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Tax & IP

The Cyprus IP Box: who the regime is for

The Cyprus IP Box can reduce effective corporate tax on qualifying IP profits to 3% (an 80% notional deduction, 15% on the remaining 20%). It does not apply to every software company or every profit. This article maps who should commission a review.

14 August 20261 min read

Which assets are typically in scope

Copyrighted software, certain patents, utility models and comparable intangibles that result from own research and development and generate licence or similar income are the usual starting point. Bought-in IP with no own development, pure trading margins or management fees without an IP link are usually the wrong start.

Trademarks, trade names, image rights and other marketing IP are typically excluded. If you have a SaaS product, the software may be reviewable; the brand name beside it is not. The line is tax and documentary, not a marketing label.

Nexus and own development

International IP boxes follow the OECD nexus idea (BEPS Action 5): relief attaches to own research and development. Holding IP without developing it generally does not get you there. Development by related parties reduces the nexus fraction and therefore the relieved profit. CyStarter reviews the chain of title and the R&D trail before recommending a structure.

Substance remains a condition

An IP Box without economic substance in Cyprus is a contradiction. Management, staff or traceable development work and an Ltd that is more than a mailbox belong together. That is why this article points to formation, the director model and the calculator, not to rates alone.

Who a review is usually worth it for

Software- and IP-driven firms with their own products, scalable licence income and a willingness to document development and ownership. Less suitable: models whose profit is mainly intermediation, advice without a protectable asset, or recharacterised activity fees.

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This article is general information and does not replace legal, tax or investment advice in any individual case.

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Review IP Box suitability

We review the asset, the income and the substance, with no rate promise before that review.