Cyprus is being promoted as a leading Intellectual property (IP) holding jurisdiction following the introduction of a favourable tax regime in relation to income generated from any type of IP. The new favourable IP regime enables the reduction of taxable profits in cases where a Cyprus company is the owner of the IP rights. Together with the wide Double Tax Treaty network offered by Cyprus, the guaranteed access to EU Directives, as well as a variety of tax benefits, Cyprus has become a very attractive jurisdiction for IP investment holding structures.<\/p>\n
All types of intellectual property, as defined in the IP legislation, which were acquired or developed post 1 January 2012 qualify for the favourable tax treatment. This included patents, copyrights, software copyrights, trademark\/service marks, business know-how, any rights related to scientific, literary, artistic or commercial work and other commonly used forms of IP.<\/p>\n
Royalty income<\/p>\n
The legislation provides for an 80% exemption on royalty income (net of any direct expenses) arising from the exploitation of IP by a Cyprus company. The remaining 20% will be subject to the corporation tax rate of 10%, resulting in an effective tax rate of 2% or lower. For the determination of net income from royalties, the law allows for deduction of expenditure incurred wholly and exclusively for the development or acquisition of the IP.<\/p>\n
Gains from the disposal of IP<\/p>\n
A Cyprus IP holding company will also benefit from the 80% exemption provisions in regards to gains (after deducting direct expenses) arising from the disposal of the IP.<\/p>\n
5 years amortization period<\/p>\n
Capital expenditure related to IP acquisition or development may be deducted in the first tax year in which the expense was incurred as well as in the subsequent 4 years, i.e development or acquisition expenses are amortized over a period of 5 years. This in practice lowers the effective tax rate to less than 2%.<\/p>\n
It should be noted that no conditions, either in the form of a limited definition of IP, related party acquisitions and\/or a minimum holding period are attached to the above advantageous tax regime.<\/p>\n
Any profits realized from the exploitation and\/or disposal or any other payments made can be performed in a tax efficient manner as a result of the below advantages:<\/p>\n
\uf0b7- No withholding tax on dividend payments irrespective of the country of residence of the recipient;<\/p>\n
\uf0b7- No withholding tax applicable on the payment of royalties from Cyprus;<\/p>\n
\uf0b7- No withholding tax on payment of interest from Cyprus.<\/p>\n
Cyprus offers unbeatable solution for investors who are seeking to minimize the taxation paid from income\/gains related to IP holding using an onshore vehicle. This can be attractive for many type of businesses.<\/p>\n","protected":false},"excerpt":{"rendered":"
Cyprus is being promoted as a leading Intellectual property (IP) holding jurisdiction following the introduction of a favourable tax regime in relation to income generated from any type of IP. The new favourable IP regime enables the reduction of taxable profits in cases where a Cyprus company is the owner of the IP rights. Together with the wide Double Tax Treaty network offered by Cyprus, the guaranteed access to EU Directives, as well as a variety of tax benefits, Cyprus has become a very attractive jurisdiction for IP investment holding structures. All types of intellectual property, as defined in the…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[13],"tags":[],"yoast_head":"\n