Who qualifies for the Cyprus IP Box?
You qualify if your company owns or develops qualifying IP — patents, copyrighted software, utility models or other certified novel IP — earns income from it, and funds the underlying R&D. Marketing IP like trademarks and brands does not qualify.
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 for smaller businesses — under €7.5m IP revenue (€50m group) — and must be certified as genuinely novel.
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.
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.
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 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).
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.
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.
Too little genuine substance in Cyprus
The regime expects real activity. A pure holding structure with no substance is the most common reason a claim fails.
Eligibility FAQ
Talk to a Cyprus IP Box specialist.
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.
Reviewed by a Cyprus-admitted advocate · Last updated 21 June 2026.