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  Corporate Tax, Cyprus Introduction Transitional arrangements New arrangements Comment Introduction Parliament recently amended the Income Tax Law to bring its provisions on the taxation of income from the use or sale of intangible assets into line with the 'modified nexus' approach. This approach was agreed by G20 leaders towards the end of 2014 and adopted by the Organisation for Economic Cooperation and Development and the European Union. It allows a taxpayer to benefit from an IP taxation regime (commonly known as an 'IP box') to the extent that it can show material relevant activity, including a clear connection between the rights which create the IP income and the activity which contributes to that income. Countries whose IP regimes were incompatible with the modified nexus approach were required to amend them and to allow no new entrants to non-compliant IP regimes after June 30 2016. However, transitional arrangements allowing taxpayers benefiting from existing...

  It is no secret that the favourable tax treatment of IP-generated income (generally known as the IP Box regime), was designed to stimulate hi-tech innovation across the EU. In the recent years, certain G20 countries, perhaps with particular reference to Germany, were unhappy with the number of IP Box regimes developed in the EU, notably extending the favourable tax treatment (in essence lower effective corporation tax) to any IP-generated income as opposed to simply Patent-related income. It is important to note the following proposals by the UK and Germany, revealed at the latest G20 summit: The present UK Patent Box will be closed to new entrants in June 2016 and abolished by June 2021. The implication is that a new, reformed UK Patent Box will be in place by June 2016 at the latest, based on the OECD's 'Modified Nexus Approach'. This will only offer tax incentives where significant R&D is undertaken in the UK. Companies already within the UK Patent Box can hold on ...

  Following considerable opposition from some countries to IP box regimes, G20 leaders reached agreement towards the end of 2014 on a 'modified nexus' approach that allows a taxpayer to benefit from an IP regime only to the extent that it can show material relevant activity, including a clear connection between the rights which create the IP income and the activity which contributes to that income. The modified nexus approach has since been endorsed by all Organisation for Economic Cooperation and Development and G20 countries. Under the proposal, countries with IP regimes that are incompatible with the modified nexus approach are expected to take steps to amend them. There can be no new entrants to non-compliant IP regimes after June 30 2016, but there may be transitional arrangements allowing taxpayers benefiting from existing arrangements to continue to do so until June 30 2021. The Ministry of Finance recently announced plans to amend the  Cyprus IP Box Regime  in lin...