Holding patents, trademarks, source code, trade secrets and other intellectual property in a separate holding company, can be a powerful asset protection strategy and have other ancillary benefits. If properly set up, a holding company can protect IP from liabilities that arise in your operating business. It can also make it easier to license or sell IP, as potential licensees or buyers have more security that the assets are not at risk of being impacted by existing or future legal or financial issues related to the operating business. In addition, depending on the structure and jurisdiction of the holding company, there may be tax advantages. For example, by holding IP assets in states like Nevada, that have no corporate income tax, you can potentially avoid paying corporate income tax on third-party licensing royalties. Large companies such as Apple, have established IP Holding company subsidiaries in various countries, known for their favourable tax regimes, through which they generate third-party licensing revenue with minimized tax liability on the income generated. These strategies can be complicated and have potential legal risks. It is important to work with an attorney and tax specialists to ensure that the structure is legally sound and complies with applicable tax laws.
The information contained in this article is strictly for educational purposes and is not intended to be legal or tax advice or to be relied upon by anyone without doing their own research, and consulting with legal and tax advisors.