CYPRUS
CYPRUS
be 5 percent. Te acceleration of writing down allowances will result in substantial cash flow benefits by reason of the deferral of tax liabilities, especially where the value of the IP asset is substantial.
Other modifications
A company incorporated by its parent company any time during a tax year will be considered as part of the group from the beginning of the year for group relief purposes. Tis means that relief of the group can be claimed from the year of acquisition. In the past, group relief was allowed only when all companies were part of the same tax group for the whole financial year for which the relief is sought.
It is important for a company to know exactly where the law stands on capital allowances as they are deductible as expenses. Te capital allowance is increased to 20 percent on plant and machinery purchased during 2012–2014. Te capital allowance has also been increased to 7 percent for industrial and hotel buildings during 2012–2014.
Tax rate
Te tax rate in Cyprus is among the lowest in Europe. Te effective tax rate applicable will be approximately 2 percent on royalty profits, given the above capital allowances as well the other reductions made.
Te amendments discussed above, as well as the fact that Cyprus is a member state of the EU with a useful geographical location, suggest that Cyprus has indeed become an enviable royalty and holding structure jurisdiction.
Ermioni Pavlidou is head of Michael Kyprianou & Co. LLC’s IP department. She can be contacted at:
ermioni@kyprianou.com.cy
Ermioni Pavlidou obtained an LLB from the University of Central Lancashire, UK, and an LLM in criminal litigation law from City University in London. She is a member of the Cyprus Bar Association. Pavlidou specialises in IP and represents mainly domestic and international clients in obtaining, maintaining and enforcing IP rights in Cyprus and abroad.
A COMPANY INCORPORATED BY ITS PARENT COMPANY ANY TIME DURING A TAX YEAR WILL BE CONSIDERED AS PART OF THE GROUP FROM THE BEGINNING OF THE YEAR FOR GROUP RELIEF PURPOSES.
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World Intellectual Property Review e-Digest 2013
www.worldipreview.com
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