Royalty income refers to the income obtained by enterprises from providing patents, non-patented technologies, trademarks, copyrights and other franchise rights. The recognition of royalty income shall be realized when the franchise has been transferred, the price has been received or the evidence of collecting the price has been obtained. Royalty income shall be confirmed according to the date when the franchisee pays the royalties in the Contract. According to the relevant laws and regulations, the franchise fee for providing tangible assets such as equipment is recognized when the assets are delivered or the ownership of the assets is transferred; Royalties for providing initial and follow-up services are recognized when providing services. There are two ways to earn royalties, one is to transfer ownership and the other is to transfer the right to use. Financially, whether the ownership or the right to use is transferred, the income obtained should be treated as the sales income (other business income) of the enterprise.
Royalties include the following:
1, which should be related to the use or use right of the following rights; Various forms of literature and art that constitute rights and property, as well as intellectual property rights defined in words and information related to industrial, commercial and scientific experiments, regardless of whether these rights have been or must be registered in the prescribed departments. It should also be noted that this definition includes both money paid with permission and compensation paid for infringement;
2. Income from using or having the right to use industrial, commercial and scientific equipment, that is, equipment rent;
3. Income obtained by using or having the right to use information about industrial, commercial and scientific experience;
4. The service result provided by the service provider falls within the definition of royalty, and the service provider still retains the ownership of the result, and the service recipient only has the right to use the result and the income generated by these services;
5. In the process of transferring or licensing the right to use the know-how, the technology licensor sends personnel to provide relevant support, guidance and other services for the application of the technology, and the service fees collected (whether collected separately or included in the technology price) do not constitute the service income of the permanent establishment or do not belong to the permanent establishment.
To sum up, royalties refer to the fees paid for the use of patents, trademarks, copyrights or similar exclusive rights owned by other economic units. It is a kind of payment as property income, and it does not belong to the payment of commodity management. The expenses incurred in using the exclusive assets of other units can only be made up by the property income obtained from using the assets. However, the expenses incurred in manufacturing patented products, patented methods or using trademarks include technical or management services, so they should be recorded as the production expenses of products. The use of exclusive rights is limited, and enterprises should use these economic rights within the scope permitted by the exclusive owner. If the scope and time limit are exceeded, the user will be punished.
Legal basis:
Article 20 of the Regulations for the Implementation of the Enterprise Income Tax Law of People's Republic of China (PRC).
The income from royalties mentioned in Item (7) of Article 6 of the Enterprise Income Tax Law refers to the income obtained by enterprises from providing patents, non-patented technologies, trademarks, copyrights and other franchise rights.
Royalty income shall be recognized according to the date when the concessionaire pays the royalties as agreed in the contract.
Article 6 of the Enterprise Income Tax Law of People's Republic of China (PRC)
The income obtained by enterprises from various channels in monetary and non-monetary forms is the total income. Including:
(1) Revenue from the sale of commodities;
(2) Income from providing labor services;
(3) Income from property transfer;
(four) dividends, bonuses and other equity investment income;
(5) Interest income;
(6) Rental income;
(7) Royalty income;
(8) Receiving donation income;
(9) Other income.