The explosion of Blockchain technology has driven the increase in popularity of Non-Fungible Tokens (NFTs), digital assets that link ownership to unique physical or digital items, such as works of art, music, or videos, and in turn businesses around the world, across a plethora of industries, are looking at ways they can tap into the trend.
NFTs can help businesses to create their own online communities, offering audiences an exclusive chance to buy into the brand through sizeable value exchange.
How can my business use NFTs?
NFTs have opened up new ways of brand storytelling and consumer interaction, which are central to effective marketing strategies which in turn deliver business growth.
With NFTs, you can create new, unique experiences, increase brand awareness and encourage customer engagement, create interest for your business and build a tribe of like-minded, valuable individuals.
These are just a few ways that smaller businesses can use NFTs to help grow their businesses:
- NFTs can replicate a business’s product digitally, such as artwork, that can be sold as an official piece of merchandise
- Retailers who are not traditionally part of the auction-based retail model can take advantage of the growing popularity of NFT auction spaces
- Businesses can create hybrid loyalty member/investor opportunities through selling NFTs that give them certain exclusivity or priority to discounts
- Businesses that sell tickets, can sell NFTs as a ticket to keep away fraudulent ticket sellers
- Businesses are also able to invest in NFTs that are produced by other companies and sell on the open market for profit
Recovering development costs: Research & Development tax credits
There may be scope to recover development costs through the government’s research & development (R&D) tax relief scheme. As NFTs are niche and may involve the development of innovative technology, your activities may qualify and you may be able to receive a tax credit, which will be a valuable injection of cash into your business. If your business is profit-making, then you will obtain a reduction in your taxable profits and your company will pay less corporation tax.
Our R&D experts can assess whether your business activities qualify, calculate the relief available and help you to lodge a claim.
How can Gerald Edelman help?
With every NFT being unique, it follows that every NFT needs to be assessed and accounted for on an individual basis.
Adding to the complexity is the fact that tax implications are also unique to each company depending on the nature of the transactions.
At Gerald Edelman, we have a leading specialist Cryptocurrency and tax advisory team with the expertise to help you navigate the complex world of NFTs. Whether you are investing or creating your own to sell, ensure you are compliant with the constantly evolving new space in the metaverse with the help of our experts.