Intellectual property is the field of law that addresses the protection of the rights of creators of original works. It includes everything i.e. literature, music, inventions and trademarks. In general terms, the main objective of the intellectual property jurisdiction is to support the development of new technologies, inventions, arts and to promote economic growth and innovation. In other words, individual creators and inventors tend to have greater incentives to develop their creative projects once they are aware that their work will be protected and can obtain some economic benefits from it.

Cyprus established an innovative system that deals with the protection of IP rights in detail. Precisely, an advanced system has been put in place that guarantees that the results of innovation and creativity are protected at a national, European and international level. In addition to this, Cyprus treaties are signatories to IP and international protocols such as WIPO, European Community Trademarks, the Patent Cooperation Treaty, the Paris Convention for the Protection of Industrial Property, the Treaty on Trademark Law, etc.

In Cyprus, the main mechanisms for the protection of intellectual rights are patents, trademarks and copyrights.

Patents protect a work from being created, traded, or used by others for a specified period of time. In Cyprus, the Department of Business Registration and Official Receiver issues a national patent certificate. On the other hand, a European Patent certificate is granted by the European Patent Office. International patent certificates that follow the provisions of the Patent Cooperation Treaty are managed by the World Intellectual Property Organization (WIPO).

Trademarks protect names and allow the identification of brands, products and companies. The logic of trademarks is to help consumers distinguish between different competitors. Trademarks are established when a business begins to use a unique mark to identify its business.

Brand protection is organized in the following ways:

1. The provisions of Cap. 268 of the Cyprus Law offers protection at the national level.

2. The EU Regulation 207/2009 and the EU Regulation 6/2002 offer through Cyprus, uniform protection throughout the territory of the European Union.

3. Since Cyprus is a signatory to the Paris Treaty on the Protection of Industrial Property, managed by WIPO and part of the Madrid Protocol, global protection of trademarks is guaranteed.

Copyright considers the protection of artistic works. Creators have exclusive rights to reproduce and display their work in public as they wish. However, it should be clarified that copyright does not consider the protection of ideas but the way in which they are expressed. Copyrights allow creators to derive financial benefits from their work. In addition, copyright prevents others from benefiting from the creators’ work without their permission.

Law No. 59/79 on the Protection of Intellectual Property offers copyright protection at the national level. In addition, Cyprus is a signatory to the Berne Convention for the Protection of Literary and Artistic Works which covers a wide range of rights, including software copyrights. The latter provides protection to all member states of the Convention without requiring any further action.

Cyprus “IP Box”:

In Cyprus, the “IP Box” scheme was introduced on January 1, 2012. Specifically, it is a package of incentives and tax exemptions in relation to income derived from IP rights. Among the main objectives is to support investments in research and development and innovative inventions that will be beneficial to the general public. The concept of “IP box” refers to reduced taxation on the income or profits from the license, alienation or transfer of a patent.

EU countries that apply similar IP tax regimes are France, Belgium, Hungary, Ireland, Luxembourg, the Netherlands, Spain and the United Kingdom. “IP box” schemes can be divided into two categories. The first category, adopted by France, the Netherlands and the United Kingdom, refers to tax reductions on qualified income. The second category, adopted by Belgium, Hungary, Luxembourg, Spain and Cyprus, considers an exemption of a particular percentage of income.

Cyprus offers considerable tax incentives such as:

1. Effective tax rate of 2.5% per year, which is the lowest percentage within the EU. Cyprus is more competitive than other countries. Precisely, in Luxembourg the effective tax rate is 5.7% and in the Netherlands 5%. As a result, companies investing in IP assets in Cyprus can benefit from an effective tax rate of 2.5% on IP exploitation. At the same time, they benefit from EU and international intellectual property treaties and protocols.

2. Competitive amortization provisions for five years. This provision refers to IP rights obtained or developed after 1^street January 2012.

3. Cyprus has an extensive network of double taxation treaties.

4. 80% of the global net royalty income generated by the intellectual property of Cyprus-based companies is exempt from income tax.

5. 80% of the net profits generated by the alienation of intellectual property of Cyprus-based companies is exempt from income tax.

A Cyprus international trust that obtains dividends from a Cyprus intellectual property owner will not be subject to any Cyprus tax. In addition, the trust can generate income that can be converted into capital at the end of the year without any tax consequences for the trust or its beneficiaries, since none of the beneficiaries is a tax resident in Cyprus.

An IP gets the benefits mentioned above only if the taxpayer is the owner of the IP, it is officially registered in Cyprus or abroad. In addition, the IP must be applied in the generation of income.

Cyprus’ efficient IP tax regime and corporate jurisdiction are two important factors that make Cyprus a highly attractive destination for the acquisition or development of IP assets. As explained above, the Cyprus IP box offers attractive incentives to set up an IP business in Cyprus.