Contributed by Yiallourides & Partners Ltd, Cyprus

Cyprus can be an ideal jurisdiction to set up and or relocate an IP Company. If your Company is an owner of an IP asset, then Cyprus could be the place to be. A Cyprus IP Box Company offers several advantages that include very favorable tax advantages that are in line with the OECD and EU guidelines, a legal framework that can offer asset protection and an operating environment that your team can enjoy working and have access to a large pool of highly educated talents.

Tax Advantages

All “Qualifying intangible asset” can enjoy a tax deduction that can lead up to 80% of the taxable profits derived from this asset and effectively a Corporation Tax that can be as low as 2.5%. A qualified asset is an asset which was acquired, developed, or exploited by a person in furtherance of his business, (excluding intellectual property associated with marketing) and which is the result of research and development activities and includes intangible assets for which only economic ownership exist. For example, patents as defined in the Patents Law, computer software and other IP assets that are non obvious, useful, and novel.

In addition, the Company can benefit from the use of a large number of Double Tax Treaties that Cyprus has signed as well as the Relief under the EU Interest and Royalty Directive that allow the Company to be excluded from the payment of withholding tax at a foreign jurisdiction on incoming Royalties.

Other tax benefits include 0% tax on dividends payable to foreign shareholders and Cyprus non domicile tax residents and 0% capital gains tax on the Sale of the Company.

Another very important fiscal benefit to the Company is that can attract talent from all over the world that they can benefit from a very advantageous tax regime. Individuals who are not considered to be "domiciled" in Cyprus would be exempt from payment of taxes on worldwide income from:

  • Dividends
  • Interest
  • Sale of securities

In addition, can benefit from:

  • 50% deduction on personal income tax, if their annual Salary is over EUR100K
  • 20% deduction on personal income tax, if their annual Salary is below EUR100K
  • 0% inheritance tax
  • 0% Lifetime gift tax

Legal framework

Cyprus legal framework is based on Common Law and is in line with the European legislation. In reference to the intellectual properties Cyprus meets the requirements of The World Intellectual Property Organization (WIPO) and the European Union Intellectual Property Office (EUIPO).

Operating environment

Cyprus is a beautiful place to call home. A place that you can have safety, great education for your children and family, and an ideal climate with sunshine all the year round. Quite importantly is that there are no language barriers as English is widely spoken. Cyprus is in the top countries % wise of university graduates, who choose to come home irrespective of their talent, making it so much easier to recruit the best suitable for your Company.

The government showed clearly that will maintain its low taxation system and further expand the avoidance of double taxation treaties with more countries. It has been openly and repeatedly expressed by the Minister of Economy and the President that they place a lot of emphasis in enhancing the IP industry in Cyprus through attracting foreign investment.

If you would like to learn more on the above and how we can assist you, please feel free to visit our website or contact us directly at [email protected]

 

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