A Comparative Study of the Leading IP Box Regimes in Europe

New Balkans Law Office (www.newbalkanslawoffice.com) is a law firm with a focus on cross-border transactions and aims to assist clients who are seeking to incorporate their businesses. The final choice of jurisdiction to incorporate is usually determined by the nature of the business itself, whereby the applicable tax regime is of significant importance. Thus, if the focus of your business is IP assets, you should pay particular attention to the IP box regime applicable in the prospective jurisdiction. In the following note, we will briefly consider the differences between the leading IP box regimes in Europe.

Historically, Cyprus is the most well-known and popular jurisdiction for IP box regimes, especially amongst countries includingBelgium, Hungary, Luxembourg, the Netherlands, France and the United Kingdom. Based on OECD figures, Cyprus has an effective tax rate of 2.5%, which is the lowest of all the compared jurisdictions (with the rest being 4.44%, 4.5%, 5.2%, 7%, 10% and 10% respectively). While it follows from this that Cyprus offers the most competitive regime from a taxation point of view, it should be noted that this should not be the sole criterion in deciding the final destination to incorporate your business as there are several other factors to be taken into account as well.

For example, certain IP assets are ineligible for Cyprus’ IP box regime, including business names, trademarks, image rights and marketing activities. Conversely, these are eligible under the Hungarian regime, where only designs are ineligible. Same goes to Luxembourg, where only formulas and copyrights other than software may not qualify for its IP box regime.

Another important consideration is the origin of the IP assets. In Cyprus, the eligible IP assets have to be internally developed and acquired, but in Belgium, they can also be licenced by third parties.

Similarly, Cyprus has certain limitations on where the R&D takes place for them to be eligible, but there are no such restrictions in Hungary, Luxembourg, France or the United Kingdom.

The scope of the qualifying revenue in Cyprus is the broadest amongst the compared jurisdictions. They include royalty, licensing fees, compensation income, trading profits and capital gains from the disposal of IP. However, it does not include income from patents, which is eligible in Belgium.

In summary, the choice of the most beneficial IP box regime is not to be made lightly as there are important differences which may be crucial depending on the structure of the newly incorporated business. Careful consideration of factors including (but not limited to) the eligibility criteria, the origin requirement, and qualifying revenue from IP assets should also be made holistically.

Although Cyprus is the most prominent destination for IP box regimes in Europe, it may not always be the optimal choice for your business. NBLO can provide valuable guidance to help you make the best decision for your newly incorporated company.

You can read more publications from the New Balkans Law Office at the links below.

Alternative Investment Funds as a Tool for Diversifying Investments

Bulgaria’s start-up visa: a route into EU markets

Benefits of Shareholders’ Agreements

How to prove my Source of Funds/Source of Wealth from crypto asset profits

Investor protection before the European Court of Human Rights

The British Chambers of Commerce (BCC) is delighted to announce the appointment of Richard Collier-Keywood to the organisation’s board.   

Richard brings with him a wealth of international and UK business experience, operating at the very highest level of industry. He served as Managing Partner of PwC UK from 2008 to 2011 and as the organisation’s Global Vice-Chairman from 2011 to 2017.   

Following this, Richard went on to become a senior adviser to the Department for Digital, Culture, Media and Sport for four years. He now spends his time working with organisations spanning the charity, business, public and NGO sectors.   

His roles include Chair of the School for Social Entrepreneurs, Chair of Fair4All Finance, Chair of New Forest Care and Chair of Big Education. He is on the Board and chairs the finance committee of Women of the World Foundation, a UK charity focused on diversity and equality. He also recently joined the Board of The National Lottery Community Fund and chairs the Audit and Risk Committee. 

Sarah Howard MBE, Chair of the British Chambers of Commerce, said:

“We are honoured to have Richard join the BCC board. Not only does he bring with him experience working at the top of the international business world, but also years of involvement with brilliant charities, third-sector organisations and public bodies. 

“The BCC represents the best of Britain, and Richard is exemplary of one of our very finest British business leaders. I look forward to working with him and our Board on ensuring the voice of business is represented and supported at the very highest levels of Government and enterprise.”   

Richard Collier-Keywood said:  

“I’m very excited to join the British Chambers of Commerce in the work they do amplifying the voice of UK businesses and advocating for the support they need to sustain tough times. 

