Royalty payments in a group of companies – to whom and how much
Imagine a common situation: a trademark is registered in the ownership of one company or individual entrepreneur, and another uses it. In other words, it is necessary to formalize the use of a trademark in operating activities. The question arises – how to do this and what risks there are in solving this problem.
Who can pay for what, so that royalties are rightfully taken into account in expenses
Payment for the use of intellectual property (royalties) is a common phenomenon.
The main question arises in the economic feasibility of paying royalties, which leads to the need to confirm the feasibility of using the trademark in the economic activities of the company. This is a key criterion by which courts assess the appropriateness of accounting for royalties in taxpayer expenses. See, for example, Resolution of the AC of the Moscow District of 13.07.2016 N Ф05-9514 / 2016 in the case of N A40-153860 / 2015.
Recall that according to the norms of the Civil Code of the Russian Federation (Article 1484), the use of a trademark implies one or more of the following actions:
placement of TK on goods, when performing work and rendering services (on labels, packages of goods that are produced, offered for sale, sold, displayed at exhibitions and fairs, etc.);
on documentation related to the introduction of goods into civil circulation;
in proposals for the sale of goods, on the performance of work, on the provision of services, as well as in announcements, on signs and in advertising;
on the Internet, including the domain name and other addressing methods.
If we are talking about a situation where a group of companies consists of two entities – the Operating Company (produces and sells products) and the Asset Keeper, there are no difficulties in general. ХА transfers a mark under a license agreement, the operating company uses it in the labeling of goods manufactured and sold to it, confirms the appropriateness of costs.
Another thing is when the business is more complicated structured – and the operational link consists of several companies separated by functional features. For example, a trading company with the function of selling products and manufacturing. Both of them use the trademark. Both concluded licensing agreements. But since the activities of companies are functionally different, the question arises of the economic feasibility of paying royalties to each company.
So, a manufacturing company already marks products with a trademark in production, therefore, a trade company does not participate in placing a trademark on products. Can she pay for the trademark and account for such costs in income tax expenses?
Trademark and trademark: how to account?
For example, in case A40-39231 / 2013, the tax authority removed royalties paid by the company from the expenses, since the company was exclusively trading, did not participate in the labeling of goods at the factory, but sold products already marked with the trademark. The court did not support the tax authority, indicating that the trading company also used the trademark in the sale of products by:
“Use in the company name of the organization;
on organization forms;
in advertising materials: booklets, layouts, brochures, business cards, banners, etc.
for individualization with the participation of society in exhibitions and in the design of sample rooms;
in the manufacture of stands and displays for demonstration. ”
As you can see, the subject of a license agreement with a manufacturing and trading company cannot be the same. Each of them uses a trademark based on the main function – production or sale, which must be reflected in the contract.
Possible uses of TK
placement of TK on goods, when performing work and rendering services (on labels, packages of goods);
placing a mark on a site in a domain name;
use in documentation and brand name
Trading Company / Sales Agent
use in proposals for the sale of goods, on the performance of work, on the provision of services, as well as in announcements, on signs and in advertising, in advertising booklets, stands; documentation related to the sale of goods (contracts, forms, correspondence with customers, business cards);
use in a company name;
placing a mark on a site in a domain name
Trading and manufacturing company
all listed uses
Consequences of Using a Trademark Without a Fee
Often we meet groups of companies where everyone uses the trademark, but no one pays for it. In the concept of a single business, this seems convenient – there is no need to withdraw money from operating activities and save them on a subject with a trademark. At the same time, there seems to be no problem with the unreasonableness of accounting for royalties in expenses, as mentioned above. When asked why this particular company is the owner of a trademark, one can hear a common answer: “It has historically developed.”