Options to reduce taxable income of Cyprus company

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Sols

Staff member
Mentor Group Gold
How can I reduce the taxable income of this company? What are my options?
Incur costs on the business which are justifiable business expenses. Discuss with a Cypriot tax adviser what this can be, as it depends on your business type.

If you have no operations or management in Cyprus and can prove you have them somewhere else, a company in Cyprus can qualify for 0% tax in Cyprus.

I will be living in a territorial tax country
Then why not form a local company? What's the point of a Cypriot company if you can achieve 0% tax with a local company?
 

dotpedal

New member
Incur costs on the business which are justifiable business expenses. Discuss with a Cypriot tax adviser what this can be, as it depends on your business type.

If you have no operations or management in Cyprus and can prove you have them somewhere else, a company in Cyprus can qualify for 0% tax in Cyprus.


Then why not form a local company? What's the point of a Cypriot company if you can achieve 0% tax with a local company?
Need to use PayPal and need tax treaty with usa. For royalties income
 

James Spader

Forum Moderator
Staff member
Then why not form a local company? What's the point of a Cypriot company if you can achieve 0% tax with a local company?
second that, what is the point of this?
 

Gediminas

Offshore Tax Advisory
Mentor Group Gold
Commercial Service
Business Angel
Hi @dotpedal,

It depends on the particular activities of the company. It is very unlikely that you will be able to apply the IP Box incentive which was extremely popular before Cyprus implemented post-BEPS measures. Now, this tax incentive is still applicable but you need to develop IP within Cyprus, moreover, it is no longer applied to brands and other “easy to develop” assets.

However, Cyprus implemented another tax incentive that might be very attractive and allow it to reduce the effective corporate income tax rate to 2.5%. The name of the incentive is NID (Notional Interest Deduction). You can apply for it if you have the same (including IP) assets to contribute to the capital of your company and these assets will help the company to generate income.
 

kkein

Entrepreneur
Hi @dotpedal,

It depends on the particular activities of the company. It is very unlikely that you will be able to apply the IP Box incentive which was extremely popular before Cyprus implemented post-BEPS measures. Now, this tax incentive is still applicable but you need to develop IP within Cyprus, moreover, it is no longer applied to brands and other “easy to develop” assets.

However, Cyprus implemented another tax incentive that might be very attractive and allow it to reduce the effective corporate income tax rate to 2.5%. The name of the incentive is NID (Notional Interest Deduction). You can apply for it if you have the same (including IP) assets to contribute to the capital of your company and these assets will help the company to generate income.
What are these post-BEPS measures? If he has royalties from USA, couldn't he transfer the IP (patents, i presume?) to a local company, and get it taxed under the IP Box incentive?
 

Gediminas

Offshore Tax Advisory
Mentor Group Gold
Commercial Service
Business Angel
What are these post-BEPS measures? If he has royalties from USA, couldn't he transfer the IP (patents, i presume?) to a local company, and get it taxed under the IP Box incentive?

As a result of BEPS, the previous IP regime was significantly changed. Now, if you want to benefit from the IP box incentive, as a general rule, IP should not be transferred to CY company but should be created in Cyprus from the very beginning.

And yes, now it only applies to patents, trademarks are no longer subject to this incentive.
 

kkein

Entrepreneur
As a result of BEPS, the previous IP regime was significantly changed. Now, if you want to benefit from the IP box incentive, as a general rule, IP should not be transferred to CY company but should be created in Cyprus from the very beginning.

And yes, now it only applies to patents, trademarks are no longer subject to this incentive.
So you saying that in all these new post-BEPS IPBox regimes (Lux as well, and i suppose a few others), IP acquisition won't be allowed? I have researched a bit but haven't seen this to be forbidden anywhere, rather, simply, that the costs for acquisition won't be deductible?
I'm asking because it's more or less the norm to transfer patents from a physical person to a company post patent-application (= no need to form a company if nobody is needing your patent for which you filed a provisional application)
 

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