Cyprus Changes Tax Regime On Royalties

In late December 2015, the Ministry of Finance issued a press release on an amendment to the Intellectual Property tax regime.

The changes will incorporate the recommendations of Action 5 of the Organisation for Economic Co-operation and Development (OECD), which were issued on 5 October 2015 for the Action Plan against 'Base Erosion and Profit Shifting' (BEPS), as well as the conclusions to the ECOFIN Council adopted on 8 December 2015.

Amongst other topics, Action 5 deals with favourable tax regimes such as the Intellectual Property regime (IP regime). It requires a clear connection between the rights which create the income and the activity which contributes to that income (the modified nexus approach).