“The power of the BCC lies in its unique network of firms of all sizes across all sectors, within the UK and around the world. I look forward to joining this network and working with Sarah, Shevaun and the rest of the brilliant BCC team on strengthening the influence and power of our national and international Chambers of Commerce.”  

On 12 April we had the pleasure to host the April’s edition of BBBA Executive Lunch. Our guests  had the opportunity to dine and wine with fellow executives in a comfortable and informal setting. We would like to thank all participants for joining the event. 

We would also like to thank RPHI for proving welcome drink for all the attendees. Special thanks to our host Jazu by Himachi for the delicious food and professionalism. 

You may find photos from the event here and watch a special video from our host here.

As we approach the long Easter Weekend here in Bulgaria I wanted to update you on the last climbing weekend and the date for the next planned climb.

Peaks 8 / 9 – Голям Калин /Big Kalin 2,669m + Малък Калин/ small Kalin 2,664m

‘We came, We saw… BUT we did NOT conquer’

As repeated throughout this challenge, safety is the number 1 priority when taking numbers into the hills. With that in mind it was the 3rd time in the challenge so far we had to turn back before we had even started!

The plan was to take an off-road private road to the start of what was to be a relatively short 3 to 4 hour hike to Big Kalin and Little Kalin. However, the private road was made all the more difficult by the large volumes of snow still lying on the ground. With many km of driving still to go Martin proposed and we all agreed it was not in our interest to slide off the road into the valley below!

As the famous Mountain climber Alan Hinkes once said… ‘No mountain is worth a life. Coming back is a success and the summit is only a bonus’. As an alternative we headed to the nearby Stob Pyramid and took a short walk to the top for some team photos.

Next Peaks

I am pleased to confirm:

• The next peaks we will attempt will be during the weekend of Saturday May 13th and Sunday May 14th.
• The location will be the Pirin Mountains (weather conditions permitting).
• The plan is to spend 2 days climbing / 1 night stay in a hut in the mountains
• Given this will be an overnight AND not a circular route we will have the logistical challenge of dropping off car/s and travelling to the start etc

For those considering joining us please be aware – i) This will be the final period of cold weather before we head into the ‘warmer’ climbs ii) We will be away two full days in the mountains – only those ‘prepared’ should join

If you are interested in joining us please drop me a message on whatsapp / viber on +359 882 900 882.

I will issue a further email at the start of May to those who have expressed an interest

A Reminder of the purpose behind the ‘Bulgarian 56 Peaks Challenge’

When embarking on this challenge myself and those who have joined me have focused less on the completion of the challenge itself…. And more on

• Raising awareness for the For our Children Foundation
• Raising much needed funds
• The great spirit and positive mental benefit enjoyed by spending quality time with friends old and new in the wonderful mountains of Bulgaria.

With this mindset the team and I have no issue if the challenge were to continue beyond 2023. Further evidence of the challenge is given below.

Fundraising Site

• Detebg.org                       https://tinyurl.com/2p8twezx
• Platformata.BG                https://tinyurl.com/yut9jc75

Ted Talk Link (November 2022 / 34,000 views to date)

• https://www.youtube.com/watch?v=lLhzxK9ZtFM&t=9s

преди обед BTV Interview (February 2023)

• https://www.btv.bg/shows/predi-obed/videos/da-zhiveesh-vtori-zhivot-1.html

Reacting to the ONS GDP figures for February, David Bharier, Head of Research at the BCC, said:      

“Although today’s GDP figures indicate the UK economy continues to technically avoid a recession, it’s now clear we are stuck in a prolonged period of almost no growth. After a sharp drop in business confidence last year, our latest research shows that optimism among SMEs is now on the way up. But this is yet to translate into an improvement to business conditions in general.  The BCC expects GDP to contract overall by 0.3% in 2023, a view echoed by the IMF forecast in their World Economic Outlook published earlier this week. The business environment needs to improve quickly to ensure confidence doesn’t fall back to the levels we saw last year. While last month’s Budget included several positive measures for the economy, it did not go far enough to shift the dial on growth which remains stubbornly low. The Government has not addressed some of the major issues holding firms back, such as the unprecedented energy price shock and record tightness in the labour market. Following the attention being given to the Windsor Framework by world leaders this week, global trade also needs to be a core priority. UK exporters have faced major administrative costs since the introduction of the Trade and Cooperation Agreement with the EU and the focus must now be on ensuring the new customs and paperwork arrangements work smoothly for businesses both side of the Irish Sea.” 

