IP Box Cyprus

Tax deductions under the IP Box Cyprus

Why is Cyprus attractive for Intellectual Property (IP) companies?

Cyprus is an attractive destination for companies due to its business-friendly legal framework including its tax framework and the protection of intellectual property rights. Holding companies that manage intellectual property choose Cyprus as their place of registration/incorporation as Cyprus combines the protection provided under the European Union through a series of significant treaties and protocols signed by the government of Cyprus.

The IP Box Regime in Cyprus

Cyprus also has one of the most favourable IP Box regimes. The IP Box is the tax regime provided under Cyprus tax laws which offers tax deductions for the acquisition or development of intangible assets.

Qualifying intangible assets are the assets which are acquired, developed or exploited by a person within the course of carrying out its business and which constitute intellectual property (excluding intellectual property relating to marketing) and which results from research and development and includes intangible assets for which only economic ownership exists.

Qualifying assets are comprised of patents, computer software and other categories of intellectual property provided under the Cyprus tax laws.

What is the qualifying profit and which is the formula for it?

For the purposes of the Cyprus tax laws, 80% of the qualifying profit that derives from the qualifying intangible assets, including the profit that derives from the sale of such assets, is regarded as an expenditure and is treated as a deductible expense. For each year, the taxpayer may elect to waive this allowance, either in part or in whole. In the case of loss, only 20% of the loss can be carried forward or group relieved.

Qualifying profit (QP) is the amount that corresponds to the fraction of the qualifying expenditure (QE) plus the uplift expenditure (UE) over the overall expenditure (OE) multiplied by the income that derives from the qualified assets (QA):

QP = (QE+UE)/OE x QA

How can CX Financia help you?

At CX Financia, we can help you with establishing a business in Cyprus and corporate re-structuring of your group of companies in a tax-efficient way.

More specifically, our team can assist you with:

• the incorporation or redomiciliation of a company in Cyprus;

• claiming tax benefits under Cyprus’ IP BOX regime;

• maintaining your company’s records in good order through our secretarial services;

• dealing with tax incentives for high net worth individuals;

• advising on corporate restructurings and international tax planning aspects.

We will be happy to discuss your enquiries with you and assist you. If you have any additional questions, you can send us an email at info@cxfinancia.com.



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