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Features of the Cypriot regime IP-BOX

Michalaki, Pitsillidou Law Firm > English Articles  > Features of the Cypriot regime IP-BOX

Features of the Cypriot regime IP-BOX

Features of the Cypriot regime IP-BOX

Currently in Cyprus there is preferential tax treatment of income derived from the use of intellectual property (IP) (IP Box). In accordance with this regime 80% of the net profit from IP usage shall be exempt from taxation.

Thus, the effective rate of tax in Cyprus in the mode IP-Box is 2.5 % and applies to income from all intangible assets, objects of intellectual property without restriction. Not less positive aspect is also the lack of requirements for the development of the taxpayer intellectual property. The main tax advantages of Cyprus include the following:

  • exemption from income tax 80% of world income in the form of royalties for the use of intellectual property owned by a resident company of Cyprus (excluding direct costs related to the acquisition or creation of intellectual property object, as well as annual depreciation);
  • 80% of the profits resulting from the sale of intellectual property owned by resident companies of Cyprus are subject exemption from taxes on profits;
  • capital costs associated with the acquisition or creation of intellectual property, decrease the profit due to the amortization of the intellectual property in equal shares in the next 5 years (annually 20% deduction).

In accordance with regulation 5 of the BEPS plan, developed within the OECD, a preferential tax regime shall be abolished from 1 July 2016.However, companies that managed to build or acquire the intellectual property prior to that date, may enjoy the benefits until 30 June 2021.

IMPORTANT!

To the tax authorities of CIS countries have recognized the expenses on payment of royalties to the Cyprus company, a Cyprus company (the owner of IP object) should lead real activity and to bear certain expenses for the development and extension of these objects of intellectual property.The Cyprus company may not be affiliated with a company that pays royalties.

To take advantage mode IP Box is available until 30 June 2016. At that, the tax benefits of this regime can be used until middle of 2021.

iMPK Global Business Law Firm and our Cyprus lawyers can assist You in opening a Cyprus company.

For more information and guidance please email iMPK Global Business Law Firm – Cyprus Lawyers, at info@impklawyers.com or visit our website at www.impklawyers.com    Tel. +357 99 345000

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