1. Positive answer
The time for recognizing royalties income depends on the situation. Royalties for the provision of equipment and other tangible assets are recognized when the assets are delivered or ownership of the assets is transferred; royalties for the provision of initial and subsequent services are recognized when the services are provided.
2. Detailed analysis
Royalty income refers to a taxable income subject to my country’s personal income adjustment tax. It refers to the income obtained by units and individuals from providing or transferring various patent rights, know-how, copyrights, trademark rights, etc. to others for use. Without permission, no unit or individual may use the concession rights owned by units or individuals to seek benefits for themselves. They can only be used if the concession owner agrees to transfer or allow use and pays a certain usage fee.
3. What are the ways to earn royalties?
The first is to transfer ownership, and the second is to transfer the right to use. Financially speaking, whether it is transferring its ownership or transferring its use rights, the income obtained should be treated as sales income of the enterprise.