Have you ever thought about personally registering the trademark and receiving royalties from your company? The benefit of trademark registration is not only

Have you ever thought about personally registering the trademark and receiving royalties from your company? The benefit of trademark registration is not only legal protection and corporate identity, but a value not to be underestimated is the presence of royalties. 

Royalties are fees paid for the use of intellectual works, industrial patents, trademarks, and other intellectual properties. 

But what does it exactly mean and how do they work? Let's find out together! Royalties are periodic payments made by one party (the licensee) to another (the licensor) for the use of an intangible asset. These assets can include, as mentioned, literary, artistic, scientific works, patents, trademarks, and know-how. 

The relationship must be fair, for an LLC with a turnover of 300 thousand euros, considering that they are generally calculated as a percentage of the turnover, this percentage can vary widely, but typically ranges between 1% and 10% of the turnover.  Calculation Example: If the agreement provides for a 5% royalty on turnover, the company with a turnover of 300 thousand euros would pay 15 thousand euros. But we must not forget that everything must be evaluated, the company should not suffer from this choice which should be made to facilitate the withdrawal of money from the company without going through payroll/contributions to be paid and can lower the company's profit without burdening the company. 

Therefore, the LLC and the person granting the trademark, if they have interests in the company and are not an outsider, obviously, must think about the benefit of both and not just their own.
So, remember: if the parties involved in the trademark licensing are all residents in Italy, the taxation of royalties will follow the ordinary rules provided by the Italian tax system. Therefore, these earnings will go into your personal income tax return.

PROS AND CONS

Pros of Royalties Income 

1. Source of Passive Income: Royalties represent a source of passive income, as once the licensing agreement is established, the beneficiary continues to receive periodic payments without having to perform additional activities. 

2. Valuation of Intellectual Assets:  Royalties allow the monetization of intellectual assets such as patents, trademarks, intellectual works, and know-how, which might otherwise remain unused. 

3. Market Expansion: Licensing a trademark or patent can facilitate expansion into new markets without directly incurring the costs and risks associated with expansion.

4. Legal Protection: The registration and licensing of a trademark or patent offer legal protection against unauthorized use by third parties.

5. Increase in Company Value: Intellectual assets that generate royalties can increase the overall value of the company, making it more attractive to investors and business partners.

6. Possible additional income channel: If you are an administrator/shareholder of the LLC that takes the trademark under license, the benefit is having an additional income channel for the company subject to fewer costs for the LLC than the classic ones.

Cons of Royalties Income 

1. High Taxation for NON-RESIDENTS: Royalties paid to non-residents are subject to a 30% withholding tax on the taxable part of their amount (article 25, paragraph 4, of D.P.R. 600/1973). Even for residents, royalties are taxed as part of the total income. 

2. Registration and Protection Costs: The registration and protection of trademarks, patents, and other intellectual assets can involve significant costs, as they include legal and registration fees.

Contact us to find out if it could be a good idea for your company, it is an excellent solution but MUST be a guided choice. 

Remember, with Studio Bellomo the advice of our professionals is always included in the services, so that the client can discuss and resolve all doubts in total serenity and discussion.