Corporate tax and IP Box — Cyprus
We will calculate your Cyprus company's corporate tax at the 2026 rate and check whether your product qualifies for the IP Box regime. We set up the per-asset records and deal with the tax authority for you.
When you need tax work in Cyprus
Corporate tax from 2026 — 15% · IP Box effective rate — around 3% · Out of the tax base — 80% of qualifying profit · Defence contribution on dividends — 5%
You build software and pay tax like any other company
Profit from your software and patents can fall under the IP Box regime: 80% of the qualifying profit leaves the tax base, and the effective rate drops to roughly 3%.
The rate has changed while your numbers have not
From 1 January 2026 Cyprus corporate tax is 15%, up from 12.5%. A model built on the old rate understates your liability by almost a fifth.
It is time to distribute profit to the owner
The defence contribution on dividends is down to 5% for profit earned from 2026, while profit earned up to and including 2025 keeps the old 17% for another six years.
It is unclear whether your product qualifies
Patents and copyrighted software go into the regime; trademarks, brands and domain names do not. Your product often has both layers, and we split them before the calculation.
The company belongs to a large group
Groups with consolidated revenue from €750 million fall under the EU global minimum tax rules: an effective 3% is below the minimum, so the group tops up the difference.
What you get
- The qualifying profit share calculated for every asset
- Per-asset records that can be reproduced in any year
- The return and the provisional payment calculation
- The dividend side worked out at both rates
- A document pack ready for a tax query
What is required for IP Box and a correct calculation
Tax is administered by the Cyprus Tax Department; returns and payments run through the state Tax For All portal, which also takes the provisional payments for the year.
What the company needs to have
- A qualifying asset: a patent or software protected by copyright. Other development results enter the regime only where additional conditions are met.
- Its own development spending: the larger the share of your own costs in the total, the larger the share of profit that attracts the relief.
- The nexus calculation: qualifying expenditure with an uplift of up to 30% divided by overall expenditure for the asset, with the ratio capped at 100%.
- Separate records per asset: income, costs and profit are tracked asset by asset, with no single pot for the company.
- Development documents: contracts with the team, statements of work, acceptance records, evidence of rights.
- Real presence in Cyprus: the people who take decisions on the asset, and functions that are genuinely performed here.
What the regime does not accept
- Trademarks, brands, domain names and other marketing intellectual property.
- The cost of acquiring a ready-made asset and development outsourced to related parties — both reduce the share of qualifying expenditure.
What we do with this
- We test every asset against the regime and calculate the share of qualifying profit.
- We set up the records so the calculation can still be shown to an inspector two years later.
- We calculate corporate tax, provisional payments and the dividend side as one exercise.
- We rebuild the model against the new rate where the company's budget was put together at the old 12.5%.
Rates and timelines
| Figure | Value |
|---|---|
| Corporate tax from 1 January 2026 | 15% |
| Corporate tax before 2026 | 12.5% |
| Qualifying profit out of the tax base (IP Box) | 80% |
| Effective IP Box rate | around 3% |
| Uplift on qualifying expenditure | up to 30% |
| Defence contribution on dividends, profit from 2026 | 5% |
| Defence contribution, profit up to and including 2025 | 17% |
| Period the 17% rate stays in place | 6 years |
Sources: the 15% rate — Law 244(I)/2025; the defence contribution — Law 245(I)/2025; the 80% deduction and the nexus formula — Income Tax Law 118(I)/2002 as currently in force.
FAQ
What happens to an asset bought from or developed by a related party?
That spending does not count as qualifying: buying a ready-made solution and development handed to a related company both reduce the share of profit the relief applies to.
The nexus formula divides qualifying expenditure, with an uplift of up to 30%, by overall expenditure for the asset. The more in-house development it contains, the larger the relief.
The product name does not qualify for IP Box, but it still needs protecting — that is trademark registration. If the company still sits in another jurisdiction, the relief begins with moving the company to Cyprus.
Stages of work
Asset review — 3–5 working days.
We will go through what your company holds: code, patents, brands, licences. We separate what qualifies for the regime from what never will.
Calculating the qualifying share.
We collect the expenditure for each asset, apply the nexus formula with its uplift of up to 30% and arrive at the share of profit the relief applies to.
This is also where it becomes visible what pulls the share down: buying a ready-made solution and development handed to a related company.
Setting up the records — 1–2 weeks.
We will build per-asset tracking of income and costs together with your accountants, so the calculation can be reproduced in any year without hand-assembly for the return.
Checking substance.
We look at where decisions on the asset are taken and by whom: without real functions in Cyprus the regime does not hold up.
Where your team is spread across countries, we work out which part of the work and which decisions genuinely sit with the Cyprus company.
Tax calculation and return.
We will calculate corporate tax at 15%, the provisional payments and the consequences of distributing profit, then prepare and file the reporting.
Where the year straddles the reform and part of the profit was earned before 2026, the dividend side is calculated at two rates at once.
Support before the tax authority.
We answer the Tax Department's queries and, where the situation calls for it, prepare an advance agreement of the position on the asset.
A query normally goes to the evidence behind the share of in-house development, which is why we gather the documents well in advance.
Recalculation as things change — continuously.
A new product, an acquired piece of development, a change in the group structure or new rules — each of these changes the calculation, and we rebuild it with you.
The rest of our Cyprus services are collected on the jurisdiction page: incorporation, bank accounts, BCS status and redomiciliation.
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