Global companies are working from Cyprus to benefit from the most advantageous IP-Box taxation in the EU
The Cyprus IP Box Tax Regime provides the following rules for intellectual property assets developed after 30. June 2016:
“Qualifying intangible asset” means an intellectual property asset which was developed or exploited by a person in furtherance of his business, (excluding intellectual property associated with marketing) and which is the result of research and development activities and includes intangible assets for which only economic ownership exists.
Those assets are:
“Qualifying expenditure” for qualifying intangible asset is the sum of total research and development costs incurred in any tax year, wholly and exclusively for the development, improvement or creation of qualifying intangible assets and which costs are directly related to the qualifying intangible assets
Qualifying expenditure includes, but is not limited to, the following:
…but do not include:
Up-lift expenditure will be added to the above costs, which means the lower of:
“Qualifying income” means the proportion of the overall income corresponding to the fraction of the qualifying expenditure plus the uplift expenditure over the total expenditure incurred for the qualifying intangible asset. Income includes, but is not limited to the following:
“Overall profit” arising from the qualifying intangible asset means the gross income accrued within the tax year, less the direct costs for generating such income.
Direct costs include:
80% of the overall profit derived from the qualifying intangible asset is treated as deductible expense. Every year the taxpayer may elect not to claim the whole or part of this allowance. In the case of a resulting loss, only 20% of the loss can be surrendered to other group companies or be carried forward to subsequent years.
Any person who claims benefit under the above regime is obliged to maintain proper books of account and records of income and expenses for each intangible asset.
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