The scope of the UK’s patent box has been reduced, after government officials agreed a compromise with German counterparts over the controversial tax break for companies.

The move was made in an effort to advance negotiations on new rules for preferential intellectual property regimes within the G20/OECD base erosion and profit shifting project.

The accord was based on the modified nexus approach proposed by the OECD, which requires tax benefits to be connected directly to research and development expenditures. The stated aim of the UK/Germany plan is to bridge different views of …