Royalties are a payment as income from property and not a payment for the operation of goods. Payments for expenses incurred in connection with the use of another entity's proprietary asset can only be covered by property income derived from the use of this asset. However, expenses incurred in the manufacture of a patented product, the use of a patented method, or the use of a trademark include technical or managerial services, and therefore should be recorded as a production cost of a product. The use of proprietary rights is limited, and the enterprise must use these economic rights within the scope permitted by the proprietor, and the user is penalized for exceeding the scope and duration.
Royalties include:
1) Intellectual property rights identified in the various forms of literature and art, texts and information relating to industrial, commercial and scientific experiments that constitute rights and property, whether or not they have been or must be registered with the prescribed authorities. It should also be noted that this definition includes both payments made where there is a license and compensation paid for infringement.
2) Income derived from the use of, or the right to use, industrial, commercial, or scientific equipment, i.e., equipment rentals.
③ Income derived from the use of, or the right to use, information concerning industrial, commercial, or scientific experience.
4) Income derived from services rendered by a service provider whose services result in an outcome that falls within the definition of royalties, and where the service provider retains ownership of the outcome and the service recipient has only the right to use the outcome.
5. In the process of transferring or licensing the right to use the proprietary technology, the technology licensor sends personnel to provide support, guidance and other services for the application of the technology and receives service fees (whether separately or included in the price of the technology), which do not constitute income from services of, or not attributable to, the permanent establishment.
Legal Basis:
Regulations on the Implementation of the Individual Income Tax Law of the People's Republic of China
Article 6: Scope of Individual Income under the Individual Income Tax Law:
(1) Income from salaries and wages refers to the salaries, wages, bonuses, end-of-year bonuses, allowances, bonuses, and allowances received by an individual as a result of holding an office or employment. salary, bonuses, year-end bonuses, labor bonuses, allowances, subsidies, and other income related to employment or employment.
(2) Income from remuneration for labor services refers to the income derived from the performance of labor services by an individual, including design, decoration, installation, drafting, laboratory, testing, medical, legal, accounting, consulting, lecturing, translating, reviewing, painting, calligraphy, sculpture, film and television, audio-recordings, video-recordings, performances, performances, advertisements, exhibitions, technical services, referral services, brokering services, agency services, as well as other income derived from labor services. income.
(3) Income from remuneration for manuscripts refers to the income obtained by an individual for the publication and dissemination of his/her works in the form of books, newspapers and magazines.
(4) Royalty income refers to the income obtained by an individual by providing the right to use patent rights, trademark rights, copyrights, non-patented technologies and other franchises; the income obtained by providing the right to use copyrights is excluded from the income from manuscripts.
(5) Business income refers to:
1. Income derived from production and business activities of individual industrial and commercial households, and income derived from the production and business activities of sole proprietorships and partnerships registered within the country by investors of sole proprietorships and partners of partnerships;
2. Income derived from the running of schools, medical treatment, counseling, and other remunerated services;
3. Income derived from the provision of patent rights, trademark rights, copyrights, non-patented technologies, and other franchises; income derived from the provision of the right to use copyrights is not included in the income from manuscripts. Income from contracting, leasing, subcontracting and subletting to enterprises and institutions;
4. Income from other production and business activities.
(6) interest, dividend and bonus income, refers to the interest, dividend and bonus income obtained by an individual who owns debt, equity and so on.
(7) Income from property leasing refers to the income obtained by an individual from the leasing of real estate, machinery and equipment, vehicles and vessels, and other property.
(h) Income from property transfer refers to the income derived from the transfer of securities, equity, shares in partnerships, real estate, machinery and equipment, vehicles and vessels, and other property.
(ix) Incidental income refers to income from winning prizes, jackpots, lotteries and other incidental income.
If it is difficult to define the taxable income items of the income obtained by an individual, the competent tax authorities of the State Council shall determine them.