Cyprus: Amendments to intellectual property tax regime, implementing BEPS recommendations

Cyprus: Amendments to intellectual property tax regime

Changes to the “intellectual property” (IP) regime in Cyprus are intended to align the existing IP regime in Cyprus with certain OECD recommendations under the base erosion and profit shifting (BEPS) Action 5.

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The IP tax changes in Cyprus were adopted on 14 October 2016, and will apply retroactively from 1 July 2016. 

The amendments do not change the effective tax rate of 2.5% as currently imposed under the current IP regime. Among the measures under the revisions to the IP tax regime are:

  • Grandfathering provisions for certain IP asset acquisitions
  • Transitional arrangements, allowing the provisions of the current IP tax regime to continue to apply through 30 June 2021
  • Changes to narrow the definition of what is a “qualifying” IP asset
  • A modified nexus approach
  • Rules for foreign permanent establishments

 

Read an October 2016 report prepared by the KPMG member firm in Cyprus: Amendments to the Cyprus Intellectual Property regime

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