In recent years, the Republic of Cyprus has introduced a number of schemes that can lead to substantial tax incentives related to license/royalty payments, deriving from the exploitation of intellectual property rights. These rights have been widely known as intellectual property rights box (IP BOX).
Intellectual Property in Cyprus makes reference to creations and ideas of a person and its protection aims at motivating such persons to utilize their ability to invent, produce, initiate, innovate and improve.
The cost of acquiring or developing of an Intellectual Property Right acquired by a Cyprus Company can be capitalized on a straight line basis over five years, giving an annual write-down allowance of 20%.
Further benefits can be achieved by using a Cyprus International Trust to hold the shares in and provide finance to the Cyprus IP owner. A Cyprus international trust receiving dividends from a Cyprus IP owner (the source of which is royalty income) will not be subject to any form of taxation in Cyprus. At the same time, the trust can accumulate income which can be converted into capital at the end of the year without any Cyprus tax consequences for the trust or its beneficiaries, provided that no beneficiary is a Cyprus tax resident . The Cyprus International Trust can also provide interest- bearing finance to the IP owner for the purpose of acquiring the IP assets or for working capital. While the interest paid by the company will be deductible for tax purposes, it will be exempt in the hands of the trust, which optimizes the structure even further from a tax perspective.
The Cyprus IP box provides attractive opportunities for structuring the exploitation of IP assets through Cyprus and in particular through the use of Cyprus-resident IP owners, especially in conjunction with Cyprus’s extensive network of double tax treaties, under which withholding tax on royalty income is either eliminated altogether or substantially reduced.
Our legal team will also handle the preparation of the royalty agreement required for the implementation of your Intellectual Property solution. The importance of the royalty agreement cannot be understated since it is the essential link that will form the remuneration received for the Intellectual Property held by the Cyprus Company and the intervals on which it is received. Another important function of the royalty agreement is that the terms must comply with the applicable transfer pricing rules and more often than not the success of tax planning structure may hinge on the specific terms of the royalty agreement.
Trade Mark Registration
One very significant part of our clients business is the creation and development of the mark, logo and name. It will identify their business, creating an unique image that will also communicate values, experience and ideals. It is here where trade mark registration plays an important role and where our Firm will assist you to make sure you take all the right steps to protect your mark.
We always encourage our clients to do so and protect their IP inventions, literary, names, symbols, images and designs. Dedalos will assist you during the process, making sure that you take all the steps.
The registration and protection of trademarks in Cyprus is governed by the Trade Mark Law, CAP. 268 as amended (the “Law”). The Law has brought Cypriot trademark legislation in line with European trademark legislation.
Intellectual Property in Cyprus is divided to (a) Trademarks, (b) Patents, (c) Industrial Designs, and (d) Copyrights.
Through our Firm, our clients can apply for:
- Cyprus trade mark registrations;
- International registrations (Madrid system);
- European Community registration (OHIM).
The procedure that we need to follow :
- An application to the Cyprus Trademark Office for trademark registration must be filed by a local law firm. Relevant authorization must be issued by the trademark owner.
Also, we will assist you in deciding the classes necessary in order to best protect your trademark, we will recommend the countries or Communities where such registration should be done (via OHIM or WIPO or otherwise).
- Once filed, the application will be subject to examination as to the subject matter as well as to its’ distinctiveness. Upon successful registration (the time of registration depends to many factors) the trademark application is published in the “Official Gazette”; which officially opens the opposition period (2 months from the publication date).
- A successfully registered trademark in Cyprus is valid for 7 years and starts from the day of filing the application. The registration is renewable for further 14 years.
- In the event that the trademark has not been used for 5 years from the day of registration, it may be subject to cancellation.
Even though the process is quite simple, we always recommend to our clients to follow some indications. Before we are proceeding with the filing for a new trademark registration, we confirm that your intended trademark is available for registration. Dedalos Firm will identify similar trademarks and names, therefore avoiding unnecessary expenses and claims when possible. This will give you a clear picture of existent similitude in the Market and if you would like to proceed.