Endeavor’s Dare toScale (D2S) growth programme will take place for a fifth consecutive year.Starting today, 10 April 2023, the platform is open, and all companies with aturnover of more than BGN 200,000 in the past year and up to 150 employees canapply to participate at this link. The deadline for applications is 30 April 2023. The programme isorganised by the Bulgarian office of the global entrepreneurial networkEndeavor with Postbank as the main partner, with the support of Software Group,the Bulgarian Small and Medium Enterprises Promotion Agency (BSMEPA), theEuropean Bank for Reconstruction and Development (EBRD), as well as with equitypartner SeedBlink.

The programme is opento companies that already have a proven product or service on the market, fromall sectors of the economy and from all regions in Bulgaria. Entrepreneurs whohave expressed interest in participating and have completed the applicationform will go through a selection process in which the Dare to Scale team,mentors and business leaders from the Endeavor network will choose the finalparticipants. Similar to last year, one of the spots in the programme isreserved for an organisation/company developing its work for the benefit ofsociety.

So far, over 80entrepreneurs from 43 companies have taken part in the previous editions ofDare to Scale, with seven of them receiving funding for a total of over BGN 3million after their participation in the programme. In 2022, 40 mentors workedwith the companies and a total of over 140 hours of training and meetings wereheld. Two of the companies received funding from a D2S alumni participant andstrategic partnerships were formed between the individual companies. Among thekeynote speakers at the workshops were Vasil Terziev (Partner at the ElevenFund), Svetozar Georgiev (Co-founder of Telerik Academy and the Campus Xincubator), Vins Gaydardzhiev (Founder of Alcatraz.ai), Hristo Hristov (ExecutiveDirector of Darik Radio), Filip Popov (Head of Small Business Banking Division atPostbank) and others. Detailed information about the program is available here.

Dare to Scale willtake place in Sofia and will last four months – from September to December2023. Company founders will have the opportunity to participate in specializedtrainings in key areas for the development of any scaling business:organization management, marketing and sales, business planning and capitalraising. Each company will have access to Endeavor’s local mentor network,whose mentors will support the founders with their entrepreneurial expertise.In addition, partners and directors from the consulting firm PwC Bulgaria willwork individually with all participants for a second year. They will holdregular mentoring meetings, using their extensive experience and expertise tohelp entrepreneurs overcome key challenges and develop opportunities in theirbusinesses.

The participants willbe able to join events during which they will get to know and exchangeexperiences with key figures in the entrepreneurial ecosystem. The programmewill conclude with the final Demo Day event, during which the companies willpresent their businesses to a jury of established business leaders.

Momchil Vassilev, Managing Director of EndeavorBulgaria:

“We are happy and proud that the Dare to Scaleprogramme is an important part of the entrepreneurial ecosystem in Bulgaria fora fifth consecutive year. We believe that this year we will select again a newgroup of inspiring and ambitious entrepreneurs, who, with their businesses, arechanging not only the economic environment in our country but also the shape ofour society. Based on the trainings, mentoring sessions and events in theprogramme, we aim to build on their knowledge and prepare them to scale theirbusinesses to new heights, even beyond those they have imagined. We are happyto have the resources, experience and mentoring network to give the startups inthe advanced stage of their development a boost in their growth journey.” 

Petia Dimitrova, CEO and Chairperson of the Management Board of Postbank:

“Fora fifth consecutive year, we share the satisfaction of being part of Dare toScale – a project with ambitious goals and real achievements. The programme isconvincing proof of the power of entrepreneurial drive and the ability to turnthis energy into measurable results. After four successful editions, weappreciate even more the potential of young companies that create value for theeconomy because we can follow their impressive development and encourage themwith our experience and self-confidence as innovators. We believe this is theformula for successful synergy in the ecosystem and this motivates us to investin this model that reflects our vision of interconnectedness and growth.”

