Cyprus IP Box 2026: About 3% Effective Tax on the Software and Patents You Build, and How We Set It Up Right

You wrote it. Every line of the code, every formula in the patent, every night spent fixing the bug nobody else could find. The product now runs on thousands of devices, customers pay for it every month, and the money finally comes in. Then the tax year closes, and the state arrives to take a third, sometimes close to half, of what your mind produced. The state did not write a single line. It did not sit with you through the failed versions. It will spend your money on things you would never fund with a free hand: subsidies for companies that compete with you, debts it ran up before you were born, weapons for wars nobody asked you about.

Now imagine a different ending. The same product, the same customers, the same invoices. But the company that owns your software sits in an EU member state that rewards people who build things. It deducts 80% of the profit that your intellectual property earns, and pays the standard 15% only on the rest. On the profit from the IP you developed, the effective rate comes to about 3%. Not by hiding anything. Not by pretending. By using a regime written into the law, approved under the OECD rules and published for anyone to read.

It sounds like a fairy tale. It is real because it is legal. Until now, the big pharmaceutical groups and the software multinationals used this kind of regime with whole departments of advisers behind them. Now you can use it too, as a founder, a developer, an inventor or a small team, through ENCC. This guide explains how the Cyprus IP Box works in 2026, what counts, how the nexus rule decides your rate, what your home country will check, and how we set it up so that it stands up to every audit.

The key points

• About 3% on IP profit. Cyprus taxes companies at 15% from 2026. A Cyprus resident company may deduct 80% of the qualifying profit earned from a qualifying intangible asset. On a fully qualifying profit, the effective rate is about 3%.
• What qualifies. Patents, copyrighted software and certain other legally protected IP that results from research and development. Trademarks, brand names and other marketing assets are outside.
• The nexus rule. The share of profit that enters the box depends on how much of the development you do yourself, in your own company, or buy from unrelated providers. Build it in-house and the whole profit can qualify.
• Which income. Royalties, licence fees, the part of your product or service income that is earned by the IP, compensation for infringement and gains on disposal of the qualifying asset.
• Your choice every year. The deduction can be claimed in full, in part or not at all, year by year. Losses from the qualifying asset count only at 20%.
• Real substance. The company must be managed and controlled in Cyprus and do real development work. We organise that with you from the first day.
• From the company to you. Profits can stay in the company and be reinvested, or flow to you. If you live in Cyprus as a Non-Dom, dividends carry no SDC, with GESY at 2.65% (capped).

Key terms, in plain words

IP Box. The everyday name for the Cyprus regime in section 9(1)(k) of the Income Tax Law: an 80% deduction from the qualifying profit earned by a qualifying intangible asset.

Qualifying intangible asset. The IP that the law accepts: patents and similar rights, copyrighted software and, for smaller companies, certain other certified inventions. It must result from research and development carried out by, or for, the company.

Qualifying expenditure. What the company spends on the research and development of that asset: salaries of the people who build it, direct costs, supplies, and work bought from unrelated providers.

Overall expenditure. Qualifying expenditure plus what the company paid to acquire IP and to related parties for development work.

Nexus fraction. Qualifying expenditure, plus an uplift, divided by overall expenditure. It decides which share of the profit from the asset counts as qualifying.

Qualifying profit. The income from the qualifying asset, minus the direct costs of earning it, multiplied by the nexus fraction.

Substance. The proof that the company is a real business in Cyprus: decisions taken there, people who work there, and costs that match the activity.

The point: the vocabulary is short, and once you have it, the regime is simple. If you already know which product you want to place in the box, tell us about it.

The arithmetic: how 15% becomes about 3%

This is the number that changes your year: on a fully qualifying profit, you keep about 97 cents of every euro the company earns from your IP, before you take it out.

Here is a simple illustration. Your Cyprus company owns a software platform it developed with its own team. In 2026 it earns EUR 500,000 in licence fees. The direct costs of earning that income, including the development salaries and the amortisation of the software, come to EUR 100,000. The income from the asset after costs is EUR 400,000.

