What IP does not qualify for the Cyprus IP Box?

Marketing rights are excluded. A brand cannot be relabelled as software to qualify. Certain other innovative assets have additional certification and size conditions; check the specific category.

Can I use IP I bought for the Cyprus IP Box?

QE is qualifying R&D, A is acquisition cost and R is related-party R&D. OE = QE + A + R. UE = min(30% × QE, A + R). Nexus = min(1, (QE + UE) / OE), where OE is positive. Use the asset’s relevant historical expenditure; the denominator is not every accounting expense.

What substance does the Cyprus IP Box require?

Assess tax residence, actual management, functions and any permanent-establishment or treaty issues on the facts. Formal incorporation and a registered address do not settle these questions. Regulation 5 requires records by asset. Timesheets, project logs and repositories can support them, but no single template proves eligibility. Retain reliable evidence and document any reconstruction or gap.

Eligibility

Who qualifies for the Cyprus IP Box?

The Cyprus IP Box requires an eligible taxpayer, qualifying IP, income attributable to that IP and documented nexus expenditure. Regulation 6 includes Cyprus residents and specified permanent establishments; the regime is not restricted by a blanket company-only rule. The 3% illustration applies to company profits at full nexus and the 2026 corporate rate.

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Qualifying assets

Which IP qualifies — and which doesn't

Check the asset against the categories in Regulation 3 and establish the relevant rights. Creating something valuable does not by itself make it qualifying IP; marketing IP is excluded.

Qualifies

Patents (and patent extensions / SPCs)
Copyrighted software
Utility models
Plant breeders' / genetic IP
Orphan-drug designations
Other certified novel, non-obvious, useful IP*

The additional certified category requires novel, non-obvious and useful IP. The five-year averages must not exceed €7.5 million of the taxpayer’s gross income from all intangible assets and €50 million of worldwide group turnover. Certification by a competent authority is also required.

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.

What counts

Which income qualifies

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.

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%.

The biggest lever

Where your R&D must come from

Who does the R&D 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).

Quick check

Questions to check before claiming

Check the taxpayer against regulation 6.

Establish the relevant ownership and qualifying asset.

Identify income and expenditure attributable to the asset.

Assess residence and permanent-establishment issues separately.

Avoid these

Common mistakes that disqualify a claim

The reasons a Cyprus IP Box claim usually fails or under-performs.

Owning IP without doing or funding the R&D

The nexus approach rewards the R&D you fund. Holding IP passively, with no own development, leaves you with little or no qualifying profit.

Claiming marketing-IP income

Trademarks, brands and image rights never qualify. Income from them is taxed at the normal 15%, not the IP Box rate.

Buying IP and using related-party R&D

Acquisition cost and related-party R&D are excluded from qualifying expenditure and drag the nexus ratio — and your benefit — down sharply.

No contemporaneous nexus-tracking records

You must track income and R&D per asset as you go. Reconstructing it at filing time risks losing the benefit if the tax office asks.

Unsupported residence, functions or records

Assess the actual decision-makers, development functions, residence and permanent-establishment position. The IP Box rules do not prescribe one universal package of local directors, banking and staff.

Answers

Eligibility FAQ

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IPBox Cyprus editorial team · Ebrovia Ltd · Updated September 27, 2026.