About Endeavor:

Endeavor is an international non-profit organization with offices in 40 locations that helps entrepreneurs with big ideas and businesses grow quickly internationally. Endeavor’s entrepreneurs have the potential to change their countries and the world – they can be the key to long-term economic growth, job creation and innovation. Endeavor provides the selected entrepreneurs with access to markets, capital and talent in its network of over 4,000 mentors and world-class investors. In Bulgaria, Endeavor launched in July 2015 with the aim of expanding the organization’s presence in Europe. To date, the Bulgarian office has supported 100+ entrepreneurs from 50+ companies in three programmes –Endeavor Global Program, Regional Support Program and Dare to Scale. These entrepreneurs have created over 2,300 jobs and generated revenues of BGN 320million in the past year. www.endeavor.bg

If your child is having extensive dental work done, the dentist may recommend putting them under general anesthesia. This can help your child stay still longer, ensuring a smooth procedure for both parties. However, there are a few things to know before agreeing to anesthesia.

Who can benefit from sedation methods in pediatric dentistry? 

Typically, the dentist recommends general anesthesia due to the patient’s young age, high level of  anxiety, or high volume of treatment required. Treatment performed under general anesthesia allows for a painless and non-traumatic visit to the dentist, which may allow the dentist to perform all necessary manipulations within a single visit.

Some children find it impossible to stay still in the dental chair for long periods of time if they do nothing but stare at the ceiling. This, combined with children’s natural reactions when feeling their teeth and mouth being pulled at, or the normal choking reflex, may sometimes result in a very problematic dental intervention. To make the procedure as smooth as possible, your dentist may recommend sedation.

For which procedures this is necessary?

If your child needs extensive dental work, such as crowns, root canal treatment or multiple fillings, the dentist may recommend that he or she be placed under general anesthesia to ensure that the procedures are performed quickly and efficiently.

How to prepare your child for sedation

The first thing you should do, in order to prepare yourself and your child for the sedation is to properly inform yourself. Talk to the dentist before the appointed day so you can understand what the process is going to be, why the procedure is necessary, who the team members involved will be and what equipment they have.

As for the actual preparation, your child should avoid eating for at least 8 hours before the scheduled procedure. This includes all foods and beverages that are not clear liquids. Make sure to discuss with the dentist in advance any possible medication therapy, not related to the process.

Should general anesthesia be performed in hospital or on an outpatient basis under the supervision of an anesthesiologist?

Dentists can perform general anesthesia in a dental office if they have appropriate equipment at their disposal. Some dental offices may offer general anesthesia, while others may not. They will perform the necessary procedures in a hospital or outpatient setting.

Is there a risk associated with general anesthesia and what are the side effects?

As with any medical intervention, there are certain risks, but this procedure is generally safe. Most side effects are temporary and some children may experience sore throat, confusion, lethargy, headache and nausea which should resolve completely within a few hours to a few days. Although some serious complications are possible, these are very rare.

What are the disadvantages of general anesthesia?

Although the advantages of general anesthesia far outweigh any disadvantages, the biggest concern is related to supporting the respiratory and cardiovascular function. Another disadvantage of general anesthesia is that the patient may need to be hospitalized or have surgery performed in an outpatient setting, where an anesthesiologist will administer and monitor the anesthesia, whereas a pediatric dentist can perform extensive dental work in one visit.

Are any investigations required prior to elective general anesthesia?

In most cases, no tests are required. However, if your child has a more serious health condition, your dentist may request lab tests or a further opinion from your child’s doctor.

What are the differences between general anesthesia and types of sedation?

In minimal sedation, anesthesia is administered to allow patients to respond normally to verbal commands. It reduces the fear of the dental visit, without disrupting the body’s basic functions.

Conscious or moderate sedation is a drug-induced suppression of consciousness that allows the patient to respond purposefully to verbal commands. The goal is to help him/her relax and avoid pain. The effect of the anesthetic wears off quite quickly, so specialists use it for shorter and less complex procedures.

Deep sedation is a suppression of consciousness, during which the patient cannot be awakened. He/she responds purposefully to repetitive or painful stimuli and may need assistance to maintain freely assessable airways.

General anesthesia is a drug-induced loss of consciousness, during which patients cannot be awakened even by painful stimuli. Usually, assistance is required to maintain passable airways and the procedure may result in impaired/altered cardiovascular function.

