The Cyprus Intellectual Property (IP) Tax Regime

On 14 October 2016, the Cyprus Parliament voted for Cyprus's old IP Box regime to be subject to amendments and aligned with the Provisions of Action 5 of the BEPS project. The old IP regime closed on 30 June 2016. However, it can still be utilised up to 30 June 2021, subject to grandfathering rules applied.

The grandfathering rules can apply, provided taxpayers have intangible assets already used in the old regime. From 1 July 2021, the old IP regime is entirely abolished, and the new IP replaces its regime.

Under the new Cyprus IP regime, 80% of the qualifying profits generated from the qualifying assets (QA) is deemed to be a tax-deductible expense for qualifying taxpayers, resulting in an effective tax rate of as low as 2.5%.

The new regime adopts the 'Nexus' approach in calculating the qualifying profits.