All the development was done by the company's own people, so the nexus fraction is 100% and the whole EUR 400,000 is qualifying profit. The company deducts 80%, which is EUR 320,000. Taxable profit is EUR 80,000. At 15%, the tax is EUR 12,000. On EUR 400,000 of profit, that is an effective rate of 3%.

Compare that with what the same EUR 400,000 costs elsewhere. At a combined corporate and trade tax rate of around 30% in many German cities, the tax would be about EUR 120,000. The difference of more than EUR 100,000 a year is not a gift from the state. It is your own money that simply stays with you, inside your company, available to hire the next developer, fund the next version or build reserves.

Now the honest variation. Suppose 30% of the development was bought from a related company, for example a firm you own in another country. The nexus fraction then falls below 100%. Qualifying expenditure is 70 out of 100, the uplift adds up to 30% of that, so 21, and the fraction is 91%. Qualifying profit becomes EUR 364,000, the deduction EUR 291,200, the taxable profit EUR 108,800, and the tax EUR 16,320. The effective rate is about 4.1%. Still a fraction of what you pay at home, but you see why the design of the development chain matters from the start.

Every euro the state does not take stays in the hands of the person who earned it. That is the whole idea. For the full mechanics of a Cyprus company without moving yet, read our guide to a Cyprus company without residency.

What counts as intellectual property for the box

The box rewards what you create: the inventions and the code. If you build software or hold patents, you are already standing at its door.

The Cyprus law, read with the Intangible Assets Regulations, accepts these assets:

• Patents and equivalent rights, including utility models and supplementary protection certificates.
• Copyrighted computer software. For most of our clients this is the heart of the matter: SaaS platforms, apps, games, trading tools, embedded systems.
• Other protected rights such as plant variety rights and orphan drug designations.
• Other IP for smaller companies. A company whose annual gross income from IP does not exceed EUR 7.5 million and whose group turnover does not exceed EUR 50 million, both measured as five-year averages, can also bring other non-obvious, useful and novel IP into the box, provided an appropriate authority certifies it.

What stays outside is marketing IP: trademarks, brand names, image rights and similar assets. If your product combines both, the profit is split between the part earned by the qualifying IP and the part earned by the brand, using transfer pricing methods. We plan that split before the first invoice, not after the first audit.

The asset must be the result of research and development. A software licence you bought from someone else and resell does not qualify. Software your company develops further, with its own people, can.

Your code is your mind turned into property. The law of Cyprus treats it that way. If you are not sure whether your product qualifies, send us a short description and we tell you.

The nexus fraction: why building it yourself is the key

The more of the work you do in your own company, the closer your rate gets to about 3%. That is not a trap. It is the rule that keeps the box respected and safe.

Around 2015 the OECD agreed that IP regimes may reward only the profit that comes from real development done by the taxpayer. Cyprus rebuilt its box from 1 July 2016 along those lines. The older Cyprus regime, which gave 80% on royalties regardless of where the development happened, closed to new assets in 2016 and its grandfathering ended on 30 June 2021. What remains is a modern regime that the European Union and the OECD accept, which is exactly why it works for you.

The formula is short:

Qualifying profit = (qualifying expenditure + uplift) / overall expenditure × overall income from the asset

Qualifying expenditure includes the salaries and direct costs of the people who develop the asset, the costs of the facilities they use for research, the supplies they consume and development work bought from unrelated providers. Interest, buildings and acquisition costs do not count.

Overall expenditure adds what the company paid to buy IP and what it paid related parties for development work.

The uplift can increase qualifying expenditure by up to 30%, but never beyond the amount of acquisition and related-party costs. It rewards companies that bought a starting asset and then developed it further.

What this means in practice:

• In-house development by the Cyprus company's own people: fully qualifying.
• Development bought from an independent studio or freelancer: fully qualifying.
• Development bought from a company you or your family control: reduces the fraction.
• IP bought from a third party: reduces the fraction, partly restored by the uplift.

