on the date of conclusion of the contract. However, taking into account their changes over the period of its validity, they must be adjusted on the basis of price indexation in the relevant industries. For this purpose, price indices for mechanical and other goods can be used.

The royalty amount is determined using standard royalty tables compiled on the basis of an analysis of global practice in concluding licensing transactions in various industries.

Standard royalty tables allow you to determine the approximate royalty amount for each specific license object, which is subject to clarification taking into account the following factors:

1. The royalty amount can be clarified as a result of searching and analyzing competitors’ materials for objects that are similar or close in their characteristics to the subject of the license.

2. The absence of a patent, as a rule, reduces the royalty amount by up to 30% compared to an object that has patent protection.

3. When transferring only design documentation under the contract, the royalty amount should be reduced by up to 30%.

When determining the price of a license, it is important to correctly determine the royalty base, which is selected so that the licensor and licensee can make a profit (income) from using the licensed object as the volume of production (sales) of products increases and the technology is applied on the basis of the transferred license. This may be the cost of manufactured products, a unit of production (goods), a unit capacity of a workshop (production), etc.

The most common basis for calculating royalties for both the licensee and the licensor is the price of a unit of production under a license or the cost of manufactured (sold) licensed products. The use of the above royalty base leads to the least number of conflicts between partners regarding the payment of license fees and is widely used in the international practice of trading licenses, if the specifics of the license object allow.

If the subject of the license is a process or technology, the royalty base may be the volume of manufactured (sold) products produced using this process (technology). In addition, the royalty base in this case may be the cost of the main processed raw materials. This option is recommended to be chosen when a range of products from the same raw materials are produced under license and when it is impossible to establish a single royalty amount for all manufactured products.

In the case where the invention relates only to part of a product or technological process, it is advisable in the license agreement to provide for the payment by the licensee to the licensor of fixed royalties per unit or batch of products produced or sold under the license.

The estimated price of a license is directly related to the validity period of the license agreement, which includes the period of development of the licensed object and its commercial use. This, in turn, largely depends on the specifics of the subject of the license. The licensor is interested in increasing the term of the agreement, the licensee seeks to shorten it in order to be freed from royalty payments and move on to free use of the licensed object. When selling a patent license, this period should not exceed the validity period of the patent. The validity period of the license agreement should also be based on the obsolescence of the subject of the license.

The methodology for determining the estimated price of a piano-based license is modified depending on the form of payment accepted under the agreement. In addition to periodic payments in the form of royalties, lump sum and combined payments are used.

Lump sum /one-time/ The payment itself is used quite rarely. It is used mainly in cases where the buyer of the license is a company unknown on the market, and there is doubt whether it will be able to successfully release and commercialize the development. Also, a lump sum payment can be applied if it is extremely difficult to control the volume of products released under license. In this case, the licensor may simply not receive the data necessary for the calculation.

Lump sum payments are a certain amount fixed in the text of the license agreement, which is paid in the form of a one-time payment or in installments in several installments: upon entry into force of the license agreement, at the time of transfer of technical documentation to the licensee and after the release of the first samples of products under the license.

A lump sum payment is stipulated in most licensing agreements not as the only type of payment, but as a kind of advance payment paid to the licensor after the transfer of documentation. The lump sum payment typically accounts for 10-20% of the total license price.

The estimated price of a license for a lump-sum payment form C p will be:

,

where K d is a discount factor that allows license payments in the form of royalties received annually by the licensor during the entire term of the contract to be brought to the current point in time.

Combination payments are a combination of one-time payments with periodic royalty-based payments. In this case, the commercial terms of the license agreement, determined on the basis of royalties, contain a provision for the licensee to pay a certain fixed amount (initial payment) at the initial stage of implementation of the agreement. Initial payments in most cases serve as a kind of guarantee of the seriousness of the licensee's intentions, which is very important for the practice of trading licenses. This amount is necessary for the licensor to pay for the costs associated with the preparation and transfer of technical documentation, other tangible media of information about the transferred technology (samples, special equipment, instruments), as well as costs incurred by him at the stage preceding the conclusion of the contract, which include advertising events , preparation of contracts and commercial proposals, correspondence, visits, participation of personnel in technical and commercial negotiations. In certain cases, the costs of research and development of the subject matter of the license may be reimbursed.

Typically, the initial payment is 10-30% of the license price, calculated on a royalty basis.

Taking into account the payment of the initial payment, a new royalty amount is determined, which is equal to:

.

