You Have the Patent. The Exemption Is Another Matter: The Qualified Expenditure Ratio

Most companies that obtain a patent while operating in a technopark announce it as an achievement and assume everything gets simpler on the tax side too. Yet where income arises from an intangible right tied to a patent, the exemption does not apply automatically and in full. A formula enters the picture.

This article explains that formula, and why companies notice it late.

The rule: income is multiplied by a ratio

The portion of income arising from intangible rights tied to a patent, or to a certificate functionally equivalent to a patent, that benefits from the exemption is calculated as follows:

The income from each project carried out in the zone is multiplied by the ratio of qualified expenditure to total expenditure for that project.

So it is not the whole of the income that is exempt but the part produced by that ratio. If the ratio comes out at 70%, 70% of the income is exempt and the rest falls under the normal regime.

This is the Turkish expression of what international tax literature calls the nexus approach: the tax benefit should be proportionate to the expenditure that actually created the value.

Which expenditure is “qualified”?

This is where the distinction starts.

Counts as qualified expenditure:

• Expenditure made by the taxpayer itself, directly connected with obtaining the intangible right
• The cost of benefits and services of the same nature obtained from unrelated parties

Does not count:

• R&D service fees obtained from related parties
• The cost of acquired intangible rights

The critical point: this second group does not enter qualified expenditure but does enter total expenditure. It enlarges the denominator without enlarging the numerator — it lowers the ratio.

What this means in practice

An example makes it clear. Say a software company developed a patent-linked product:

• Development carried out by its own team: 700 units
• R&D services bought from an independent university: 100 units
• R&D services bought from a group company: 200 units

Qualified expenditure: 700 + 100 = 800 Total expenditure: 700 + 100 + 200 = 1,000 Ratio: 80%

80% of the income from this product falls within the exemption; 20% does not. Had the same company bought that 200 units of service from an unrelated firm instead of a group company, the ratio would have been 100%.

The figures are illustrative; their purpose is to show the mechanism. But what they show is real: where you buy your R&D changes your tax outcome.

Why companies notice this late

I see three reasons.

One: the calculation is made per project. Not per company. So a separate expenditure pool has to be tracked for each intangible right. In a company without project accounting, that data cannot be produced after the fact.

Two: intra-group R&D looks natural. Buying services from the parent company’s R&D centre abroad is an entirely reasonable operational choice. Its effect on the tax side only becomes visible when the calculation is run — usually years after the patent was obtained and the structure was built.

Three: the patent comes up late. Expenditure is incurred over years and the patent is obtained afterwards. Answering “which expenditure was qualified” retrospectively is not possible if no record was kept.

What to do

Set up project-based expenditure tracking. Track expenditure separately for every development that might turn into an intangible right. This is a record-keeping discipline that has to start before the patent is obtained.

Put the related/unrelated distinction into the record itself. For every R&D service bought in, record whether the counterparty is a related party. Separating this later is far harder.

Factor tax into the structure as you build it. Buying services from a group R&D centre may be operationally right; just make the decision knowing how far it narrows the exemption on intangible income. A decision taken after seeing both sides is the one you do not regret.

Do not forget transfer pricing. The price of R&D services bought from a related party affects both the qualified expenditure ratio and the arm’s-length review. The two have to be assessed together — see transfer pricing in the glossary.

In short

For income from intangible rights tied to a patent, the exemption is capped by the ratio of qualified expenditure to total expenditure. R&D bought from related parties and acquired intangible rights lower that ratio. Because the calculation is made per project, the record-keeping has to be in place years before the patent is obtained.

This is the most technical corner of the technopark exemption, and one of the ones with the largest effect. For the general scope of the exemption see the scope article; you can book a call for your own project.

Sources

• Council of Ministers Decision No. 2017/10821 on the application of the exemption to intangible income — Official Gazette
• Law No. 4691 on Technology Development Zones — Legislation Information System
• Corporate Tax General Communiqués, sections on intangible income — Turkish Revenue Administration

---

This article reflects 2026 legislation and is provided for general information only; it is not legal or tax advice. The numerical example is illustrative of the mechanism and is not a real calculation.