Section 2 showed the scale of Cyprus's gaming market. Section 3 showed the diversity of the studios that make it up. Section 4 showed the capital that flows through them. This section looks at what made all of it possible in the first place.
The growth of Cyprus’ gaming sector can be traced back to a specific policy moment in the early 2010s. Before 2012, Cyprus was known abroad for three things: shipping, financial services, and tourism. There was a developing tech sector, but gaming had not yet emerged as a visible industry. That changed when Cyprus introduced its IP Box regime in 2012.
The principle behind the IP Box was straightforward. Companies could benefit from an 80% deduction on qualifying profits from eligible intellectual property, including game engines, source code and in-game IP, subject to the relevant conditions. At the previous 12.5% corporate tax rate, this could result in an effective tax rate as low as 2.5% on qualifying IP income. That made the regime highly
