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: in an asset purchase, 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 between 8 July 2015 and 31 March 2019 get no relief; since 1 April 2019 they get relief only when bought with qualifying IP, at a fixed 6.5% a year (capped at six times the cost of that IP). A share purchase gives the buyer no relief on the price paid. 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 generally not tax-deductible, but accounting amortisation of goodwill acquired from 1 January 2022 to 31 December 2029 is temporarily deductible (small companies amortise over a flat 10 years, other buyers must show a limited useful life, and purchases from related parties are excluded). Other intangibles such as patents can be amortised over their protection period or shorter useful life. Netherlands: acquired goodwill can be depreciated at no more than 10% of its cost a year, so over at least 10 years, and other business assets at no more than 20% a year. The Innovation Box taxes qualifying innovation profits at an effective 9%. Ireland: acquired specified intangibles, and goodwill to the extent it is attributable to them, are relieved in line with accounting amortisation or, by election, over 15 years, and the Knowledge Development Box taxes qualifying income at an effective 10% (6.25% before 1 October 2023). Australia: goodwill is not a depreciating asset, and only listed intangibles qualify, such as patents (20 years), registered designs (15 years), copyright and in-house software (5 years), over statutory effective lives; trade marks do not. Rules change often, so confirm local treatment before relying on any of this. 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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