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Cyprus Intellectual Property

Intellectual Property law or IP law as it is more often referred to is the Legal entitlement in connection with creative ideas and works such as literary works, artistic works, designs and inventions. The purpose of Cyprus Intellectual Property law is ultimately to encourage innovation and creativity by protecting the works of the individual and giving commercial value. Theft of a person’s idea or copying of a person’s work is not generally taken as seriously as theft of a person’s TV or phone, hence the need for IP law to protect this.

The World Intellectual Property Convention of 1968 defines IP as including;

  • Literary, artistic and scientific works
  • Performances of performing artists, phonograms and broadcasts
  • Inventions in all fields of human endeavour
  • Scientific discoveries
  • Industrial designs
  • Trademarks, service marks and commercial names and designations
  • Protection against unfair competition, and
  • All other rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields

Cyprus Intellectual Property Law is in line with the European Union and Cyprus is a member of the Office for Harmonization in the Internal Market for the registration and protection of Trade Marks and Industrial Designs within the European Union. Cyprus is also a member of the World Intellectual Property Organization and is party to numerous International Conventions and Treaties.

In 2012 Cyprus introduced a new Intellectual Property regime which provides tax benefits in order to stimulate growth in the area of IP.

These benefits include;

  • 80% exemption on royalty income and capital gains upon disposal of IP
  • No recapture system for previously generated losses and losses can be carried forward indefinitely
  • Competitive amortization provisions over a five year period for IP rights acquired
  • A wide range of qualifying IP rights
  • Effective tax rate of 2% of less

This effectively means that four fifths of the profit earned from IP endeavors is automatically disregarded for tax purposes. When you combine this with the usual tax benefits of a Cyprus company such as any dividend income generated and paid to non-resident persons or company being exempt from Cyprus tax, Cyprus’s corporation tax of just 10%, no capital gains or stamp duty and the numerous double tax treaties Cyprus has with many countries word wide it is a very attractive regime indeed. If a Cyprus International Trust is used to receive the dividends then providing that no beneficiary is resident in Cyprus then there will be no form of Cyprus taxation at all.

Intellectual Property is an evolving field whose influence on technology, social development and Economic growth is immense. Certain legal entities that are active internationally will not allow Intellectual Property to be sold in countries that do not have adequate IP laws to protect the owner’s right. Cyprus recognized this and not only enacted legislation that is accepted world wide, but also introduced a favorable regime to foster investment and trade. It is perhaps not surprising therefore that Cyprus is so popular for Offshore Company Formation when it comes to Intellectual Property.

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