The latest addition to our series of brief insights into the workings of the UK and supranational bodies reviewing the taxation of digitalisation of business.
12 November 2024 - Hong Kong Court refines sources rules and suggests possibility of apportionment of royalty income
The Hong Kong Court of appeal has decided in one case that where royalties were dependent on the exploitation of intellectual property (IP), their source is determined not only by the place of acquisition and granting of the licences but also the marketing, negotiation/ procurement and performance of the sublicences (though an upfront fee paid to the foreign negotiator was Hong Kong sourced revenue).
As the determination of the source is a matter of fact, the court remitted the matter back to the Board of Inland Revenue for determination, including the possibility of apportionment between locations.
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