Licence agreements and royalties in Spain: licence types, rates and how to calculate royalties

A licence agreement in Spain grants the right to use a trademark, patent, software or know-how without transferring ownership.

Payment is an upfront fee, a royalty on the licensee’s sales or a fixed amount; typical royalties are 3–10% of revenue.

When paying a foreign licensor, the Spanish company withholds 24%, 19% or the lower tax-treaty rate.

Below: what can be licensed under Spanish law and which types of licence exist, what the payment is made of, which royalty rates are seen across industries, how royalties are calculated and tested, how the intellectual property itself is valued, which taxes arise for licensee and licensor, and what changes when the parties are related.

The contract itself is drafted and reviewed by an IP lawyer; this article is about the money: how much to pay, how to justify it and what is left after tax.

What a licence agreement and a royalty are

Under a licence agreement (contrato de licencia), the rights holder, the licensor, allows the other party, the licensee, to use the asset within agreed limits: territory, products or services, term.

Ownership stays with the licensor. That is what distinguishes a licence from an assignment (cesión or transmisión), after which the asset has a new owner.

A royalty (regalía, canon) is the recurring fee for that use, most often a percentage of the licensee’s sales.

In Spain, each type of right has its own statute, and each sets rules for licences:

• Trademarks. The Trademark Act 17/2001 allows a mark to be licensed for all or some goods and services and for all or part of Spain, on an exclusive or non-exclusive basis (art. 48). Unless the contract says otherwise, the licence is non-exclusive, and the licensee may not assign it or grant sublicences. Against third parties acting in good faith, the licence is effective only once entered in the Trademark Register (art. 46).
• Patents. The Patents Act 24/2015 works the same way: a licence may be exclusive or non-exclusive, with non-exclusive as the default (art. 83), and it is effective against third parties from entry in the Patent Register (art. 79). Unless agreed otherwise, the licensor must provide the technical knowledge needed to work the invention (art. 84). An owner who publicly offers a licence to anyone interested (licencia de pleno derecho) pays half the annual renewal fees (art. 88).
• Copyright and software. Under the Intellectual Property Act (TRLPI), any transfer of rights must be in writing (art. 45). If the contract states no term, the rights are transferred for five years; if it states no territory, only for the country where it was signed (art. 43). By default the author receives a share of revenue, and a lump sum is allowed only in the cases the Act lists (art. 46). An exclusive grant must be expressly called exclusive (art. 48).
• Know-how. The Trade Secrets Act 1/2019 allows a trade secret to be licensed with whatever scope, territory and term the parties agree; the default is non-exclusive, and the licensee must protect the secret from disclosure (art. 6).

Types of licence

Financially, the label matters less than what the licensee actually gets: whether the licensor can still serve the same market itself and let others in.

The narrower the rights, the lower the justified rate, and vice versa.

Competition law applies too. Since 1 May 2026 the EU has had a new Technology Transfer Block Exemption Regulation, Regulation (EU) 2026/877, replacing Regulation 316/2014.

Territorial, customer and price restrictions in a technology licence are checked against it by the lawyer.

What the licence fee is made of

The payment almost always has several parts. Each one should be valued before signing, not after the first royalty report.

• Upfront fee (pago inicial): a one-off sum on signing or technology transfer. It covers the licensor’s transfer costs and the risk that sales never take off.
• Running royalties: a percentage of net sales of the licensed product. The key question is the definition of net sales: which discounts, returns, taxes and freight are deducted, and whether sales to affiliates are counted at market price.
• Per-unit royalties: a fixed amount per unit or tonne sold. This protects the licensor from price wars but gives it no upside from higher prices.
• Tiered royalties: the rate steps up or down with sales volume.
• Minimum royalties: a guaranteed annual payment, especially under an exclusive licence. For the licensee it is a fixed cost to be built into the financial model as such.
• Milestone payments: sums due on product approval, commercial launch or a sales threshold; common in pharma and technology.

In a sample of technology licences analysed by IP Research in les Nouvelles in 2009, 93% of deals paid royalties as a percentage of sales and 7% per unit; only 20% included an upfront fee.

How each part of the fee hits the licensee’s cash flow is worked out in a financial model: fixed payments raise the break-even point, percentage royalties reduce the margin.

Royalty rates by industry: benchmarks

There are no official Spanish statistics on royalty rates, since licences are confidential.

Benchmarks come from databases of published licence agreements, mostly those disclosed in US company filings.

They are a starting point for negotiation, not a justification for a tax audit.

Industries: RoyaltyStat database statistics published in the IAM Yearbook 2017, rates as a percentage of the licensee’s revenue.

