The Cyprus IP Box Regime: Designed for Ambitious High-Tech Entrepreneurs

Intellectual Property (IP) protection is not always high on the list of priorities for start-up founders immersed in the day-to-day struggle to turn an inspired idea into a successful business.

Quite often, the first-time entrepreneurs seriously consider securing their IP is during the first seed funding round. But the sooner business owners think about protecting their IP, the better. A good IP Box regime both protects the IP and provides lower effective tax rates on income derived from it. Not only can effective structuring of IP early on make a business a more attractive target for investment, it can also allow a business to grow faster and invest more in research and development.

Cyprus IP regime

The Cyprus IP Box regime has recently been updated and is now one of the most attractive options in the world. It offers full international protection for IP assets and significant financial benefits. It is a regime fully compliant with international developments, applied in line with the OECD’s guidance, and reviewed and assessed according to the EU Code of Conduct.

Perhaps most importantly, 80% of profits earned from the use of intangible assets (IP) are deducted for tax purposes. Only 20% of IP income is taxed.

The updated IP Box regime only adds to Cyprus’ reputation as one of Europe’s most business-friendly jurisdictions. It is one of a wide range of benefits that have persuaded a growing number of international start-ups to relocate to Cyprus, in particular businesses developing software and mobile applications where proper IP structuring is essential.

An international business hub

Many businesses deliver their services remotely to a range of international clients, and can effectively be headquartered anywhere. Increasing numbers are choosing Cyprus as a base for both its growing reputation as an international business hub, driven by its EU location that is also next to Asia, English speaking population and zero dividend tax, as well as its family-friendly amenities, which are important for employee relocation.

Cyprus has a well-developed ecosystem of international professionals and business services, making it easy to do international business, and access financial and legal expertise.

Cyprus’ efficient tax regime is clearly a major attraction. As well as the tax advantages of the IP Box, Cyprus-resident companies benefit from incentives such as zero withholding taxes on dividend payments and a wide network of Double Tax Treaties.

Employees enjoy a range of personal income tax incentives. The free access to the labour market for spouses of Highly Skilled 3rd country national employees is an additional benefit.

Trident Trust is your relocation partner

The Cypriot government is determined to grow the country’s high-tech sector by attracting new talents and promoting headquartering in Cyprus. The IP Box regime is part of that effort.

Trident Trust is a trusted partner for international entrepreneurs looking to relocate to the island. We offer a concierge service, helping busy business people quickly settle into life on the island. We also provide a full suite of corporate services.

We help IT and technology start-ups access and take full advantage of the IP Box regime. For example, when setting up a Cypriot company we can apply for a tax ruling to show the business is entitled to use the regime.

That may not seem hugely important during the early start-up phase, but it secures the position for the future, pre-empting any possible challenges from Cypriot tax authorities. That has resulted in significant savings for our clients.

We also advise companies on creating substance in Cyprus, helping them recruit employees and rent a physical office.

Finally, when the time is right, we help bring entrepreneurs and investors together, ensuring a good fit in terms of what each expects from any funding agreement. 

The IP Box regime is just one of a wide range of benefits for technology businesses headquartering in Cyprus. From tax efficiency and property to recruitment and lifestyle, Trident Trust can help you enjoy them all.