Quebec Opening Patent Box: Tax Relief for Intellectual Property Investment

Advocates for tax relief for investment in intellectual property have won a major victory as Québec became the first province to announce implementation of a “patent box” incentive.  A “patent box” is a fiscal incentive that allows a company to identify revenue that comes from its patents on its corporate tax return (by checking the "patent box").  This income is then taxed at a lower rate.

As of January 1, 2017, Québec businesses that market a product that includes a patent-protected invention developed in the province will benefit from a lower tax rate on the revenue attributable to that patent.  Specifically, the tax rate on this portion of income will drop from 11.8% to 4%. This reduction will be in addition to any existing R&D tax credits offered by the province. 

Similar initiatives are planned in other provinces.  For example, on March 11, 2016, the Premier of Saskatchewan announced that if his government is re-elected, it will also implement a patent box incentive.

The relevant section of the Québec budget can be viewed here.