Franchises: our review of 52 Spanish franchise networks with percentage royalties in the mundoFranquicia catalogue (October 2026), covered in more detail in Franchise for sale in Spain; an advertising levy of around 1% usually comes on top.

Two conclusions from the same data.

Across 3,322 pharmaceutical patent licences in RoyaltyStat, the median is 4.6% for non-exclusive and 5% for exclusive licences, so exclusivity on its own barely moves the rate; tiered royalties have a higher median, 8.5% versus 5%.

In the IP Research sample, 65% of rates were 5% or less and 90% were 10% or less; rates above 15% were rare, mostly in gaming and entertainment.

A double-digit rate is a reason to check whether it bundles services, supplies or support that are not really royalties.

How to calculate a royalty

A rate is justified with several methods that are cross-checked.

If the results differ by a factor of two, the error is usually in the assumptions about how much profit the licensed asset itself generates.

The 25% rule

The licensor receives about a quarter of the operating profit the licensee earns on the licensed product: with a 20% EBIT margin that is a 5% royalty on sales.

The rule is handy for a first estimate but ignores how much of the profit comes from the asset and how much from the licensee’s manufacturing, sales and brand.

In the United States, the Federal Circuit in Uniloc v.

Microsoft (2011) held the 25% rule unfit for calculating damages, and the OECD Transfer Pricing Guidelines state that a rule of thumb cannot evidence an arm’s length price, including the split of income between a licensor and a licensee (paras 2.10 and 6.144).

Comparable licences

Find agreements on similar assets in the same industry with similar rights (exclusivity, territory, term, development stage) and take the range of their rates.

This is the comparable uncontrolled price method, the main one for tax purposes.

The sources are commercial licence databases; the broad industry medians above are not comparable agreements.

Income approach and relief from royalty

Estimate the profit the asset adds for the licensee beyond the normal return on its own functions, and split that uplift.

The mirror question is relief from royalty: how much the company would save by owning the asset rather than paying for it.

The same method is used to value the asset itself, as described below.

Percentage or fixed fee

A percentage shares the risk: if sales disappoint, the payment is small. A fixed fee suits a licensee confident of growth, and a licensor that does not trust the reports. The break-even point is the fixed fee divided by the rate.

Illustrative example: a licensee with €2–10 million in revenue

A Spanish SL licenses technology from an unrelated foreign company. The royalty is 5% of net sales, and the product’s operating margin before royalties is 20%. All figures are illustrative and calculated with a script.

What the numbers show. A 5% rate at a 20% margin is exactly the 25% rule; at a 12% product margin the same rate takes 42% of the profit and should be renegotiated.

Withholding tax is not a cost for the licensee but part of the payment to the licensor, but only if the contract says the royalty includes taxes.

A clause that the licensor “receives the amount free of deductions” turns the tax into the licensee’s cost: at 24% it pays an extra 31.6% of the royalty.

A €200,000 fixed fee equals 5% at €4 million of revenue: for a company with €2 million in sales it is twice as expensive as the percentage, for one with €10 million it is 2.5 times cheaper.

Valuing intellectual property

The value of a trademark, patent or software is needed when selling a business, contributing the asset to share capital, transferring it within a group, allocating a purchase price and raising finance.

There are three main approaches: cost (what it would take to recreate), market (prices in similar deals) and income.

For licensable assets the usual income method is relief from royalty: value equals the present value of the after-tax royalties the owner avoids paying because it owns the asset.

An illustration: the technology supports a product with €5 million of revenue in year one, growing 5% a year; the market royalty is 5%, corporate tax 25%, useful life 10 years and the discount rate 14%.

After-tax royalties are €187,500 in year one and €290,874 in year ten. Their present value is about €1.25 million.

Sensitivity is high: a discount rate of 12% or 16% gives €1.35 million or €1.16 million, a royalty of 4% or 6% gives €1.0 million or €1.5 million.

So the royalty rate in a valuation needs the same support as in a contract, and the discount rate should reflect the risk of the asset, not of the company as a whole.

Discounting is explained in NPV: net present value, and an independent valuation of an asset or business can be ordered on the business valuation page.

Taxes on royalties in Spain

Withholding tax on payments to non-residents

Royalties paid by a Spanish company are Spanish-source income of the non-resident; they include payments for trademarks, patents, designs, software, know-how, copyright and equipment (art. 13 of the Non-Resident Income Tax Act, TRLIRNR).

Tax is charged on the gross amount, with no deduction for expenses (art. 24.1).

