Due to the low withholding tax rates for royalties provided in most of the Cyprus’ Double Tax Treaties and the use of the EU Directives, establishing a royalty company in Cyprus can be a very attractive proposition.
Royalties and licensing rights for intellectual property can be owned by or assigned to a Cyprus Company. Intellectual Property may include computer software, technical knowledge, patents, trademarks, trade secrets & methods, and copyrights.
Royalties and licensing fees for intellectual property can be owned by or assigned to a Cyprus Company. The Cyprus IBC can then enter into license or franchise agreements with other companies interested in exploiting these rights. Royalty payments from Central and Eastern European countries would normally be deductible expense in the source country and they will be subject to a 10% tax after deduction of expenses in Cyprus. The use of the Cyprus' Wide Double Tax Treaties Network and EU Directives reduces or eliminates the withholding tax on the collection of the Royalty payment.
Apart from the tax system’s generic features, the DTT Network and the adoption of EU Directives, other important tax system features beneficial to Cyprus Royalty Companies are the following:
- Absence or reduction (under a Double Tax Treaty or the Interest and Royalty Directive) of withholding tax on royalties paid to Cyprus Company.
- Low overall tax burden.
- Tax deduction of royalty payments.
- Effective tax depreciation of investments in intellectual property.
- Absence of withholding tax on royalty payments (including to offshore companies) for rights used outside Cyprus - the usual case.
- Neutral VAT treatment.
- Reasonable level of “margin” required by tax authorities.
- Effective protection of intellectual property rights by Legislation and the participation of Cyprus in international agreements.
Please contact us for more information:
Tax Structures can legally mitigate one’s tax liabilities. More information can be provided on request (contact us). However, it must be noted that since some of the structures may be technically complex, they are ideally discussed at a meeting with Focus Business Services’ Directors.
Note: Our Directors are continuously travelling to a number of countries meeting existing and potential clients and associates.
For more detailed information about the Uses of Cypriot Companies by Corporations, please either scroll up or down this page (quicker) or click below to go to the relevant section:
Int'l Trading, Commission Agent & Service Companies | Investments | Holding Companies | Group Finance Companies | Royalty, Patent & Trademark Companies | Construction & Engineering | Internet & E-Commerce | Leasing | Printing & Publishing | Real Estate | Headquarter Companies | Administration & Treasury Management | Employment Companies | Executive Recruitment & Employment | Int'l Banking Units | Captive & General Insurance | Financial Services | Shipping & Ship Management
For more detailed information about the Uses of Cypriot Companies, please either use the main menu on the left or click below to go to the relevant section (quicker):
Uses by Corporations | Uses by Individuals | Non - Tax Uses