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New IP Box Regime in Cyprus

The House of Representatives on the 14th of October 2016 has voted amendments to the IP Box Regime in order to comply with the approach adopted by the OECD.

The new IP Box Regime means that laws in Cyprus on the taxation of Royalties are now in full compliance with the OECD guidelines.

The new IP Box Regime provides a definition as to what constitutes qualifying intangible assets, overall income and qualifying expenditure and provides guidelines as to how to maintain accounting records. Moreover, there is a new methodology for calculating the profits that will be subject to a beneficial tax treatment. Any profit that will not be subject to this beneficial treatment will be taxed under normal tax rates.

Under the new law, rights used for the purposes of marketing products and services such as business names and brands will no longer be considered as qualifying intangible assets. The calculation of taxable income will remain the same as the previous IP Box Regime and allow for an 80% of the qualifying income to be treated as a deductible expense for tax purposes.

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