In general, the receipt of royalties/licence fees does not constitute a qualifying trade. Consequently, holdings in a company whose business activities consist primarily in receiving royalties and licence fees are not qualifying holdings (see E3.248)1. There is however an exception if a substantial part of the royalties or licence fees are attributable to the exploitation of relevant intangible assets (see below for details).
Royalties
Royalties are received where a person owning rights in a property (such as copyright or design rights) exploits those rights by allowing another person to make use of that property.
For example, a publisher (A) who has rights over a book may exploit them by granting rights to another publisher (B) to publish a paperback edition in return for royalties based on sales. If the royalties represent a significant proportion of A's trade, that is not a qualifying trade2.
See
To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to Tolley+™ Research or register for a free trial
Web page updated on 17 Mar 2025 16:26