This is where most do-it-yourself structures fail. A founder sets up a Cyprus company, keeps developing the code in his old company back home, and invoices the work across the border. The money moves, but the nexus fraction collapses, and the box gives almost nothing. We build the chain the other way round: the development team, or at least a real part of it, sits in the Cyprus company or works for it as unrelated contractors, and the records show it from the first month.

Build where you are taxed lightly, and the law is on your side. That is the whole strategy. Want to see how your own team would fit the formula? Ask us for the nexus sketch.

The nexus calculator: four cases side by side

The 3% is not a promise you buy. It is the result you earn, and you can see exactly how in one table.

Same company, same product, same EUR 400,000 of income from the asset after direct costs. The only thing that changes is how the asset came to life. Read the table from left to right and you read the law.

Case	Nexus fraction	Qualifying profit	80% deduction	Taxable profit	Tax at 15%	Effective rate
A. Built in-house by the Cyprus company	100%	EUR 400,000	EUR 320,000	EUR 80,000	EUR 12,000	3.0%
B. 30% of the development bought from a company you control	(70 + 21) / 100 = 91%	EUR 364,000	EUR 291,200	EUR 108,800	EUR 16,320	about 4.1%
C. Platform bought for 200, then 300 of own development	(300 + 90) / 500 = 78%	EUR 312,000	EUR 249,600	EUR 150,400	EUR 22,560	about 5.6%
D. Income from a brand, not from qualifying IP	not applicable	EUR 0	EUR 0	EUR 400,000	EUR 60,000	15%

How to read it. In case C the uplift is 30% of the 300 of qualifying expenditure, so 90, and it stays below the 200 of acquisition cost, which is its ceiling. The part of the profit that falls outside the fraction is not lost: it is simply taxed at the normal 15%. The deduction applies only to the qualifying share.

Two rules sit behind every line. First, the purchase price of an asset you buy never counts as qualifying expenditure; it only enlarges the denominator. Second, the expenditure is counted over the life of the asset, which is why case C improves every year the Cyprus team keeps building: each new euro of own development pushes the fraction up.

A table like this is the first thing we draw for every client, with their own figures. Ask us for your nexus sketch.

Which income enters the box

Not only royalties. If your IP earns money in any form, that share of the income can enter the box.

Overall income from a qualifying asset includes:

• Royalties and licence fees paid for the use of the asset.
• Embedded income. Where you sell a product or a service that uses the IP, such as a SaaS subscription, the part of the price that the IP earns. It is measured with transfer pricing methods, usually by stripping out a routine return for the other functions.
• Compensation received under insurance or for infringement of the IP.
• Gains on disposal. A gain on the disposal of a qualifying asset is exempt from income tax where the disposal is capital in nature, as the official Invest Cyprus tax guide for 2026 sets out. A disposal that is part of your trade is taxed as trading income. We confirm the treatment for your case before any sale.

The direct costs of earning that income come off first: development salaries, amortisation of the asset, and the other expenses directly linked to it. Section 9(1)(l) lets the company deduct the cost of acquiring or developing IP over its useful life, up to 20 years. Goodwill is excluded. If you contribute existing IP to the company for shares, its market value has to be documented by an independent valuation.

Two rules give you flexibility. First, you may claim the full 80%, part of it, or none of it in a given year; that matters when you want to use other allowances first. Second, if the asset makes a loss, only 20% of that loss can be carried forward or set against other profits. That symmetry is fair: the regime that taxes the gain lightly also counts the loss lightly.

The law gives you a choice every year. We help you use it every year. To see how your revenue would be split, read on or book a first conversation.

Substance: how we make the company real in Cyprus

A company that really lives in Cyprus keeps its rate, keeps its bank and keeps its peace. We build that from the first day.

