Cyprus – Where Tech IP Finds Its Perfect Domain

It's widely known that the favorable tax treatment of income generated from intellectual property was created to encourage innovation in the high-tech sector throughout the European Union. IP tax regimes are essential for tech and software companies to avoid high taxes and safeguard their intellectual property. This is where the island of Cyprus excels in this regard, positioning itself as a tier-one European location for innovative technology firms to establish their operations.

Cyprus’ IP Box Regime: A Comprehensive Overview

IP Box or Patent Box regimes, established by various countries, aim to incentivize research and development related to intellectual property assets, including patents, software, and copyrights. These regimes offer reduced effective tax rates on income derived from such intellectual property, which cover royalties, sale of IP, licensing fees, sales of products and services incorporating IP, and copyright infringement awards.

Several EU member states, including Cyprus, have implemented IP regimes, and non-EU countries like Switzerland and the UK also have similar provisions in place. Fully compliant with both EU and OECD standards, Cyprus’ IP Box regime aligns with the provisions of the modified nexus approach, treating 80% of "Royalty Profit" as expenses.

Normally, Cyprus has a corporate income tax rate of 12.5% that would apply to the entire net profit, but with the IP Box regime exemptions, only 20% of the profits are subject to taxation, resulting in an effective corporate tax rate of just 2.5%. This makes it one of the lowest IP box regime tax rates in Europe. Additionally, if there's a tax loss, 20% of that loss can be carried forward to future financial years or surrendered to an associated group company.

The combination of Cyprus' prudent IP tax regime, coupled with its double tax treaties and conventions, has contributed to Cyprus becoming an international technological and software hub for innovation and IP asset acquisition. All while significantly reducing foreign withholding taxes on royalty income to just 2.5%, marking it as one of the lowest IP Box regimes in Europe.

How ATG can Help You Relocate to Cyprus

In line with this thriving environment, ATG Corporate Services specializes in providing Administration and Management Services to Corporate Structures in Cyprus, the UK, BVI, UAE, Hong Kong, Singapore, and other financial centers. We offer our clients a centralized point of contact for their corporate structuring needs, ensuring streamlined management of international group tax and compliance. Our tailored corporate solutions span a wide range of sectors and industries, and we handle all administration and compliance matters with regulators, registrars, tax authorities, banks, corporate lawyers, fund managers, and auditors.

ATG can assist with all aspects related to the relocation of private clients and corporate entities to Cyprus. Whether you are looking to invest in real estate on the island, relocate your family, or move your team and business operations, our team at ATG can advise and coordinate the entire process seamlessly.

Contact Us

This publication should be used as a source of general information only. It is not intended to give a definitive statement of the law. For a FREE Initial Consultation to discuss the specifics of your enquiry please contact Andreas Athinodorou on + 35722057560 or andreas.athinodorou@atgcorporate.com.