Tax & legal glossary Tax

Patent Box Regime (Spain)

Tax incentive under Article 23 of the Spanish Corporate Tax Act (LIS) that provides a 60% reduction on income derived from the licensing or transfer of qualifying intangible assets such as patents, utility models, and registered software, effectively reducing the tax rate on IP income to 10%.

Tax incentive under Article 23 of the Spanish Corporate Tax Act (LIS) that provides a 60% reduction on income derived from the licensing or transfer of qualifying intangible assets such as patents, utility models, and registered software, effectively reducing the tax rate on IP income to 10%.

In practice

What is the Patent Box

Spain’s Patent Box regime allows companies to apply a 60% reduction to net income derived from licensing or transferring qualifying intangible assets. With the standard corporate tax rate of 25%, this means qualifying IP income is effectively taxed at just 10% — one of the most competitive rates in the OECD.

Qualifying assets

The regime applies to income from:

  • Patents and utility models
  • Supplementary protection certificates
  • Registered designs and models
  • Advanced registered software (not standard management software)
  • Secret plans, formulas, or procedures with economic value

Excluded: trademarks, trade names, domain names, literary or artistic works, and generic know-how not linked to patentable technology.

Requirements and calculation

The taxpayer must have created the intangible asset (contributing at least 25% of its development cost). The reduction applies to net positive income (gross licensing revenue minus direct costs attributable to the asset). The OECD nexus approach may limit the reduction if substantial development was outsourced to related parties.

Compatibility with R&D deductions

The patent box is fully compatible with Spain’s R&D tax deductions under Article 35 LIS (25-42% for R&D activities, 12% for technological innovation). This creates a powerful double benefit: deductions on the cost side during development and a reduced tax rate on the revenue side during exploitation. Companies can also obtain a Informe Motivado Vinculante (binding motivated report) from the Ministry of Science to secure legal certainty on the R&D qualification.

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Frequently asked questions

Spain's Patent Box regime (Article 23 LIS) provides a 60% reduction on net income derived from licensing or transferring qualifying intangible assets. With the standard Corporate Tax rate of 25%, this means qualifying IP income is effectively taxed at 10% (40% of 25%). This is one of the most competitive IP income tax rates in the OECD and makes Spain an attractive jurisdiction for locating and exploiting intellectual property.
Qualifying assets include patents, utility models, supplementary protection certificates, registered designs and models, advanced registered software (not standard management software), and secret plans, formulas, or processes with economic value. Excluded assets are trademarks, trade names, domain names, literary or artistic works, and generic know-how not linked to patentable technology. The taxpayer must have created the qualifying asset, contributing at least 25% of its development cost.
The OECD nexus approach (implemented following the BEPS Action 5 framework) limits Patent Box benefits when substantial IP development was outsourced to related parties. The reduction is calculated by multiplying the full 60% reduction by a nexus fraction: qualifying R&D expenditure divided by total R&D expenditure. If the company itself conducted all R&D, the full 60% reduction applies. If a significant portion was outsourced to related parties, the available reduction is proportionally reduced.
Yes, and this is one of Spain's most powerful IP tax advantages. The Patent Box on IP income (Article 23 LIS) is fully compatible with R&D and technological innovation tax deductions (Article 35 LIS — 25–42% for R&D activities, 12% for technological innovation). This creates a double benefit: deductions on the cost side during development phase, and a reduced 10% effective tax rate on licensing income during the exploitation phase. Companies can also obtain a Informe Motivado Vinculante from the Ministry of Science to secure legal certainty on R&D qualification.
The regime covers net positive income from licensing qualifying intangible assets to third parties or related parties (at arm's length), as well as net income from transferring the assets themselves. The income base is gross licensing revenue minus direct costs directly attributable to the qualifying asset. Capital gains from selling the IP also qualify if the IP was self-created. Income from using the IP internally (to produce goods or services) is not covered by the Patent Box.
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Frequently asked questions

What is Spain's Patent Box and what tax rate does it produce?
Spain's Patent Box regime (Article 23 LIS) provides a 60% reduction on net income derived from licensing or transferring qualifying intangible assets. With the standard Corporate Tax rate of 25%, this means qualifying IP income is effectively taxed at 10% (40% of 25%). This is one of the most competitive IP income tax rates in the OECD and makes Spain an attractive jurisdiction for locating and exploiting intellectual property.
Which intangible assets qualify for Spain's Patent Box?
Qualifying assets include patents, utility models, supplementary protection certificates, registered designs and models, advanced registered software (not standard management software), and secret plans, formulas, or processes with economic value. Excluded assets are trademarks, trade names, domain names, literary or artistic works, and generic know-how not linked to patentable technology. The taxpayer must have created the qualifying asset, contributing at least 25% of its development cost.
What is the OECD nexus approach and how does it apply to Spain's Patent Box?
The OECD nexus approach (implemented following the BEPS Action 5 framework) limits Patent Box benefits when substantial IP development was outsourced to related parties. The reduction is calculated by multiplying the full 60% reduction by a nexus fraction: qualifying R&D expenditure divided by total R&D expenditure. If the company itself conducted all R&D, the full 60% reduction applies. If a significant portion was outsourced to related parties, the available reduction is proportionally reduced.
Can Spain's Patent Box be combined with R&D tax deductions?
Yes, and this is one of Spain's most powerful IP tax advantages. The Patent Box on IP income (Article 23 LIS) is fully compatible with R&D and technological innovation tax deductions (Article 35 LIS — 25–42% for R&D activities, 12% for technological innovation). This creates a double benefit: deductions on the cost side during development phase, and a reduced 10% effective tax rate on licensing income during the exploitation phase. Companies can also obtain a Informe Motivado Vinculante from the Ministry of Science to secure legal certainty on R&D qualification.
What income is covered by Spain's Patent Box regime?
The regime covers net positive income from licensing qualifying intangible assets to third parties or related parties (at arm's length), as well as net income from transferring the assets themselves. The income base is gross licensing revenue minus direct costs directly attributable to the qualifying asset. Capital gains from selling the IP also qualify if the IP was self-created. Income from using the IP internally (to produce goods or services) is not covered by the Patent Box.

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