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IP Box Alignment with the OECD’s BEPS

MEDIA / News / 2016 NEWS / IP Box Alignment with the OECD’s BEPS Action 5 conclusions announced

The Cyprus Ministry of Finance (MoF) announced on 30 December 2015 proposed amendments to the current Cyprus Intellectual Property (IP) Box in order to introduce a new IP Box as from 1 July 2016 in order to be fully aligned with the conclusions of the Organisation for Economic Co-operation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) Action 5.

In order to provide maximum transitional arrangement, the MoF has provided certain timeframes for the current IP regimes to transition and adapt to the new amendments. It is expected that IP benefiting from the current Cyprus IP Box by 30 June 2016 will continue to receive the current benefits for a further period of five (5) years. In the case, however, of IP acquired, directly or indirectly, from related parties at any time in the first six months of 2016, the transitional period is much shorted, until 31 December 2016, unless at the time of acquisition such IP was already benefiting from an IP Box.

Under the current Cyprus IP Box, the effective corporate tax rate is 2.5% for qualifying incomes earned on qualifying IP assets. Qualifying income includes royalties, gains on disposal of IP and IP infringement compensation. The new amendments will also include a narrower range of IP assets and is expected to include patents and computer software.

Although not referred in the MoF announcement, it is expected that the new Cyprus IP Box will retain the competitive effective corporate tax rate of 2.5% with a possible difference that only a portion of income may qualify.

In line with the recommendations of BEPS Action 5, it is expected that Cyprus will automatically exchange information (under existing international agreements) on taxpayers who benefit from the transitional agreements of the current IP Box if the IP entered the current IP Box in the time-period from 7 February 2015 to 30 June 2016.

If you wish to take advantage of the prevailing Cyprus IP Regime you can do so by 30 June 2016. For more information and a complimentary consultation please contact our director, Mr Savvas Shiatis at

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