1. Cyprus now considered a prime IP jurisdiction – why is this?
During this era of uncertainty and instability Cyprus is indeed one of the most favorite IP jurisdictions of the EU and the Middle East.This is mainly due to the experienced and skilled service sector of the island, but also due to the tax provisions which make our country an excellent basis for entrepreneurs. The culture of cooperation and security, the Mediterranean climate, the legal tools for the enforcement of law and the political stability are only a few of the advantages Cyprus offers.
But the most attractive element Cyprus can offer today to any company involved in innovative products and services, culture, technology and startups, is the tax regime of intellectual property rights. The beneficial tax provisions of intellectual property rights in Cyprus, also known as “IP Box”, among others provides 80% tax exemptions on worldwide royalty income and/or on profit generated from IP owned by Cypriot resident companies. The advantage of Cyprus as a business centre is reconfirmed not only because of the introduction of the IP Box, but also because of the attractive 12,5% Cyprus company tax rate and the extensive network of double tax treaties ratified by Cyprus.
In addition to the above, Cyprus is a member state of the EU and has a long commercial and political cooperation history with all the countries of the Middle East. Consequently, Cyprus has another big advantage that can be used today: a number of companies of the region who cannot cooperate or work together directly due to political restraints, can use Cyprus as a common base for business!
2. How might these benefits be exploited by companies which collect cultural royalties and motion picture royalties globally?
Cyprus’ IP Box provisions as per above, can be used by any organisation who collects cultural or motion picture royalties, provided the intellectual property is owned by a Cyprus company who can show local substance.
Therefore, the introduction of IP Box, the low corporate tax rate of 12,5% and the extensive network of double tax treaties ratified by Cyprus will be valuable to any organisation dealing in this area of business.
3. Have any such firms relocated to Cyprus in the light of the attractive local IP environment?
It is a fact that during the last years, an increasing number of foreign investors who are active in the field of cultural and scientific production have shown in interest in using Cyprus as their base.
However, since Cyprus’ advantages are still generally unknown, there is still scope to attract more foreign investment using this environment.
4. Finally, the European Union’s new financial transaction tax framework is set to be fully enforced in Cyprus by June 30, 2016 – how is this expected to affect the country’s IP sector, if at all?
I am positive that despite the initial concerns, the outcome of these reforms will strength the Cypriot ecosystem, as its main result will be the empowering of the “Made in Cyprus” spirit and the development of a better skilled and trained local community.
