Announcement by the Ministry of Finance
Tax regime on royalties from Intellectual Property in accordance with the Action Plan of OECD for the Base Erosion and Profit Shifting (BEPS)
The Administration of the Ministry of Finance announces the upcoming
amendment of the Intellectual Property tax regime. The said amendment will
incorporate the recommendations of Action 5 of the Organisation for Economic
Co-operation and Development (OECD), which were issued on October 5
th 2015 for the Action Plan against ‘Base Erosion and Profit Shifting’
(BEPS) as well as the Conclusions of the ECOFIN Council adopted on December
8 th 2015.
Action 5 deals with favourable tax regimes among which the
Intellectual Property regime (IP regime). The approach of the Action 5 (nexus
approach) requires the existence of material activity which includes the clear
interconnection between the rights which create the income and the activity
which contributes to that income.
Having regard the above, the Cyprus Authorities will proceed with the
amendment of the Intellectual Property tax regime in order for it to be aligned
to the parameters of Action 5 for the Intellectual Property tax regime and for
the inclusion of persons to be possible who acquire or already acquired
Intellectual Property in a competitive tax regime fully aligned as from January
1 st 2016 with the Action Plan against the Base Erosion and Profit
Shifting of the OECD and the applicable framework at the European Union
level.
The intention of the Cyprus Authorities is for the amendment of the
Intellectual Property legal framework in line with the provisions of Action 5 to
provide for the maximum transitional arrangements that are included within the
revised framework.
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