Intellectual Property Management & Royalty Transit Service
The practice of intellectual property management
? What do these companies have in common:
They are MANAGE their intellectual property EFFECTIVELY:
patents, industrial designs, integrated circuits, software, database, trademarks,
trade names, logos, slogans, etc.
1. Intellectual property legal rights’ transfer to subsidiary company.
2. Licenses’ transfer to transit companies and sublicenses to the end users with applying
international agreements and tax legislation of particular countries.
3. Accumulation of the royalties in the subsidiary company.
Intellectual Property Management: how does it work?
3 2 BELIZE
1. IP rights transfer to the subsidiary company in offshore jurisdiction (Belize, BVI, etc.)
2. The license for IP transfer to the subsidiary transit company or service company in the country having Double Tax Treaty
agreement with Russia (Cyprus, the Netherlands, etc.)
3. The sub-license for IP transmission to the Russian company for commercial use
4. Russian company pay royalties to transit company at the rate of 0% in accordance with the Double Tax Treaty
agreement. Royalties are not taxed upon receipt in the transit country
5. The transit company pay royalties to IP holder at the rate of 0%. Royalties in offshore jurisdictions are not taxed upon
! Direct royalty payment to offshore jurisdiction is the subject to Russian withholding tax at the rate of 20%
If the difference between received and paid royalties in the transit country is 1%,
99% of paid royalties accumulates in the offshore jurisdiction for
future dividend payments, acquisitions or commercial lending.
Royalties are recognized as expenses deductible income tax of the Russian company.
= THIS MAKES YOUR BUSINESS EFFICIENT!
Royalty payment from Russia: terms and features
Sub-licensor (transit company) has to confirm its residence in a country which Russia have an Double Tax Treaty agreement
with. The withholding tax is not applicable in case a foreign company provides the Russian company with residence
confirmation before the date of royalty payment. Residence conformation should be signed by the authority of the foreign
Royalties must be economically justified. Relation should be evident between royalty payment and revenue. Royalties for
trademarks, for instance, in the amount of 6-8% of turnover, generally correspond to the market level. The license agreement
should specify the term of agreement and types of the goods / services / operations it concludes.
License / sub-license agreement and amendments thereto shall be registered in Rospatent before the royalty payments.
In the absence of registration the agreement is going recognized as invalid.
The only exception is an agreement on the use of know-how the registration of which is not provided by law.
Licensee and the licensor shall not be interdependent.
Non-exclusive rights to intellectual property must be obtained from unaffiliated legal entity.
5 Royalties paid by the Russian company to the sub-licensor in some cases is a subject to VAT.
But the Russian company is entitled to VAT deduction if the company is a VAT payer.
VAT is not charged for royalties under the license agreements for use of the invention, utility model, industrial design,
software, databases, integrated circuits, production secrets (know-how)
Solution implementation: infrastructure formation
IP legal rights
Royalty (100/100) Royalty (99/100)
If you are going to implement a solution for the intellectual property management,
we offer you the following services:
1 Registering a company in an offshore jurisdiction (Belize, BVI, etc.), including the nominee service and annual company
maintenance, opening an account in a European bank with Internet banking service.
Supporting intellectual property registration process in the offshore jurisdictions
3 Transit sub-licensor service in Cyprus: drawing up license agreement with a company from offshore and sublicense agreement
with the Russian company.
4 Regular transit of royalty from Russia to offshore via Cyprus at a fixed rate and in compliance with all legal and documentary
terms for Russian company.
Royalty Transit Service in Cyprus:
1. The low cost of the provided service :
min 500 EUR, max. 1% from each royalty transit payment
2. No need to register your own company in Cyprus ...
3. ... and NO annual maintenance costs for the Cyprus company
4. No need to confirm the company tax resident status for the purpose of applying the Double Tax
5. The absence of interdependent relations neither between the licensor and the sub-licensor, nor
between licensee and sub-licensor
Please contact us for more information about our services:
Phone: +357 25 030 505
Fax: +357 25 030 511