Changes To The Cyprus Intellectual Property Box

Introduction

The Cyprus parliament has passed a law amending the Income Tax Law to bring its provisions on taxation of income from the use or sale of intangible assets into line with the "modified nexus" approach.

This approach, which was agreed by G20 leaders towards the end of 2014 and adopted by the OECD and the EU, allows a taxpayer to benefit from an intellectual property taxation regime, commonly known as an intellectual property (IP) box, only to the extent that it can show material relevant activity, including a clear connection between the rights which create the IP income and the activity which contributes to that income.

Countries whose IP regimes were incompatible with the modified nexus approach were required to take steps to amend them, and to allow no new entrants to non-compliant IP regimes after June 30, 2016. However, transitional arrangements were permitted to allow taxpayers benefiting from existing schemes to continue to do so until June 30,