Confidus Solutions logotype

Confidus Solutions

Cyprus limited companies for intellectual property (IP) holding

Intellectual property refers to a creation of numerous intellectual units, such as literary and artistic works, inventions, designs as well as names, images and symbols used in commerce, for which a monopoly is assigned to the owner or creator of the said units. A related term is intellectual property rights, such as trademarks, patents, copyrights and industrial design rights, which enable the owner of the intellectual property to earn financial benefit and recognition for their products.

Intellectual property can be created by private persons or legal entities. Typically, companies that own intellectual properties find it beneficial to set up an Intellectual Property Holding, in which all these assets are registered and licenced for royalty income generation. Since intellectual property can often be among the most valuable assets of a company, choosing the right jurisdiction of an Intellectual Property Holding requires a careful consideration in order to ensure the most beneficial environment for the company and its assets. Three main aspects to consider before choosing the jurisdiction for incorporation of the Intellectual Property Hold are quality asset protection, legal framework and tax optimisation possibilities.

Benefits of having an IP structure on Cyprus

Cyprus has become an important player in the field of Intellectual Property Holdings since it introduced new tax legislation on Royalties in 2012. In addition to a beneficial tax regime, Cyprus can offer its companies a protection afforded by member states of the EU and all major Intellectual property treaties and protocols. Cyprus also has managed to link its world-wide network of double taxation treaties with its outstanding shipping, holding and intellectual property regimes and offers one of the lowest corporate tax rates in the EU – 12.5%. Additional benefits of choosing to register an Intellectual Property Holding in Cyprus:

Cyprus has also developed a strict Anti-Money Laundering legislation and is consistently positioned in high rankings among the EU Member States for compliance with AML practices and guidelines.

In order for an Intellectual Property Holding registered in Cyprus to benefit from the favourable tax regime, it must be protected by one of the following laws:

Cyprus’ tax regime

The favourable tax regime for Intellectual Property Holdings is displayed in three possible activities connected with the intangible assets: when income is generated from any form of qualifying intellectual property rights; when income is generated through sale of any form of qualifying intellectual property rights; and providing generous allowances for development or acquisition of intangible assets:

The effective tax rate applicable to the Intellectual Property Holding company registered in Cyprus is as low as 2.5% and can be even less if reduced by the capital allowances.