The Cyprus Intellectual Property Rights 'Box' - A Limited Time Opportunity

Introduction

In May 2012, Cyprus introduced a package of incentives and tax exemptions relating to investment in intellectual property rights, commonly known as an "IP box." Intellectual property projects are particularly susceptible to cross-border planning by reason of the mobility of intellectual property rights, which do not consist of physical assets and so can be easily moved between different jurisdictions and tax systems according to prevailing circumstances.

There has been considerable opposition from some countries to IP box regimes, and now that consensus has been reached on the modified nexus approach under Action 5 of the G20/OECD base erosion and profit shifting project, new entries to such schemes will not be permitted after mid-2016. However, companies that join the Cyprus scheme before that date can look forward to benefiting from substantial savings until mid-2021.