A Cyprus company is tax resident in Cyprus if it is managed and controlled there, and since 2026 also if it is incorporated there, subject to the treaties. For an IP company, substance means three things, and each of them is something we arrange with you:

• Decisions in Cyprus. The board meets in Cyprus, the key decisions on the IP are taken there and the minutes say so. If you live elsewhere, a qualified Cyprus resident director sits on the board and takes part for real. We explain the details in our guide to the place of effective management.
• Development connected to Cyprus. Developers employed by the company in Cyprus, or work bought from independent providers under proper contracts. Either keeps the nexus fraction high.
• Records that tell the story. Development logs, version histories, timesheets, contracts, invoices and the transfer pricing file. From 2026, a Cyprus company needs a transfer pricing local file once its related-party transactions pass EUR 2.5 million a year for royalties and services, EUR 5 million for goods or EUR 10 million for financing; below that, simplified documentation is still required. We set up the documentation so that it is produced as you work, not reconstructed in a panic.

Banks matter here too. A Cyprus business account opens more smoothly when the company has a visible office, staff and a clear business model. We prepare that file with you; see our guide to a Cyprus business bank account.

Substance is not a cost. It is the armour that lets you keep what you earn. We put it in place with our licensed partners.

From the company to you: getting the money out

The 3% is only half the story. The other half is how the money reaches you, and in Cyprus that half can be just as strong.

Profits taxed at about 3% inside the company can do three things.

Stay and grow. The company reinvests in the next product, hires, builds reserves. For profits earned from 2026, Cyprus no longer applies deemed dividend distribution, so profits you keep for growth are not treated as if you had paid them out.

Reach you in Cyprus. If you move to Cyprus and become tax resident without being domiciled there, the Non-Dom status gives you no SDC on dividends for up to 17 years out of 20, and GESY health contribution at 2.65%, capped. A salary from your own company is possible too, and new residents with higher salaries may benefit from a partial personal exemption on employment income. Our guide to Non-Dom dividends and no SDC explains it step by step.

Wait for you in Cyprus. If you are not ready to move yet, the Cyprus company becomes your piggy bank. Profits from your IP accumulate there, taxed at about 3%, managed in Cyprus by a real board. The day you relocate and obtain Non-Dom status, you start drawing dividends on Cyprus terms. Until then, you keep the money working instead of sending it to the state of your current residence. This is the path we design for founders who want to start now and move later.

There is also a protection side. Your IP sits in a separate company in another EU jurisdiction, with its own board and its own accounts. If an operating company in your home country faces a dispute, the IP and the profits already in Cyprus are not automatically exposed. This is not a shield against honest creditors, and it is no place to hide; it is ordinary good order, the way serious groups have always separated what they own from where they trade.

Your IP, your company, your timetable. The state only gets the share the law allows. Let us design the exit with you: I want my structure.

If you live in Germany or Austria: how we keep your home state satisfied

Germany and Austria will look at your Cyprus IP company. We design it so that what they find is a real business in an EU state, not a pretext.

German CFC rules. If persons resident in Germany control a foreign company, its passive income taxed below 15% can be added to their German income under §§ 7 and 8 AStG. About 3% is below 15%. Licensing income counts as active only if the foreign company exploits the results of its own research and development, carried out without the participation of the German shareholder or persons close to him (§ 8 Abs. 1 Nr. 6 letter a AStG). A German resident founder who keeps writing the code himself and licenses it through Cyprus is exactly the case the rule was made for.

How we do it right for you: either you move to Cyprus, so that you are no longer a German resident and the CFC rule no longer applies to you, or the development is done by the Cyprus company's own team in Cyprus, with real substance. Because Cyprus is an EU state, the company can also rely on the escape clause in § 8 Abs. 2 AStG if it carries on a substantial economic activity there. That proof is a file we build together: people, premises, contracts and decisions in Cyprus.

Place of management. A company whose real management sits in Germany is taxable in Germany under § 10 AO, whatever its register says. If you remain in Germany, the board in Cyprus has to be real and you cannot run it from your desk in Hamburg.

Moving IP out of Germany. If existing IP or a development function moves from a German company to Cyprus, the German tax office can tax the arm's length value of what moves (§ 1 Abs. 3b AStG, transfer of functions). We value it before the move and plan the timing.

