Intellectual Property Holding Company (IPs)
Cyprus is a signatory in Article 2 (viii) of the World IP Convention of 1968 for the protection against unfair competition of IPs. Following a number of significant revisions to the Cyprus Income Tax law in 2012, Cyprus is now at the forefront of IP tax planning, coupled with the protection afforded by EU Member States and by the signatories of all major IP treaties and protocols.
Tax Benefits: A company receiving royalty income may be liable to little or no withholding tax at source in accordance with the extensive network of double tax treaties and the provisions of the EC Interest & Royalties Directive. Special tax incentives by tax exemption of 80% of profits from sale or use of IPs, achieving an effective tax of 2.5% (or less) on qualified profits earned from exploiting qualified IPs.
Royalty Income: A Cyprus tax resident company which holds IP rights and derives royalty income, after deducting directly related expenses, is allowed a tax amortisation of 20%.
IP Protection in Cyprus: The EU Directives and Regulations relating to IP protection fully apply and have been introduced into the Cyprus domestic legislation to include patents, trademarks and service marks, designs and models, internet domain names, software copyrights, secret formulae, know-how, work-in-process research and development (R&D), copy rights related to scientific, literary or artistic work, and rights related to industrial or commercial work. Moreover, IPs registered outside Cyprus, either on a European or international level, are eligible for the benefits of the IP Box Regime. It should also be noted that there is no requirement for the R&D to be undertaken in Cyprus to be considered as an internally developed IP.
Other Benefits: Resting on a sound legal system based on Common Law principles, and being a signatory to International Conventions on the Protection of Intellectual Property, Cyprus’s IP tax regime is considered the most favourable in Europe, affording the maximum protection, stability and assurance for IP owners.