The rate is 24%, or 19% for residents of the EU and of EEA countries with effective tax information exchange (art. 25.1.a); EU residents may deduct expenses directly linked to that income (art. 24.6).

Two instruments reduce the rate:

• Double tax treaties. According to the Spanish Tax Agency (AEAT), the cap on royalties in Spain’s treaties is normally 5–10%, and some treaties set zero: per the PwC summary as of 30 June 2026, 0% with Germany, the United Kingdom, the United States and the UAE, 0 or 5% with Switzerland, 5% with Portugal, 6% with the Netherlands and 10% with Luxembourg. To apply the reduced rate, the licensee obtains in advance a tax residence certificate from the licensor’s country and checks that the licensor is the beneficial owner of the income rather than a conduit.
• The EU Interest and Royalties Directive. Royalties between “associated” companies in different EU Member States are exempt in Spain if one holds at least 25% of the other’s capital (or a third company holds 25% of both) for at least one year and both are subject to corporate tax (art. 14.1.m TRLIRNR).

The licensee pays the withheld tax with Form 216, quarterly within the first 20 days of April, July, October and January, or monthly for large companies, and files the annual summary Form 296.

If the licensee fails to withhold, the tax is collected from the licensee itself.

Whether payments for standard software and cloud services are royalties or service fees should be checked separately with a tax adviser.

VAT on royalties

Granting rights to trademarks, patents, licences and other intellectual property is a service for VAT purposes.

When the recipient is a Spanish business, the service is taxed in Spain (art. 69.Uno.1º of the VAT Act, LIVA), and if the licensor is not established in Spain, the licensee self-assesses VAT at 21% (reverse charge, art. 84.Uno.2º.a).

A licensee with full deduction rights deducts the same amount in the same return, so the cash effect is nil, but the entry must be there.

A Spanish licensor granting a licence to a foreign business does not charge Spanish VAT.

Corporate tax and the Patent Box

For the licensee, an arm’s length royalty is an ordinary deductible expense. Spain’s general corporate tax rate is 25%. For a Spanish licensor there is the Patent Box.

Under art. 23 of the Corporate Income Tax Act (LIS), net income from licensing patents, utility models, supplementary protection certificates and protected designs derived from R&D, and registered advanced software, is reduced by 60% multiplied by a ratio: the numerator is the expenses of creating the asset incurred by the company itself and through unrelated subcontractors, increased by 30%; the denominator is all expenses of creating the asset, including work by related companies and acquisition of the asset.

Trademarks, copyright, ordinary software and know-how do not qualify.

The licensee must use the rights in its business and must not be in a tax haven; income and expenses must be tracked per asset, and qualification and valuation can be agreed with the tax authority in advance (acuerdo previo).

An illustration: a Spanish SL earns €500,000 in royalties on a patent, with €100,000 of direct costs, so net income is €400,000.

If the invention was developed in-house, the ratio is 1, income is reduced by 60%, and tax is €40,000 instead of €100,000, an effective rate of 10%.

If €600,000 of the €1,000,000 of development costs went to a related company, the ratio is 0.52, the reduction 31.2%, tax €68,800 and the effective rate 17.2%.

Where to hold the rights within a group is decided together with the holding structure.

Transfer pricing

If licensor and licensee are related, the tax authority checks that the royalty is at arm’s length.

Under art. 18 LIS, transactions between related parties are valued at market value; related parties include, for example, a company and a shareholder with 25% or more.

Documentation follows the regulations; a simplified version is allowed for turnover below €45 million, but never for transactions involving intangible assets; no documentation is required if transactions with one related party do not exceed €250,000 a year.

Failure to provide documentation is penalised at €1,000 per item and €10,000 per data set, capped at 10% of the transactions and 1% of turnover; where the tax authority also makes an adjustment, the penalty is 15% of the adjustment.

In practice, an owner who holds a trademark or patent personally or in a foreign company and charges royalties to a Spanish SL must justify the rate with comparable licences or a profit analysis, not “market practice”.

It is also checked whether the rights holder creates real value, by funding development and controlling risks, or whether the rights sit in a company with no staff.

Without that, the tax authority may deny the licensee’s deduction and still require withholding on the payment.