A guarantee of the effectiveness of the transaction, in addition to knowledge of the above recommendations, can be knowledge of the main unfair practices used in the practice of trading licenses. Such techniques include:

1. When concluding a licensing agreement, a potential licensee often seeks to negotiate the price without the other terms of the agreement. In this case, you should pay attention to the scope of patent protection, the size of the territory to which the license is transferred, the type of product and the expected price for it, and sales volume.

2. Attempts to influence the position of the licensor due to the fact that he does not have a patent for the development at the time of concluding the agreement (in cases where the patenting procedure has not yet been completed). In such a situation, it is enough to present priority certificates and not be afraid for the results of patenting.

3. Attempts by license buyers to obtain consent to sell products on the territory of the licensor.

4. The licensee’s opposition to the provision on the impossibility of transferring rights to use to third parties (conclusion of a sublicense).

5. An attempt to limit ourselves to a lump sum payment only. However, such a payment does not reflect the actual cost of development and is clearly unprofitable for the licensor if the volume of use of the license significantly expands. In addition, royalty payments are preferable for large volumes of production under license. In this case, if we limit ourselves to only a lump sum payment, the price of the license may be reduced to the fee for obtaining technical documentation.

6. There are attempts to avoid lump sum payments. This technique helps to obtain the necessary technical documentation for free. To avoid this situation, it is convenient to offer the partner the wording of the agreement clause: “Payment upon transfer of documentation.”

7. Reluctance to sign option agreements or confidentiality agreements, because It is these legal forms of the agreement that allow the buyer of the license to first familiarize themselves with the development materials before patenting it, taking on obligations to keep the information secret, and avoid deceiving the seller and buyer of the license during preliminary negotiations.

TEST QUESTIONS AND TASKS

1. Define an innovation project.

2. What levels of scientific and technical significance do innovative projects have?

3. On what basis are innovative projects classified?

4. Describe the algorithm for comprehensive examination of an innovative project.

5. What information should the investment memorandum contain?

6. What is an invention, utility model, industrial design?

7. What provisions should an application for an invention (utility model) contain?

8. What conditions for patentability must an invention, utility model, or industrial design meet?

9. Describe the different types of licensing agreements?

10. Describe the content of pre-license agreements.

Quite simple: royalties are that part of the proceeds from the sale of a product that the author receives. Despite the simplicity of the formulation, the topic is quite extensive and, in connection with this, taxation and accounting of such transactions has a number of features. Let's try to deal with some of them.

Scope of application and some legal issues

The concept of royalty can be attributed to several legal areas. Thus, it is used as one of the forms of payment under a contract widely in the franchising sphere and denotes copyright and license payments for the commercial use of something belonging to another person (patent, work of art, etc.).

And finally, royalties in economics and land law (a term used in world practice) are rent payments for the right to develop natural resources paid by an entrepreneur to the owner of land or subsoil.

The legal relations of the parties regarding royalties related to franchising activities are regulated by Chapter 54 of the Civil Code of the Russian Federation (the basis of the relationship: a commercial concession agreement). In accordance with paragraph 4 of Article 1027 of the Civil Code of the Russian Federation, all rules of the Civil Code of the Russian Federation on a license agreement are applied to a commercial agreement. The only difference between a commercial concession agreement and a license agreement from a legal point of view is the object of the agreement. In a commercial concession agreement, an object is a set of exclusive rights, while in a license agreement it is the right to use an intellectual property object.

Based on clause 2 of Art. 1028 of the Civil Code of the Russian Federation, a commercial concession agreement is subject to the federal authority for intellectual property (Rospatent). According to the general rule of Art. 1031 of the Civil Code of the Russian Federation (which can be amended by agreement), a commercial concession agreement must be registered by the copyright holder (franchisor). If the registration requirement is not met, the contract is considered void (according to Article 1031, paragraph 2 of Article 1028, paragraphs 3,6 of Article 1232, paragraph 1 of Article 1490 of the Civil Code of the Russian Federation).

Relations between individuals (authors) and persons receiving exclusive rights to works are regulated by Chapter 70 of the Civil Code of the Russian Federation. It determines that the relationship must be confirmed in writing in the form of a certain type of agreement. These are types of contracts such as:

• agreement on the alienation of the exclusive right to a work and the right to use the work under a license (Article 1285 of the Civil Code of the Russian Federation);
• license agreement granting the right to use the work (Article 1286 of the Civil Code of the Russian Federation);
• copyright agreement (Article 1288 of the Civil Code of the Russian Federation).

