Royalty income refers to a taxable income of China's personal income adjustment tax, that is, the income obtained by units and individuals from providing or transferring various patents, proprietary technologies, copyrights and trademark rights for others to use. Without permission, no unit or individual may use the franchise rights owned by units and individuals to seek benefits for services, and can only use them after the franchisee agrees to transfer or allow the use and pay a certain royalty.
Therefore, the royalty income is the exclusive income of the franchisor and an integral part of the taxable income of units and individuals.
legal ground
Regulations of People's Republic of China (PRC) Municipality on the Implementation of Enterprise Income Tax Law
Article 20 The term "income from royalties" as mentioned in Item (7) of Article 6 of the Enterprise Income Tax Law refers to the income obtained by enterprises from providing the right to use patents, non-patented technologies, trademarks, copyrights and other franchises. Royalty income shall be recognized according to the date when the concessionaire pays the royalties as agreed in the contract.
Forty-ninth management fees paid between enterprises, rents and royalties paid between internal operating institutions of enterprises, and interest paid between internal operating institutions of non-bank enterprises shall not be deducted.
Article 6 The income mentioned in Article 3 of the Enterprise Income Tax Law includes income from selling goods, providing labor services, transferring property, dividends and other equity investments, interest income, rental income, royalties, donations and other income.
Article 7 The income from sources inside and outside China mentioned in Article 3 of the Enterprise Income Tax Law shall be determined according to the following principles:
(a) the income from the sale of goods shall be determined according to the place where the trading activities take place;
(2) The income from providing labor services shall be determined according to the place where the labor services occur;
(3) Income from property transfer, income from real estate transfer shall be determined according to the location of real estate, income from movable property transfer shall be determined according to the location of the enterprise, institution or place where movable property is transferred, and income from equity investment assets transfer shall be determined according to the location of the invested enterprise;
(four) dividends, bonuses and other equity investment income, according to the location of income distribution enterprises to determine;
(5) Income from interest, rent and royalties shall be determined according to the location of the enterprise, institution or place that undertakes or pays the income, or according to the domicile of the individual who undertakes or pays the income;
(six) other income determined by the competent departments of finance and taxation of the State Council.