Royalties paid from Germany. Germany has repealed its former royalty deduction limit (§ 4j EStG); it last applied for the 2024 tax year. Royalties paid from Germany to a related Cyprus company are still tested under the arm's length principle, the place of management rules and the Foreign Tax Act. Your German tax adviser confirms the treatment of your flows.

If you move. If you hold at least 1% of a company and you have been unlimited taxable in Germany for at least seven of the last twelve years, moving abroad can trigger exit tax on your shares under § 6 AStG; it can be paid in seven annual instalments on application. We plan your move with that in mind; our guide to German exit tax and the Cyprus year end shows the timing.

Austria. Where an Austrian company holds the Cyprus company, Austria's CFC rule in § 10a KStG can attribute passive income that is low-taxed abroad, royalties included, and about 3% is clearly low. The rule does not reach individuals who hold the shares directly, but Austria still checks where the company is really managed. The logic is the same: real development and management in Cyprus, or your own move to the island. An Austrian tax adviser checks your case before the first licence.

The law at home sets conditions. We meet them, one by one, so that the result is yours to keep. For the full move, see Germany to Cyprus, step by step.

If you live in Romania: how we keep ANAF satisfied

From Romania, the Cyprus IP company is one of the cleanest ways to keep the fruit of your code inside the EU while you prepare to move.

Place of effective management. The Romanian Fiscal Code treats a foreign company as Romanian for tax if its place of effective management is in Romania. If you run the Cyprus company from Cluj, it can be taxed in Romania at 16%. The answer is a real board in Cyprus, with a qualified Cyprus resident director, decisions taken on the island and records that show it.

Romanian CFC rules. Article 40⁵ of the Fiscal Code applies to Romanian companies that control low-taxed foreign companies. If a Romanian company would own the Cyprus IP company, that rule enters the picture. We place the shares so that the structure is coherent, usually held by you personally and never through a holding in Romania.

Royalties from Romania. If your Romanian company pays royalties to the Cyprus company, Romanian withholding tax applies unless the treaty or the EU Interest and Royalties Directive reduces or removes it; the Directive needs, among other conditions, a holding of at least 25% for at least two years. Transfer pricing rules apply in both countries, so the price has to be the one independent parties would agree.

Dividends to you. As long as you live in Romania, dividends from Cyprus are taxed in Romania at 16% from 2026, with credit for any foreign tax. That is why the piggy bank logic matters: profits stay in Cyprus, taxed at about 3%, until you move and obtain Non-Dom status. Our guide to moving to Cyprus shows the order of the steps.

You can start in Romania and finish in Cyprus. We build the bridge. Write to us: I want my structure.

The four proofs: is your IP ready for the box?

The IP Box is an evidence regime. The rate is the reward for a chain of proof, and the chain has four links.

A tax officer, a bank compliance team or a buyer's lawyer asks the same four questions. If your file answers all four on the first day, the deduction is solid. If one is missing, the 3% is a hope, not a position.

1. Ownership. Does the Cyprus company legally own the asset? Employment contracts and contractor agreements that assign the IP to the company, signed before the work starts. Transfer agreements for anything that existed before. Registrations and licences in the company's name.
2. Development. Did the company direct and control the research and development? Repository and version history, roadmaps, specifications, test and bug reports, release notes, and board minutes for the major development decisions.
3. Expenditure. Can every euro be traced to an asset? Salaries and contractor invoices coded per asset, related-party and acquisition costs kept apart, and the nexus workpapers that turn those ledgers into the fraction.
4. Exploitation. Does the income come from this asset? Customer contracts, licence and royalty agreements, SaaS invoices and the transfer pricing analysis that separates the IP's share from the routine functions and from the brand.

Together these form what we call the Permanent IP File: one living audit file per asset, built as you work. The technical story and the tax story must tell the same thing. When they do, your company does not have to argue with anyone. It simply shows the file.

The eligibility check in ten questions

Answer yes or no. Every no is a task, not a dead end.

