Think Beyond Tomorrow

Intellectual Property is a fast-moving and complex

area of law, which affords protection to innovative and

creative endeavor. The Cyprus legal system has been fully

harmonized with EU IP directives and regulations and the

major related IP International Treaties and Protocols have

been ratified, such as the Madrid Agreement Concerning

the International Registration of Marks or the Patent

Cooperation Treaty. Furthermore Cyprus has numerous

double tax treaties with other countries.

With effective date of 1st January 2012 Cyprus has

introduced a new taxation scheme on Intellectual Property

Rights, which provides the lowest tax rate in the European

Union.

The worldwide income of royalties and capital gains

are exempted of 80 % from corporate tax profits. The

remaining 20% will be taxed with a current rate of 12,5%,

which makes an effective rate of lower than 2,5%. This

deduction is applicable to net profits arising from the use

or the disposal (licensing) of intangible assets.

The Cyprus Intellectual Property Box

Key advantages:

Corporate Tax: 12.5 %• 80% exemption of taxation on royalty income • of Intellectual Property RightsEffective tax rate: 2,5 % (or less)• R & D can be done outside Cyprus• Amortization provisions over a 5 year period• IP can easily be transferred covers all • Intellectual Property Rights

Business Location Cyprus

Lowest taxation on Intellectual Property • Rights Member of the European Union• Party of all major international IP treaties and • protocols Reputable, international oriented financial • center with extensive know-how Ideal geographical position (situated in the • crossroad of Europe, Africa and Middle East)

Example of annual tax calculation for the Cyprus IP Company:

Royalty – License fee

Foreign company Cyprus IP company

License agreement

€

Annual royalty income 200.000

Estimated direct expenses (40.000)

Net income 160.000

80% deemed deduction (128.000)

Taxable income 32.000

Income tax (12,5%) 4.000

Effective tax rate 2.0%

Intellectual Property is a

fast-moving and complex area of law, which

affords protection to innovative and

creative endeavor.

63 Agias Fylaxeos - Megaro Charalambous 1st floor | 3025 Limassol - Cyprus | P.O Box 54261 | 3722 Limassol Cyprust. +357 25 101080 | f. +357 25 101070 | e. info@mylonaslawfirm.com | w. www.mylonaslawfirm.com

Think Beyond Tomorrow