Cyprus Company

Cyprus Intellectual Property (IP) Company

Intellectual Property (IP) can be one of the most valuable assets of an individual or a company. Choosing the right location for the centralisation and management of IP is a highly important commercial decision.

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

CYPRUS AN IDEAL LOCATION FOR INTELLECTUAL PROPERTY ASSETS: KEY BENEFITS

STRUCTURE OF CYPRUS ROYALTY ROUTING

Illustration 1:

A Russian tax resident company has charged a Cyprus tax resident company €100,000 as royalty fees for allowing the Cyprus Company to exploit the intellectual property of the Russian tax resident company.

Scenario 1:

The Cyprus tax resident company earned incomes both in the Republic of Cyprus and outside the Republic of Cyprus in equal proportions.

Hence, the 10% withholding tax will apply on half the royalty payment made towards the Russian tax resident company. For the other half income outside the Republic of Cyprus, no withholding tax will apply.

Scenario 2:

The Cyprus tax resident company earned all incomes completely in the Republic of Cyprus, then 10% withholding tax will apply on the entire amount of €100,000

Scenario 3:

The Cyprus tax resident company earned all incomes completely outside the Republic of Cyprus, then no withholding tax would have applied on the €100,000

If the above Scenario 1 and Scenario 2, if the Double Tax Treaty signed between Cyprus and Russian stated a more favourable rate of withholding tax (less than 10%), then the reduced agreed rate would have applied on the royalty payment.

Illustration 2:

An EU member tax resident company has charged a Cyprus tax resident company €100,000 as royalty fees for allowing the Cyprus Company to exploit the intellectual property of the EU tax resident company. The Cyprus tax resident company earned incomes both in the Republic of Cyprus and outside the Republic of Cyprus in equal proportions.

Due to EU Royalties Directive, Cyprus will not withhold any taxes made to EU “affiliated undertakings”, irrespective if the intellectual property was exploited in the Republic of Cyprus.

An “affiliated undertakings” exists when a minimum 25% share capital participation exists between the paying out entity and the recipient entity or when a third party owns a minimum of 25% in both paying out and recipient entity.

Cyprus Intellectual Property (IP) Company​

Contact us for more information

Get our latest news

subscribe to our newsletter and get our news in your inbox!