What to check before signing: common mistakes

• No definition of net sales. Disputes over the royalty base cost more than disputes over the rate. The contract should list what is deducted and how sales to affiliates are counted.
• Tax clause not agreed. Who bears the withholding, and what happens if the treaty rate changes or the licensor does not provide a certificate.
• Licence not registered. For trademarks and patents this is about protection against third parties, and when buying a company it is the first line of due diligence: who really owns the rights the revenue depends on.
• Minimum royalties missing from the model. A guaranteed payment with revenue below plan can wipe out the product’s entire profit.
• Bundled payment. If one sum covers royalties, training, support and supplies, the tax authority will split it itself, not necessarily in your favour. For the Patent Box, a separate price is a legal requirement.
• An “industry rate” in an intra-group licence. An industry median does not hold up in an audit: comparable agreements or a calculation are needed.
• No audit right for the licensor over royalty reports, or no exit right for the licensee if the asset loses protection.

Frequently asked questions

What is a royalty in simple terms?

A royalty is a recurring payment to the owner of a trademark, patent, software or know-how for the right to use it. It is usually a percentage of revenue from the product that uses the licence, less often a fixed amount per unit or per year.

What is a typical royalty percentage?

In published licence databases the median is around 5% of revenue in pharmaceuticals, medical devices, consumer products and telecoms, and around 10% in software. 90% of rates are 10% or less. In Spanish franchises the median royalty is 5%, plus about 1% for advertising.

What is the difference between an exclusive and a non-exclusive licence?

Under an exclusive licence, the licensor grants no other licences for the same territory and field and uses the asset itself only if the contract reserves that right. Under a non-exclusive licence there can be any number of licensees. In Spain, unless the contract says otherwise, a licence is non-exclusive.

What is an upfront fee in a licence agreement?

It is a one-off amount the licensee pays on signing or on technology transfer, regardless of future sales. It is often combined with running royalties: the upfront fee covers the licensor’s transfer costs, the royalties pay for ongoing use.

How do you calculate a royalty rate?

The rate is cross-checked with several methods: comparable licences on similar assets, the share of profit the asset itself generates, and, as a rough check, the 25% rule, a quarter of the operating profit on the licensed product. For related-party transactions, the 25% rule is not accepted as justification.

What is the royalty withholding tax rate in Spain?

The general rate is 24% on the gross amount, or 19% for EU and EEA residents. Under a double tax treaty it is usually 5–10%, and zero under the treaties with Germany, the United Kingdom and the United States. Royalties between associated EU companies with a 25% holding are exempt under the Directive.

Is VAT charged on royalties in Spain?

Yes. When a Spanish company pays a foreign licensor, it self-assesses 21% VAT under the reverse charge and deducts it in the same return. When a Spanish licensor grants a licence to a foreign business, no Spanish VAT is charged.

What is the Spanish Patent Box?

It is the relief under art. 23 of the Corporate Income Tax Act: net income from licensing patents, utility models, designs and registered advanced software is reduced by up to 60%. For in-house development the effective tax rate falls from 25% to 10%. Trademarks do not qualify.

Key points on licence agreements and royalties in Spain

• A licence grants the right to use a trademark, patent, software or know-how without a transfer of ownership; by default it is non-exclusive, and for trademarks and patents it is effective against third parties once registered.
• Payment can be an upfront fee, a percentage royalty, a per-unit royalty, minimum royalties and milestones, all of which belong in the financial model.
• Benchmark rates have a median of around 5% of revenue, around 10% in software; for related parties only comparable licences or a profit analysis justify the rate, not the 25% rule.
• Payments to non-residents bear 24% or 19% withholding, usually 5–10% or zero under a treaty; the licensee self-assesses 21% VAT and deducts it at once.
• A Spanish patent licensor using the Patent Box pays from 10% on net income instead of 25%; trademarks do not qualify.

Sources

• Ley 17/2001 de Marcas, arts. 46 and 48 — BOE; Ley 24/2015 de Patentes, arts. 79, 83, 84, 88 — BOE; TRLPI (Royal Legislative Decree 1/1996), arts. 43–50 — BOE; Ley 1/2019 de Secretos Empresariales, art. 6 — BOE.
• Regulation (EU) 2026/877 on technology transfer agreements — European Commission.
• TRLIRNR (Royal Legislative Decree 5/2004), arts. 13, 14, 24, 25 — BOE; AEAT on royalties in double tax treaties — sede.agenciatributaria.gob.es; treaty rates — PwC Worldwide Tax Summaries, Spain, 30.06.2026.
• Ley 37/1992 del IVA, arts. 69 and 84 — BOE; Ley 27/2014 del Impuesto sobre Sociedades, arts. 18, 23, 29 — BOE.
• OECD Transfer Pricing Guidelines 2022, paras 2.10 and 6.144 — OECD.
• Industry rates — RoyaltyStat, IAM Yearbook 2017, PDF; IP Research, les Nouvelles, March 2009, PDF; franchises — Finetic review of the mundoFranquicia catalogue, October 2026.