Cyprus IP Box versus Ireland KDB: eligibility, tax base and claim timing
The bilateral decision: eligibility before rates
IPBox Cyprus editorial team · Ebrovia Ltd · Updated: ·3 min read
In short
Compare two separate reliefs: Cyprus’s full-nexus corporate illustration is 3% of eligible net IP income at the 2026 rate, while Ireland’s KDB can produce 10% on qualifying profits. Check the asset, development history, claim procedure and accounting period before comparing the figures.
The bilateral decision: eligibility before rates
An eligible software company may have a reason to examine either jurisdiction. Start with where the business actually develops and exploits its software, which entity holds the rights and which income is attributable to the asset. Moving an address or copying another country’s computation does not establish entitlement.
This page compares Cyprus and Ireland specifically. The wider EU comparison serves a different decision: shortlisting several jurisdictions. A two-country assessment should resolve the conditions that apply to the actual business rather than simply repeat the rate table.
Compare the deductions on their own tax bases
For Cyprus in 2026, the simplified full-nexus example applies an 80% deduction to eligible net IP income and a 15% corporate rate to the remainder. On €100,000 of such income, that gives €3,000 before other adjustments. Partial nexus changes the result; not all profit necessarily receives the full deduction.
Ireland’s current KDB deduction is 20% of qualifying profits. With the 12.5% trading rate, an illustrative €100,000 qualifying-profit base leaves €80,000 taxable and €10,000 tax. This does not establish that the same accounting profit produces the same qualifying base in both countries.
Check the asset and development conditions separately
Irish Revenue identifies computer programs, qualifying patented inventions and certain certified IP for small companies among qualifying assets created through qualifying R&D. Software is therefore not a Cyprus-only category. The company’s creation of a usable qualifying asset from qualifying R&D is an Irish eligibility condition to examine.
Cyprus recognises copyrighted software and other specified assets under its own regulations. Establish ownership or economic ownership and classify the relevant expenditure. An acquired asset, independent development services and related-party development can affect the calculation differently. Do not transfer one country’s classification into the other without checking its rules.
Put accounting periods and evidence into the comparison
Revenue’s published KDB window covers accounting periods beginning before 1 January 2027. Check the position for any later starting period before building a long-term forecast. The Irish claim is made through ROS on the corporation tax return; Revenue’s guidance describes a 24-month limit from the relevant period end for the initial election per asset.
For Cyprus, an advance ruling is optional and the annual claim still needs substantiation. Prepare rights documents, development expenditure and asset-level income records in either assessment, but identify the specific local claim, election and retention requirements instead of assuming one common procedure.
Model the business transition and total burden
Compare the costs and consequences of keeping the current structure with those of a real relocation or asset transfer. The comparison should identify who develops, controls risks, contracts with customers and maintains the records. Existing expenditure history does not disappear because a new structure is proposed.
Foreign withholding, potential exit taxes, transfer pricing and any in-scope Pillar Two exposure are separate questions. Personal tax residence and dividends also require a separate shareholder analysis. Select a structure on the supported overall outcome, not on an assumed universal 3% versus 10% burden.
Frequently asked questions
Sources & further reading
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