IP box registration in Cyprus

The IP box is an ultra-loose tax regime for IT companies, where the tax rate can be reduced to 2.5%.

Cyprus is known in Europe as a jurisdiction with one of the mildest and most favorable tax climates. The corporate tax rate here is one of the lowest in the EU — only 12,5%. And there are no taxes on inheritance, foreign income, dividends, shares, etc. The country also has an IP box program, under which a company that profits from innovation from qualifying assets can be taxed at a reduced rate.

IP box tax regime: how to register a company

Qualifying assets that fall under the IP box regime are:

• research and development;
• software;
• mobile applications;
• computer programs and games;
• drugs for the treatment of rare diseases;
• patents for inventions;
• innovative objects of intellectual property;
• medicines, etc.

How the IP box rate is calculated:

• 80% of earnings on qualifying assets are not taxed. The remaining 20% is taxed at 12,5%. That is, income tax can be as low as 2,5%.

Who may apply the IP box regime:

• Cyprus tax resident companies;
• Permanent establishments of foreign companies that pay taxes in Cyprus.

It is noteworthy that this program does not apply to the company’s profits as a whole but separately to each piece of intellectual property. This is convenient because the object has no physical attachment to a particular location. Thanks to this system, most IT companies in Cyprus conduct their business abroad. As of today, there are over 2 thousand such companies registered.

Suppose you want to register your company under the IP box program, contact SPM. In that case, we will provide detailed advice and help with registration.

 

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