Is deep sedation the same as general anesthesia?

No. Deep sedation or deep anesthesia does not usually require assisted ventilation or cardiovascular function assistance as is the case with general anesthesia.

On April 2, the British Bulgarian Business Association took part in the Bulgaria Wants You event in London, which took place in the Royal Geographical Society and welcomed over 2500 visitors. BBBA, represented by Elena Yordanova – trade officer, spoke to many of them, promoting our membership base, and our programme First Job, where our members can post job vacancies.

BBBA Board member Genoveva Christova gave an inspiring speech at the event, promoting Bulgaria both as an innovation destination and a great next step in the careers of the ambitious Bulgarians. 

The same week, Elena attended the Bett Show, which is our long-time partner in promoting Bulgarian ed-tech companies to the UK market, and connecting them with high-potential partners. Last but not least, Elena met with our key stakeholder – London & Partners, the British Chambers of Commerce, Hyve Group, and many others. We would like to thank all our partners for their time and continued support!

BBBA is delighted to share with you that we were part of this year’s edition of the Forbes Business Awards. We would like to say special thank you to everyone who was not only involved in organizing the event but for continuously supporting and encouraging the business people in Bulgaria to thrive for more and more success stories. 

Last but not least, we would like to compliment everyone who were awarded and all the other finalists for the recognition. We are happy to congratulate our members and friends who were among the winners: 

SiteGround for being awarded “Employer of the year”, “Information technology company of the year” and “Socially responsible company of the year” 

DS Smith for being awarded “Green company of the year” and a nomination in “Production” and 

Nikolai Andreev from VIVACOM for being named “CEO of the year”

We firmly believe in leading by example and we hope that by rewarding the champions of bright ideas and entrepreneurship this will only serve as an inspiration and motivation for everyone else.

New Balkans Law Office (https://www.newbalkanslawoffice.com) regularly advises clients on therequirements for incorporation, registration and approval of AIFMs and AIFs. Wehave recently been through all of the administration steps for the set-up,registration and approval of AIFM and AIF entities within Bulgaria (https://www.newbalkanslawoffice.com/nblo-advised-on-the-registration-of-an-aifm-and-aif-in-bulgaria/). Our significant experience positionsus well to legally support AIFMs and AIFs in their day-to-day activities,concerning any of their commercial, investment and regulatory matters.

Defining an AlternativeInvestment Fund and Manager of Alternative Investment Funds

The Alternative Investment Fund (‘AIF’) and the Manager of Alternative InvestmentFunds (‘AIFM’) were introduced inthe European Union under Directive 2011/61/EU. The AIF is a collectiveinvestment undertaking where investors raise capital for investments under adefined investment policy. The AIFM is the legal person controlling the AIF’sactivities, in particular by managing its risk compliance and investmentportfolio. 

While AIFMs and AIFs are not consideredwidespread in Bulgaria, their significance will grow as they provide riskmitigation and a unique opportunity for many investors, including retailinvestors, to participate in projects collaboratively with significant value.

AIF’s Advantages

The main advantages of AIF include, butare not limited to, the following:

●       Simplicity – an AIF may be structured under a widevariety of forms (legal entities or other types of legal forms), allowinginvestors to choose the most appropriate structure for their investments.

●       Richness – compared to traditional investments,which encompass conventional investment strategies (e.g., public stocks, fixedincome, and cash),  an AIF may invest ina wide range of assets (e.g., real estate, art, digital assets, and manyothers) that fall outside of the mainstream investment world.

●       Transparencyand predictability– an AIF offers a high degree of legal certainty, as its regulatory structureneeds to be fully clear on its compliance, decision-making, types of assetssubject to investments and risk management.

●       Easyto configure -setting up an AIF is easier than other legal entities that publicly collectassets.

●       Harmonisation – an AIFM can market an AIF across theEU, allowing investments to be made by investors of different Member States (asthe legal framework relating to AIF’s marketing is unified at an EU level).

You can read more publications from the New Balkans Law Office at the links below.

• Bulgaria’s start-up visa: a route into EU markets
• Benefits of Shareholders’ Agreements
• How to prove my Source of Funds/Source of Wealth from crypto asset profits
• Investor protection before the European Court of Human Rights