Changes In The IP BOX Regime In Cyprus

On 4 November 2016 the House of Representatives of Cyprus approved changes to the existing preferential tax treatment of income from the exploitation and/or sale of intellectual property (IP BOX). The purpose of the adopted amendments is to align Cyprus tax law with the provisions of Action 5 of the BEPS plan and the new EU rules for taxation of comparable IP BOX tax regimes.

Transitional provisions

The current IP BOX tax regime provides for an 80% tax exemption on income from the use of intangible assets after deducting all direct expenses, such as amortization (more than five years) and interest expense, and also 80% of income from the sale of intellectual property. If there are losses, then only 20% of the losses can be transferred to other companies of the group or carried forward to future periods.