• Is the asset a patent, copyrighted software or another qualifying right, and not a trademark or brand?
• Was it created through research and development, and not bought only to be resold?
• Is the Cyprus company its legal owner, with signed assignments from every person who wrote it?
• If the asset existed before the company, was it transferred under a written agreement at a documented market value?
• Is the development directed by the Cyprus company, with decisions minuted in Cyprus?
• Are development costs recorded per asset, from the first month?
• Are payments to related parties for development kept apart from payments to independent providers?
• Can each stream of income be traced to the asset, separately from income earned by the brand?
• Does the company have the people, premises and management in Cyprus that its activity requires?
• Has your home country's side been checked: management rules, CFC rules and any exit tax on a transfer?

Ten yes answers, and the box works as the law wrote it. Fewer, and we know exactly what to build next. Send us your answers.

Two starting points: build in Cyprus, or bring what you built

Whatever you have today, there is a clean way into the box. It is not the same way for everyone.

Path 1: the company builds it from day one. You form the Cyprus company before the serious work begins. Every developer and contractor signs an IP assignment in its favour on the first day. The repository lives under its control, the costs run through its books, the customers contract with it. This is the strongest position under the nexus approach: the fraction can stay at or near 100%, and the file almost writes itself.

Path 2: you bring an asset that already exists. Many founders wrote the first version themselves, before any company existed, or own it through an old company at home. That asset can still enter the box, but it has to be moved properly: a written transfer agreement, an independent valuation, a board decision and an actual payment, recorded in the accounts. From that day the purchase price sits in the denominator of the fraction, so the start is lower. Then the Cyprus company keeps building, with every new commit clearly dated after the transfer, and the fraction climbs year after year, as case C shows.

What does not work is the shortcut: a zip file shared with the new company, no assignment, no new development for a year and a half, and licences sold on the old build. That company owns nothing it can prove, developed nothing it can show, and has no claim the box can carry. We see this file more often than any other, and we repair it before anyone asks for it.

If you live in Cyprus, both paths are open to you today. If you do not, both paths can start now, with the company run for real from Cyprus while you prepare the move. Tell us which one is yours: start here.

How we do it: the sequence

A box built in the right order is quiet for years. Here is our order.

1. First conversation. You describe the product, who develops it, where you live and where you want to be in five years. We tell you which path fits: move now, move later, or a company that lives in Cyprus on its own.
2. Asset map. We list the IP: which code or patents exist, who owns them today, what is protected, what is marketing IP.
3. Nexus sketch. We estimate the fraction with you: who develops, under which contracts, from which country.
4. Home state check. Your adviser at home confirms the German, Austrian or Romanian points above for your facts. We prepare the questions.
5. Company formation. A Cyprus law firm that you engage directly forms the company and prepares the constitutional documents; the Cyprus resident director is appointed.
6. IP transfer or development start. Existing IP is valued and transferred at market value, or the Cyprus company starts development from zero.
7. Team and contracts. Developers employed in Cyprus or engaged as unrelated contractors; development agreements signed.
8. Bank and substance. Office, business account, accounting and the documentation routine.
9. Tracking. Qualifying and overall expenditure are recorded per asset from the first month, so that the fraction can be proven.
10. Annual claim. The tax return claims the deduction, in full or in part, with the transfer pricing documentation behind it.

Ten steps, one direction: your IP working for you, not for the treasury. Start at step one: contact us.

The most common errors

Every mistake on this list costs real money. Each one is avoidable.

• Development stays at home. The code is written in the old company or by the founder personally while he lives in a high-tax state, and invoiced to Cyprus. Nexus falls, CFC rules bite.
• No tracking. Without records per asset, nobody can prove the fraction, and the deduction is at risk.
• Brand mixed with code. Trademark income is pushed into the box. It does not qualify and spoils the file.
• Board on paper. The resident director signs what the founder decided by phone. Management is then elsewhere.
• No valuation. Existing IP is moved without an independent valuation, and both tax offices argue about the price.
• Ignoring the exit. The company pays about 3%, and then the dividends are taxed fully at home because nobody planned the move.
• Holding at home. A holding in the founder's own high-tax country is placed above the Cyprus company, and the advantage is lost at the top.
• IP moved, research left behind. The asset is transferred to Cyprus, but the people who develop it, and the decisions about it, stay in another country. The box rewards research, not addresses.
• The founder's code with no paper. The first version was written personally before the company existed and was never assigned. The company licenses something it cannot prove it owns.

