How do different jurisdictions treat tax amortisation of intangible assets?

Full Explanation

The tax treatment of intangible asset amortisation varies widely across jurisdictions, creating both planning opportunities and compliance challenges for multinational acquirers. United States: Section 197 intangibles (including goodwill, customer relationships, patents, trade names, and covenants not to compete acquired as part of a business) are amortised over 15 years for tax purposes, regardless of their economic useful life. This straightforward approach simplifies compliance but may not match economic reality. United Kingdom: the Corporation Tax Act 2009 (Part 8) allows tax deductions for acquired intangible assets based on their accounting amortisation or impairment charges, but with important restrictions. Goodwill and customer-related intangibles acquired from related parties after July 2015 are not eligible for tax relief. Pre-April 2002 intangibles follow the old rules (no amortisation deduction). Germany: acquired goodwill is tax-amortised over 15 years. Other intangible assets follow their economic useful life, subject to documentation. France: acquired goodwill is not tax-amortisable (it is treated as a non-depreciable asset), though other intangible assets like patents and software can be amortised. Netherlands: acquired goodwill is amortised over at least 10 years. The Innovation Box regime provides a reduced 9% tax rate on qualifying IP income. Ireland: acquired IP (including goodwill related to IP) can be amortised for tax purposes at the accounting rate, and the Knowledge Development Box provides a 6.25% rate on qualifying IP income. For cross-border acquisitions, the tax amortisation benefit calculation must be performed jurisdiction by jurisdiction, as the benefit varies significantly based on local rules.

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