What means royalties and where it is convenient to receive them!
The dictionary defines royalties as follows: “Royalties are payments to owners of property for use of that property. Royalties often deal with payments for the right to use intellectual property, such as copyrights, patents, and trademarks.”.
But how do royalties work more specifically in the economic field? Royalty fees and payment amounts can be set in a variety of ways. For example, in a franchise situation, fees can be set as a fixed or variable percentage of gross sales. In many cases, there is a minimum royalty. Some common forms of royalty payments include:
- Royalties for specific products (like a book, a piece of music, a patented product, or a concert) are generally based on the number of units sold.1
- Royalties for oil, gas, and mineral properties may be based on either revenue or on units, such as barrels of oil or tons of coal.
A variable percentage is often used for newly created IP. In this case, the royalty percentage might be small in the beginning as sales are low. Then, as the sales increase, the royalty percentage might increase to a maximum amount.
Some royalties are paid for public licenses. The Copyright Office collects royalty fees from:
- Cable operators retransmitting TV and radio broadcasts2
- Satellite carriers retransmitting network and nonnetwork signals
- Importers or manufacturers distributing digital audio recording products
If you want to open a LTD in Bosnia or Montenegro, go to our page:
However, royalties are not taxed in the same way in all countries. Below is a list of the taxes on royalties income in the countries we deal with:
Bosnia and Montenegro have the lowest taxation regarding royalties. Furthermore, Bosnia does not tax dividends and Montenegro has a 9% profit tax.
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