Avoid these nine, and the box does what the law promises. We check each one for you: send us your case.

Three illustrations

These are illustrations of how the rules apply, not real clients.

Jonas, game developer, Leipzig. He and two colleagues build a mobile game. Jonas decides to move to Cyprus in spring. The Cyprus company employs the three of them in Nicosia from the day it is formed; the code written from then on is the company's own development. Jonas plans his German exit tax on his old GmbH shares with his adviser and keeps no home in Germany. The game earns EUR 600,000 profit in its first full year; with a 100% nexus fraction, the company pays about EUR 18,000. Jonas lives on a salary and Non-Dom dividends with no SDC.

Ioana, SaaS founder, Iasi. She cannot move before her children finish the school year. Her Cyprus company is formed with a Cyprus resident director, a small office and one developer in Limassol; a second developer is an independent contractor in Spain. Ioana is a shareholder, attends the board meetings in Cyprus four times a year, and does not run the company from Romania. Profits accumulate in Cyprus at about 3%. In two years she moves, obtains Non-Dom status and starts drawing dividends.

Pieter, medical device inventor, Eindhoven. He holds a European patent personally. He transfers it at a documented market value to a Cyprus company that continues the development with an independent lab. Part of the value is acquisition cost, so the nexus fraction is below 100% in the early years and rises as new development is added. He knows the Dutch side will review the transfer and has his adviser check it first.

Three different people, one principle: the box rewards those who build. Which one are you? Tell us.

The circle you join

You are not the first to choose this path, and you will not walk it alone.

Our clients are founders, developers and inventors from Germany, Austria, Romania and across Europe who decided that what they create should serve them and their families first. Some already live in Cyprus; others are preparing the move. What they share is a conviction: a person who builds something useful has the first right to its fruits.

ENCC coordinates. Licensed Cyprus law firms, accountants and auditors, engaged by you directly, do the regulated work in their own name. We make sure the pieces fit, the order is right and nothing falls between the cracks.

This is the circle of people who build, and keep what they build. The door is open: join us.

FAQ

What is the effective tax rate of the Cyprus IP Box in 2026?

About 3% on qualifying profit. The corporate rate is 15% from 2026, and 80% of the qualifying profit is deductible, so 15% applies to the remaining 20%. If the nexus fraction is below 100%, the effective rate is somewhat higher.

Does my software qualify?

Copyrighted software that results from development by your company, or bought from unrelated developers, qualifies. Software you only resell does not. Brands and trademarks are excluded.

Do I have to move to Cyprus?

Moving gives you the full result, including Non-Dom dividends. If you stay where you are for now, the company can accumulate profits in Cyprus, managed by a real Cyprus board, until you move. Your home state's CFC and management rules have to be respected; we plan that with your adviser.

What happens if I develop the code myself from Germany?

Then German CFC rules can add the company's licensing income to your German income, because the development was done with your participation from Germany. The solution is either your own move or development by the Cyprus company's team in Cyprus with real substance.

Can I move existing IP into the box?

Yes, at a documented market value. The purchase price becomes acquisition cost, which reduces the nexus fraction at first; further development in the Cyprus company increases it over time. Your home country may tax the transfer.

Is the Cyprus IP Box accepted by the EU and the OECD?

The regime introduced on 1 July 2016 was built on the OECD nexus approach under BEPS Action 5, and the OECD Forum on Harmful Tax Practices reviewed it on that basis. The old pre-2016 regime ended for good on 30 June 2021.

What about large groups and the global minimum tax?

Groups with consolidated revenue of EUR 750 million or more fall under the 15% global minimum tax rules, which can top up the IP Box result. Founders and small groups are below that threshold.

What does ENCC do, and what do the partners do?

