Cyprus accounting offices and Royalty Companies – Royalties are the payment of license fees or commissions by one individual or entity to another for the use of intellectual property such as:
For many international companies, the development and licensing of intellectual property can be considered as one of their most important activities. Licenses can be granted to third parties or related parties. Adequate structuring of the ownership of the intellectual property and channeling of the license payments can lead to significant tax benefits.
The advantages of a Cyprus IBC granted the royalty rights to use a patent, trademark or innovation outside Cyprus are the following:
The royalty income of a Cyprus IBC will be subject to corporation tax at the rate of 10% after deducting all relevant expenses including royalties paid. Therefore, a small margin of net royalty income will be taxable in Cyprus at 10%.
Any withholding taxes over the royalties received by the Cyprus Company can be deducted from corporate income tax payable in Cyprus .
If a Cyprus IBC is granted the royalty rights to use a patent, trademark or innovation outside Cyprus, then there are no withholding taxes on royalties paid by the Cyprus company.
No withholding tax on dividends distributed to non-resident shareholders of Cyprus Companies.
No withholding tax on interest paid by a Cyprus Company to non-resident creditors.
Cyprus has concluded tax treaties with more than 40 countries worldwide. Royalty payments to Cyprus licensing companies benefit from the low withholding taxes imposed by countries with which Cyprus signed Tax Treaties.
For example royalties are paid to Cyprus from Russia , Ukraine , Austria , Belgium , Denmark , Hungary , Italy , Norway , South Africa , USA , and Sweden with zero withholding taxes, Ireland and Greece 5% on film royalties only, France, Germany and UK 5% on film and TV royalties only.