Taxand Cyprus explains the new IP box regime.
The new IP box regime, defines what constitutes qualifying intangible assets, qualifying profits/income, overall income and qualifying expenditure, as well as guidelines for maintaining accounting records.
The most significant change which will have an impact on many existing IP structures is that rights used for the purposes of marketing products and services such as business names, brands, trademarks, image rights etc. will no longer be considered as qualifying intangible assets.
Additionally, qualifying expenditure will only include the total research and development costs incurred in any tax year wholly and exclusively for the development, improvement or creation of qualifying intangible assets and where costs are directly related to the qualifying intangible assets. An uplift expenditure will be added to this.
The calculation of taxable income will remain consistent with the previous IP box regime, and continue to allow for an 80% of the qualifying income to be treated as a deductible expense for tax purposes. In the case of losses only 20% of the loss can be carried forward or be surrendered for the purpose of group loss relief.
Proper books of account and records of income and expenses must be kept for each intangible asset by any person who wishes to claim the above described benefit.
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The revised IP Box Regime is applicable from 1 July 2016 onwards.