As for royalties in the economy, from the point of view of world practice, the mineral extraction tax introduced in the Russian Federation in 2002 actually currently performs the functions of a royalty (payment to the owner of resources for the right to develop reserves).

It is necessary to dwell separately on agreements with counterparties, because a question arises about the applicable law (Russian or foreign). According to paragraph Art. 1211 of the Civil Code of the Russian Federation, by default, the law of the country with which the contract is most closely related is applied to the contract. The relations of the parties under the license agreement are governed by the law of the state where the licensor is located. At the same time Art. 1210 of the Civil Code of the Russian Federation allows the parties to an agreement to choose the law that is subject to application to their rights and obligations under this agreement. When applying Russian law, relations automatically fall under the regulation of Part 4 of the Civil Code of the Russian Federation.

Tax aspects

Income tax

Expenses in the form of royalties are recognized in the period to which it relates, on the date in accordance with the conditions or on the date of presentation to the user of documents serving as the basis for making calculations, or on the last day of the reporting (tax) period (clause 3, clause 7, art. 272 of the Tax Code of the Russian Federation).

For profit tax purposes, income from the granting of rights to the results of intellectual activity for use, in accordance with clause 5 of Art. 250 of the Tax Code of the Russian Federation, relate to non-operating income if they are not determined by the taxpayer in the manner specified in Art. 249 of the Tax Code of the Russian Federation, as income from the sale of property rights. Thus, if for the copyright holder this type of activity is one of the main types of activity, then income is recognized in accordance with Art. 249 of the Tax Code of the Russian Federation, and if not, then in accordance with Art. 250 Tax Code of the Russian Federation.

In clause 3, clause 4 of Art. 271 of the Tax Code of the Russian Federation determines that for non-operating income in the form of royalties, the date of receipt of income is recognized as the date of settlements in accordance with the terms of concluded agreements, the date of presentation to the taxpayer of documents serving as the basis for making settlements, or the last day of the reporting (tax) period.

Important:

International aspect

One of the most common tax planning schemes is the transfer of intellectual property rights to an offshore company for the purpose of accumulating royalties in a tax-free jurisdiction.

UNCTAD estimates the global offshore industry to be worth US$12 trillion (http://www.unctad.org). Russian organizations cannot do without the use of offshore business. The use of offshore jurisdictions by Russian organizations affects not only their internal interests, but also the interests of Russia as a whole. Evasion reduces the public sector of the country's economy, and companies that evade paying taxes through such schemes may find themselves in a worse position than law-abiding taxpayers.

Accounting

In organizations whose subject of activity is the provision for a fee of rights arising from patents for inventions, industrial designs and other types of intellectual property, revenue is considered to be receipts the receipt of which is associated with this activity. Thus, remuneration should be included in income from ordinary activities in the reporting period in which they were accrued under the terms of the agreement (clauses 12 and 15 of PBU 9/99).

The organization's expenses for paying royalties related to its core activities are recognized as expenses for ordinary activities in accordance with clause 5 of PBU 10/99, approved by Order No. 33n dated 05/06/1999.

Example

In October 2011, Alpha LLC transferred to the Company the right to use a set of exclusive rights to intellectual property (this service is the main activity). Monthly payments are set in a fixed amount in euros and are subject to receipt on the terms of 100% prepayment in rubles at the official rate on the day of payment. The monthly payment under the contract is set at 118 euros (including VAT) and is due no later than the 15th day of the month preceding the billing month. The euro exchange rate set by the Bank of Russia as of October 15, 2011 is 41.6638 rubles/euro.

Dt 51 “Settlement accounts” Kt 76-5 “Settlements with other debtors and creditors”

RUB 4,916 (118 euros* 41, 6638) - Advance payment received from
user for November

D-t 76-VAT K-t 68-2 “Calculations for VAT” 750 rub. (RUB 4,916 x 18/118) - VAT is calculated on the prepayment received

D-t 76-5 K-t 90.1 “Sales” 4,916 rub. (118 euros* 41, 6638) - Income for
november

Dt 90-3 “Value added tax” Kt 68.2 750 rub. (RUB 4,916 x 18/118) - VAT calculated on income

D-t 68-2 K-t 76-VAT 750 rub. - Accepted for deduction of VAT calculated from the prepayment amount for November