In the article, UK solicitor Izaz Ali outlines the importance of using escrow as a protection for electronic IP as well as a sound business development tool.
Izaz mentioned in his article that ¨Escrow comes in to play when two parties hand over something valuable (money, contracts, software etc) to a trusted third party (who acts as the agent) to release the valuable item when certain conditions are met¨
From an international tax perspective, placing IP on escrow under certain circumstances, and in an appropriated jurisdiction may provide an advantageous tax planning tool for transactions involving software or electronic IP.
Using escrow for tax planning purposes involves careful tax planning and legal drafting of the arrangements between the parties and the escrow agent.
Any tax strategy must consider tax residence issues for the parties, escrow jurisdiction, contractual drafting and the appropriate timing for execution and completion.