Taxes Consolidation Act 1997 section 141

Distributions out of income from patent royalties

Section 141 provided that certain distributions made by a company out of patent royalty income which had itself been exempt from tax under section 234 were also exempt in the hands of the shareholder, subject to anti-avoidance restrictions, until the regime was abolished by Finance Act 2011.

• Distributions out of "disregarded income" (exempt patent royalty income under section 234) were themselves exempt from income tax in the hands of the shareholder.
• The shareholder exemption applied only where the shares were "eligible shares" (fully paid ordinary shares with no preferential rights), or where the shareholder personally carried out the research leading to the patented invention.
• "Specified income" (patent royalties received from a connected manufacturing company) was exempt only up to the level of the company's aggregate R&D spend in the State over three years, unless Revenue accepted that the patent was for a radical innovation.
• The section was repealed by Finance Act 2011, section 26, in respect of distributions made on or after 24 November 2010.