Intellectual property is increasingly becoming one of the most valuable assets of businesses. Thus, choosing the appropriate regime/location for structuring the exploitation of IP assets is vital in order for businesses to achieve business development, effective IP protection and maximum tax optimisation.
Cyprus IP Box Regime: Effective Tax Rate at 2.5% – Lowest in Europe
Cyprus offers an advantageous regime for businesses investing in IP rights. The IP Box Scheme put in place with effect from 1st January 2012 was a package of incentives and tax exemptions concerning income from intellectual property rights, intended to urge investment in research and development. The Cyprus corporate income tax rate at 12.5% would normally apply to the 100% of net profits produced. However, following the applicable tax exemptions, only 20% of the profits will be taxed, reaching an effective rate of 2.5% per annum. At 2.5%, this rate is considerably lower than the respective percentage in other countries offering similar ‘IP Box’ schemes, including Luxembourg at 5.7%, the Netherlands at 5% and the United Kingdom’s ‘Patent Box’ regime at 10%. The efficient IP tax regime of Cyprus in conjunction with the protection offered by EU and all major IP treaties and protocols in which Cyprus is signatory is what makes Cyprus highly attractive for the acquisition or development IP assets.
