Data licensing guide
Data licensing guide

Tax on data licence income: UK and US pointers

By Ade Molajo · Updated · How we check figures · Not tax advice · Not reviewed by an accountant

Quick answer

Licence income is taxable. For a UK company it's part of the profits subject to Corporation Tax. A licence supplied to a business customer outside the UK, such as a US programme, is generally outside the scope of UK VAT under HMRC's general rule for business-to-business services. A US payer may ask for Form W-8BEN-E. These are general pointers: take advice on your own position.

Taxable
licence income counts as profit
Outside scope
UK VAT, B2B to an overseas business (general rule)
W-8BEN-E
the IRS form a US payer may ask for
Ask
your accountant before you sign

Nobody covers this, so here are the general pointers. This is general information, not tax advice, and it hasn't been reviewed by an accountant.

Questions to take to your accountant about data licence income: how the income is taxed, VAT on a supply to an overseas business, US withholding paperwork, and timing of recognition.Tax: questions for your accountantHow is the licence income taxed for us?Is a supply to an overseas business outside UK VAT?Do we need a W-8BEN-E for a US payer?When do we recognise the income?Any effect on R&D or other reliefs?TrackImpact · trackimpact.io/data-licensing
General pointers, not tax advice. Take advice on your own position.

01Corporation Tax

For a UK company, licence income forms part of the profits subject to Corporation Tax. How it's classified, and when it's recognised (on signing, delivery or payment), depends on your circumstances and the contract.

02VAT on a licence to an overseas business

HMRC's VAT Notice 741A sets the general rule for business-to-business services: the supply is made where the customer belongs. So a supply to a business customer outside the UK, such as a US programme, is generally outside the scope of UK VAT. Keep evidence that the customer is a business outside the UK. There are exceptions (for example, use-and-enjoyment rules for some services), so check with your accountant.

03US withholding paperwork

A US company paying a non-US business may ask for IRS Form W-8BEN-E, which documents your status and any tax treaty position. Ask the programme what it needs before the first payment.

04Before you sign

Take the checklist above to your accountant, with the draft licence. The payment milestones in the contract affect timing.

05Check whether you're likely to match

Our free fit check asks about your size, location, records and tools, then shows which programmes you're likely to match. The programme decides.

06Questions people ask

Is data licensing income taxable?

Yes. For a UK company it forms part of the profits subject to Corporation Tax. How it's treated depends on your circumstances, so ask your accountant.

Do I charge VAT to a US programme?

Under HMRC's general rule for business-to-business services, the place of supply is where the customer belongs, so a supply to a US business is generally outside the scope of UK VAT. Check the exceptions with your accountant.

Sources

Check which programmes you’re likely to matchA few short questions, about a minute. Free, no sign-up. The programme decides who qualifies.trackimpact.io/data →