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Discussion in 'Cyprus Company formation' started by blizz, Mar 17, 2017.
I was wondering if a Cyprus company pay tax on royalties?
Are they exempted from other tax?
Tax treaties withholding tax (WHT)
WHT on dividends, interest and royalties
Cyprus does not levy a WHT on dividends, interest and royalties paid to non-residents of Cyprus except in the case of royalties earned on rights used within Cyprus, which are subject to a WHT of 10% (5% in the case of cinematographic films). Such Cyprus WHT on royalties for rights used within Cyprus may be reduced or eliminated by double tax treaties entered into by Cyprus or by the EU Interest and Royalty Directive as enacted in the Cyprus tax legislation.
No they don't pay any tax on royalties!
what other answers are you looking for?
No they don't pay tax!
Regarding Royalty income in Cyprus: You get an 80% tax exemption.
Here is an example to help you understand how it works:
The tax on royalty income is as follows: Let's say we have a total of €100
Royalty income €100
Less: Direct expenses relating to royalty income €25
Net royalty income €75
Other trading income (not from IP) €20
Tax allowance 80% of €75 - €60
Taxable income €35
Tax payable €35 Χ 12,5% (Cyprus Corporate Tax) €4,38
All income from use of intellectual property e.g sale, rental etc (less direct expenses) is subject to 80% tax relief.
The above apply provided that the IP is registered in the name of the company.
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