Pay as little as ~3% tax on your IP income with the Cyprus IP Box.
The Cyprus IP Box lets software, tech, and IP-owning companies tax qualifying profits at an effective rate as low as ~3% — fully OECD-compliant. We structure, document, and secure your tax ruling end to end.
- Regulated Cyprus law firm
- OECD-compliant
- Fixed-fee engagements
- Tax ruling secured for you
~3%
Effective tax rate (2026)
80%
Deduction on qualifying IP profit
0%
Tax on qualifying IP disposal gains
~1mo
Expedited tax ruling
What is the Cyprus IP Box?
The Cyprus IP Box is a special, fully legal tax discount for companies that make money from intellectual property — things like software you wrote or a patent you own.
Normally a Cyprus company pays 15% corporate tax on its profit. With the IP Box, Cyprus lets you ignore 80% of the profit that comes from your qualifying IP and only tax the remaining 20%. Because you tax just one-fifth of the profit, the effective rate falls to about 3%.
It was introduced in 2012 and updated in 2016 to follow strict international (OECD) rules, so it is a stable, long-term tool — not a loophole. It lives in Article 9(1) of the Cyprus Income Tax Law.
Tax on €1,000,000 of IP profit
What the Cyprus IP Box gives you
Tap each feature to see the detail.
How the IP Box works
Four simple steps turn your IP profit into a ~3% effective tax rate.
- 1
IP income
€1,000,000
Profit from your patents or software
- 2
Deduct 80%
− €800,000
Treated as a tax-free expense
- 3
Tax the 20%
€200,000 × 15%
Only one-fifth is taxed
- 4
You pay
€30,000
≈ 3% effective rate
Work out your IP income
Take everything you earn from the qualifying IP (royalties, software fees, IP embedded in products) and subtract the direct costs of earning it. That is your net IP income.
Apply the nexus ratio
Multiply that income by the share of the R&D you funded yourself (plus a 30% bonus), divided by all spending on the IP. Do all your own R&D and this is 100%.
Deduct 80%
Cyprus lets you treat 80% of the resulting qualifying profit as a tax-free expense. Only the remaining 20% is taxable.
Pay 15% on the 20%
The 2026 corporate rate of 15% applies to just one-fifth of your profit — so the effective rate lands around 3%.
The “nexus” rule
Cyprus only gives you the discount on the part of the IP that you genuinely developed.
This is measured by the nexus ratio: the R&D you funded yourself (plus a 30% bonus) divided by all the money spent on the IP. If you did all your own R&D, the ratio is 100% and you get the full benefit. If you bought the IP or paid your own group to develop it, the ratio drops — and so does the benefit.
QP = OI × (QE + UE) / OE · capped at 100%
Your benefit is scaled by
The more of the R&D you did yourself, the closer this gets to 100% — and the lower your tax rate.
OI — Overall income
Net income from the qualifying IP, after the direct costs of earning it.
QE — Qualifying expenditure
R&D you do yourself or buy from unrelated parties.
UE — Uplift
A bonus of up to 30% of QE, capped at what you spent on acquisition + related-party R&D.
OE — Overall expenditure
Everything: QE plus IP you bought plus related-party R&D.
Cyprus IP Box tax calculator
Adjust the editable fields to match your case and see your approximate effective tax rate using the full OECD nexus formula at the 2026 corporate rate of 15%.
Overall income
Qualifying expenditure
Non-qualifying expenditure
Effective tax rate
3.0%
Indicative only — not tax advice. The formula is QP = OI × (QE + UE) / OE, capped at 100%. Actual results depend on your facts and documentation.
How your structure changes the rate
The same €1,000,000 of IP income — three different setups, three very different tax bills.
Internally developed IP
Optimal| Overall income (OI) | €1,000,000 |
|---|---|
| Internal R&D (QE) | €500,000 |
| Nexus ratio | 100% |
| Qualifying profit | €1,000,000 |
| 80% deduction | − €800,000 |
| Taxable profit | €200,000 |
Why this result
You built the IP yourself, so all of your spending is your own qualifying R&D. The nexus ratio is 100%, which means the entire €1,000,000 counts as qualifying profit. Cyprus then lets you deduct 80% of it (€800,000), leaving just €200,000 to be taxed at 15% — that's €30,000, or a 3.0% effective rate. This is the best outcome the regime allows.
