The Central Interregional Administration of the State Tax Service of Ukraine provided a detailed explanation of what exactly is considered “royalty” and the payment of the corresponding taxes on such payments.

The tax department emphasized that royalty is any payment, including a payment paid by a user of copyright objects and (or) related rights in favor of collective management organizations, received as a reward for using or granting the right to use objects. the subject of intellectual property rights, namely to any literary works, works of art or science, including computer programs, other recordings on information carriers, video or audio cassettes, cinematographic films or films for radio or television broadcasting, transmissions (programs ) of broadcasting organizations, other audiovisual works, any patent-protected rights, any registered trademarks (goods and service marks), intellectual property rights to design, secret drawing, model, formula, process, intellectual property rights to information regarding industrial, commercial or scientific experience (know-how).

Thus, are not considered royalty payments received:

– as a reward for the use of a computer program, if the terms of use are limited to the functional purpose of such a program and its reproduction is limited to the number of copies necessary for such use (“end consumer” use);

– for the purchase of copies (copies, instances) of intellectual property objects, including in electronic form, for use according to their functional purpose for final consumption or for the resale of such a copy (copy, instance);

– for the acquisition of things (including media) in which the objects of intellectual property rights defined in the first paragraph of this subsection are embodied or contained, for the use, possession, and/or disposal of a person;

– for the transfer of rights to objects of intellectual property rights, if the terms of the transfer of rights to the object of intellectual property rights entitle the person who receives such rights to sell or alienate in another way the intellectual property right or to make public (publicize) secret drawings, models, formulas, processes, intellectual property rights to information about the industrial, commercial or scientific experience (know-how), except for cases when such publication (disclosure) is mandatory according to the legislation of Ukraine;

– for the transfer of the right to distribute copies of software products without the right to reproduce them or if their reproduction is limited to use by the end user.