Germany and Britain agree on closing "patent box" loophole: officials

[BERLIN] Germany and Britain have reached an agreement on closing a loophole called "patent box" tax breaks, just days before a meeting of the leaders of the Group of Twenty (G20) in Brisbane, senior German government officials said on Monday.

Under the loophole, firms use tax breaks on profits generated from patented research to minimise tax bills.

Britain is willing to wind down its patent box rebates and join other OECD countries in only granting tax breaks for patents if they are tied to research and innovation at home, according to several government officials in Berlin.

The British-German deal could be a blueprint for a broader agreement at the G20 meeting in Brisbane on Friday, one of the German government officials said, calling the agreement with Britain a "sensible compromise".

A British treasury official said that Germany and Britain would present a joint proposal to the OECD forum on harmful tax practices with a view to getting an agreement by the G20 and OECD in January. The official said that the agreement with Germany addressed some of the British government's key concerns.

REUTERS