Acquired IP + third-party R&D
Partial| Overall income (OI) | €1,000,000 |
|---|---|
| Acquisition cost | €300,000 |
| Unrelated-party R&D (QE) | €200,000 |
| Nexus ratio | 52% |
| Qualifying profit | €520,000 |
| 80% deduction | − €416,000 |
| Taxable profit | €584,000 |
Why this result
Here you bought the IP for €300,000 and only €200,000 of R&D was your own (done by an unrelated firm). The nexus formula only rewards R&D you funded: (€200,000 + €60,000 uplift) ÷ €500,000 total spend = 52%. So only €520,000 counts as qualifying profit. After the 80% deduction (€416,000), €584,000 is taxed at 15% = €87,600 — an 8.8% rate. The money you spent buying the IP dragged the ratio down.
Acquired IP + related-party R&D
No benefit| Overall income (OI) | €1,000,000 |
|---|---|
| Acquisition cost | €300,000 |
| Related-party R&D | €200,000 |
| Qualifying expenditure | €0 |
| Nexus ratio | 0% |
| Qualifying profit | €0 |
Why this result
Nothing here counts as your own qualifying R&D: you bought the IP (€300,000) and the R&D (€200,000) was done by a related company in your own group. Qualifying expenditure is therefore €0, the nexus ratio is 0%, and qualifying profit is €0. There is no deduction at all, so the full €1,000,000 is taxed at the normal 15% = €150,000. You get no IP Box benefit whatsoever.
The lesson: do your own R&D in Cyprus (or use unrelated contractors) and you reach ~3%. Buy the IP or use your own group, and the benefit shrinks fast.
Wondering what your effective rate would be?
Get a free, confidential assessment — we'll confirm if you qualify and quote a fixed fee, usually within one business day.
Key Cyprus IP Box concepts, explained
Tap any concept to expand a clear, plain-language explanation.
Which income qualifies?
The discount only applies to income that comes from your qualifying IP. Here is what is in — and what is out.
Royalties & licence fees Qualifies
A company pays you to use your patent or software.
Software subscriptions (SaaS) Qualifies
Monthly/annual fees customers pay to use software you wrote.
IP embedded in a product's price Qualifies
You sell a device and part of the price reflects your patented technology.
Gains from selling the IP Qualifies
You sell a patent — the capital gain is fully tax-exempt.
Compensation for the IP Qualifies
Insurance or damages you receive relating to the qualifying IP.
Brand / trademark licensing Excluded
Letting others use your brand name or logo — this is marketing IP, excluded.
General trading profit Excluded
Profit that has nothing to do with your IP — taxed at the normal 15%.
Where must your R&D come from?
Who does the research and development decides how much benefit you get. This is the part most people get wrong.
Your own in-house R&D team
Counts in full. This is the best case — it pushes your nexus ratio toward 100%.
Outsourced to unrelated third parties
Counts in full. An independent dev shop or lab abroad is fine.
Outsourced to related parties
Does NOT count. R&D bought from your own group/subsidiaries lowers the benefit.
Buying ready-made IP
Acquisition cost does NOT count as your R&D — it lowers the nexus ratio (but a 30% uplift softens this).
Which IP qualifies — and which doesn't
The rule of thumb: things you invent or create qualify; things you use to market a product do not.
Qualifies
- Patents (and patent extensions / SPCs)
- Copyrighted software
- Utility models
- Plant breeders' / genetic IP
- Orphan-drug designations
- Other certified novel, non-obvious, useful IP*
*Other IP qualifies only for smaller businesses — under €7.5m IP revenue (€50m group) — and must be certified as genuinely new.
Does not qualify
- Trademarks
- Brands / brand names
- Image rights
- Goodwill
- Other marketing intangibles
These are “marketing” IP — they help sell a product rather than being an invention.
You also need real substance & records
This is not a paper exercise. You must actually carry out R&D and keep clear records, kept up to date as you go — what was developed, who developed it, and how much each asset cost. These records prove your nexus ratio if the tax office asks. We set this up for you from day one.
You likely qualify if…
You develop software — SaaS, fintech, apps, platforms, or AI/ML models (copyrighted software is a core qualifying asset).
You hold patents or patent-pending inventions (deep tech, engineering, hardware).
You operate in pharma/biotech with patents or orphan-drug designations.
You run a gaming studio or digital-product company with proprietary technology.
You earn royalties or licence fees from IP, or sell products with IP embedded in the price.
You (or unrelated contractors) perform the R&D that creates the IP.
The steps to get your IP Box in place
We handle the whole journey — you focus on your business.
Assessment
We review your IP, R&D, and revenue to confirm eligibility and quantify the benefit. Free initial consultation.
Structuring
We structure the IP within your company to maximize the nexus ratio and overall tax efficiency — fully OECD-compliant.
Application & tax ruling
We draft and submit your IP Box application and secure a tax ruling from the Cyprus Tax Department (standard ~3–6 months, or expedited ~1 month).
