A Licensing structure can be adapted to achieve the maximum tax and commercial advantages. The basic principles of the Licensing or royalty structure are as follows:
The beneficial ownership of the intellectual property (i.e. trademark, film rights, copyrights, patents etc.) is in an offshore or a low tax jurisdiction.
In order to utilise Double Tax Treaties the intermediate licensing company is located in a suitable jurisdiction. Ireland is ideal because of its large network of Double Tax Treaties, and because it is possible to pay certain royalties with no withholding tax deduction.
The royalty payable by the Irish licensing company to the beneficial owner of the intellectual property is deductible against royalty income for tax purposes.