The Cyprus IP Regime provides significant tax incentives for Companies that develop and hold an IP, and together with other tax benefits that Cyprus offers for international businesses and employees, makes Cyprus the ideal location for IP Companies.

The effective tax rate on qualifying profits can be as low as 2.5% and it will depend on the level of the research and development (R&D) expenditure carried out by the Cyprus Company internally. In brief, an amount up to 80% of the qualifying profit earned from the qualifying IP asset will be allowed as a tax-deductible expense.

The new Cyprus IP Regime, effective as of July 1, 2016, complies with the provision of the modified nexus approach, whereby for an IP asset to qualify for the benefits of the regime, there needs to be a direct link between the qualifying income and the qualifying expenses.

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Cyprus IP Box Regime