Assume that a Cyprus IP company licenses its IP to operating foreign companies and in return receives an annual royalties income of 1,000,000 Euros:


The expected annual tax for the Cyprus IP Company will would be as follows:

Annual Royalty Income €1,000,000
Direct Expenses (assumed) €200,000
Net Income €800,000
80% deemed deduction €640,000
Taxable Income €160,000
Income tax on 160000 €20,000
Effective Tax Rate 2.50% €20,000
Tax Rate without IP Box 12.50% €100,000
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Cyipco Overview