Ongoing compliance
We maintain the documentation and record-keeping the regime requires, so your position holds up over time.
Pricing & what's included
A fixed professional fee, plus the government's fee for issuing your tax ruling. No surprises.
Our professional fee
€5,000 – €8,000+ VAT
Plus actual costs and the government fee shown opposite.
What this includes
- IP structuring — Correct structuring of the IP within your company to maximize compliance and tax efficiency.
- Detailed analysis & strategy — Full review of how your IP qualifies, with tailored guidance based on your business activities.
- Meetings & consultations — Ongoing discussions to align the application with your objectives and address concerns.
- Preparation & submission — Comprehensive drafting and timely submission of the IP Box application.
Government fee — pick your speed
Tax ruling in about 3–6 months
Tax ruling in about 1 month
All fees are exclusive of VAT and government fees.
Get a fixed quote → book a callNeed a Cyprus company too?
We also handle Cyprus company formation, so you can set up your company and structure your IP in one place.
from €799
+ VAT + actual expenses
Cyprus vs other EU IP boxes
Most EU countries have an IP discount. Cyprus has one of the lowest rates of all.
| Country | IP Box rate | Normal corporate rate |
|---|---|---|
| Cyprus | ~3% (2026) | 15% |
| Malta | 1.75% | 35% |
| Belgium | 3.75% | 25% |
| Luxembourg | ~5% | ~24.9% |
| Poland | 5% | 19% |
| Netherlands (Innovation Box) | 9% | 25.8% |
| Ireland (Knowledge Development Box) | 10% | 12.5% |
Rates indicative, from Tax Foundation Europe (2025), updated for Cyprus's 2026 reform.
Beyond the rate — why founders choose Cyprus
Broad income scope
The benefit applies to a wide range of IP income — royalties, licence fees, software revenue and IP embedded in product sales — not just patents.
0% on disposal gains
Capital gains from selling qualifying IP are fully exempt where the disposal is capital in nature.
EU & OECD-compliant
An EU member state, with a regime built on the OECD BEPS Action 5 modified-nexus standard — stable and defensible.
Common-law system & treaties
An English-language, common-law-influenced legal system and an extensive network of double-tax treaties.
Your IP is protected worldwide
Cyprus has signed all the major international IP treaties, so rights registered here are recognised and enforceable around the globe.
A focused practice, built around one regime
The IP Box is a statutory Cyprus regime built on the OECD nexus standard — not a loophole. It should be structured by a lawyer, not just an accountant, because getting the IP ownership, R&D trail and tax ruling right is what makes it hold up.
Specialists, not generalists
The IP Box regime is our core focus, not a sideline.
End to end
From the first eligibility check to the tax ruling and ongoing compliance.
OECD-compliant by design
Structures built to hold up under scrutiny — no shortcuts.
Transparent, fixed fees
You know the cost before you start.
Gregoris Philippou
Founder & Principal
Gregoris Philippou leads IPBox Cyprus. A Cyprus advocate admitted to the Bar in 2013, he has built a distinguished career in corporate and commercial law, tax, and dispute resolution, and is regularly consulted on complex commercial and tax matters. He combines deep technical knowledge of the Cyprus tax framework with a practical, structuring-first approach — exactly what the IP Box regime demands.
Focus
Education
- LL.B. (First-Class) — University of Leicester (George Heim Memorial Trust Prize)
- LL.M. in Commercial Law — University of Cambridge (Cyprus Ministry of Education scholarship)
- Legal Practice Course (LPC) — BPP Law School
Memberships
- Cyprus Bar Association (since 2013)
- Accredited ADR Mediator & Mediation Advocate
- Member, Chartered Institute of Arbitrators
Languages: Greek · English
Reviewed by Gregoris Philippou · Last updated 21 June 2026.
In-depth Cyprus IP Box guides
Dedicated pages for the questions that need more detail.
Frequently asked questions
The Cyprus IP Box is a tax regime under Article 9(1) of the Income Tax Law that allows an 80% deduction on qualifying profits from intellectual property such as patents and copyrighted software. Only 20% is taxed, producing an effective rate as low as ~3% at the 2026 corporate rate of 15%.
Where this information comes from
The figures on this page are drawn from primary legislation and independent authorities. Last reviewed 21 June 2026.
See exactly what the Cyprus IP Box could save you.
Book a free, no-obligation assessment. We'll confirm whether you qualify, estimate your effective rate, and give you a fixed quote — confidentially, usually within one business day.
- Regulated Cyprus law firm
- Confidential & no obligation
- ~1 business-day response
Prefer email? hello@ipbox-cyprus.com