CYPRUS ROYALTY COMPANY

Cyprus is known as a very attractive jurisdiction for the establishment of Royalty companies and holding structures in general. For professional assistance and advise please contact solutions@oxfordcy.com.

 

CYPRUS ROYALTY COMPANY KEY BENEFITS

  • There is an exemption from tax on dividends received from overseas (conditions apply).
  • Eighty per cent (80%) of the revenue from intellectual property rights deemed as expense thus effectively tax is payable on the remaining 20% less other expenses.
  • Payments of dividends, interest and royalties to non residents are not subject to any withholding tax.
  • Profit from dealing in securities is tax free. (This includes trading in securities in Cyprus as well as overseas markets).
  • Capital gains from the sale of movable asset are tax free.
  • Large network of tax treaties with very favorable clauses. Many of the treaties impose low or nil withholding tax on dividends, interest or royalties at source.
  • European Union parent subsidiary directives apply.
  • Registration for V.A.T. for E.U. transactions.
  • E.U. presence.
  • Low income tax (12.5% on the net profit).
 

Cyprus provides unilateral tax credit for any tax withheld overseas on the payment of Royalties (as well as dividends and interest). Thus the tax in Cyprus can be reduced to a very low amount or zero in most cases.

Royalties paid by Cyprus companies to overseas are not subject to any withholding tax (as per Cyprus Law) except where the source of the Royalty is Cyprus. Zero withholding tax also applies to payment by Cyprus Government for dividend and interest to non residents.

 

Structure of Cyprus Royalty Routing

Starting a royalty company in Cyprus you will find that this is an excellent idea, taking into account the zero or low withholding tax rates on royalties which the majority of the Cyprus’ Double Tax Treaties provide, along with the provisions of the EU Interest & Royalty Directive.

Once the royalty rights are assigned to the Cyprus Company, the Cyprus Company will then be able to franchise or license these rights to various companies. EU Interest and Royalty Directive and Cyprus’ Double Tax Treaty network will reduce or even abolish the withholding tax on the Royalty payment.

 

ROYALTIES EXAMPLE No.1

Cyprus Company is the owner of the Intellectual Property right which is then been licensed to the Russian entity.

CYPRUS ROYALTY COMPANY
 

ROYALTIES EXAMPLE No.2

Cyprus Company retains a license fee and pays tax on this income but it will be able to pass 95% to the offshore company where no further tax will be levied. Thus, effectively taxed on the retained commission fee, say 5%.

CYPRUS ROYALTY COMPANY
 

Note: No tax shall be paid on the offshore company level as this will be a zero tax jurisdiction.