We coordinate: the plan, the order, the communication and the quality check. Licensed Cyprus lawyers, accountants and tax advisers that you engage directly do the formation, the bookkeeping, the valuations and the tax filings, under their own responsibility.

I wrote the first version myself before the company existed. Can it still enter the box?

Yes, if it is transferred properly: a written agreement, an independent valuation, a board decision and an actual payment. The price then counts as acquisition cost, so the nexus fraction starts lower and rises as the Cyprus company develops the asset further. Without a written assignment, the company cannot show that it owns the code.

Is the 3% guaranteed once the company is set up?

No. About 3% is the result when all the profit comes from qualifying IP and the nexus fraction is 100%. With related-party development or acquired IP, the rate is higher, and income earned by a brand is taxed at 15%. What decides the result is the file: ownership, development, expenditure and exploitation, proven per asset.

Next steps

Write down three things: what you build and who builds it, where you live now and where you want to live, and what you want to do with the profits over the next five years. With that, one conversation is enough to tell you which path fits and what comes first. For background, see our guides to a Cyprus company without residency, the 2026 list of low-tax jurisdictions and salary or dividend in Cyprus.

Sources

• Cyprus Income Tax Law 118(I)/2002, consolidated, sections 9(1)(k) and 9(1)(l) (CyLaw, Greek): https://www.cylaw.org/nomoi/enop/non-ind/2002_1_118/full.html
• Income Tax (Amending) (No. 4) Law 244(I)/2025 (CyLaw, Greek): https://www.cylaw.org/nomoi/arith/2025_1_244.pdf
• Cyprus Ministry of Finance, tax incentives: https://www.gov.cy/mof/en/documents/tax-incentives/
• OECD, BEPS Action 5, harmful tax practices and the nexus approach: https://www.oecd.org/en/topics/sub-issues/harmful-tax-practices.html
• Invest Cyprus, Cyprus tax guide for investment, February 2026: https://www.investcyprus.org.cy/wp-content/uploads/2026/04/cyprus-tax-guide-for-investment-feb-2026-lr.pdf
• PwC Cyprus, Tax Facts and Figures 2026: https://www.pwc.com.cy/en/publications/assets/tff-eng-2026.pdf
• Deloitte Cyprus, the Cyprus IP Box regime, May 2026: https://www.deloitte.com/cy/en/about/recognition/news/intellectual-property-the-cyprus-ip-box-regime-may-2026.html
• German Foreign Tax Act, § 8 AStG: https://www.gesetze-im-internet.de/astg/__8.html
• German Foreign Tax Act, § 6 AStG: https://www.gesetze-im-internet.de/astg/__6.html
• German Foreign Tax Act, § 1 AStG: https://www.gesetze-im-internet.de/astg/__1.html
• German Fiscal Code, § 10 AO: https://www.gesetze-im-internet.de/ao_1977/__10.html
• Austrian Corporate Income Tax Act, § 10a KStG (RIS): https://www.ris.bka.gv.at/NormDokument.wxe?Abfrage=Bundesnormen&Gesetzesnummer=10004570&Paragraf=10a
• Council Directive 2003/49/EC (Interest and Royalties Directive), EUR-Lex: https://eur-lex.europa.eu/eli/dir/2003/49/oj
• ANAF, summary of 2026 tax changes: https://static.anaf.ro/static/10/Brasov/Brasov/modificari_fiscale_2026.pdf

Verified on 28 October 2026.

Cover photo: Nicosia skyline from the old town, Cyprus. Photo: Gab Pavlides, Wikimedia Commons, CC BY-SA 3.0, cropped.

Status as of 28 October 2026: based on the Cyprus Income Tax Law 118(I)/2002, sections 9(1)(k) and 9(1)(l), as amended up to and including Law 244(I)/2025 (in force from 1 January 2026), the Income Tax (Intangible Assets) Regulations of 2016, the OECD nexus approach under BEPS Action 5, the German Foreign Tax Act (§§ 1, 6, 7 and 8 AStG), the German Fiscal Code (§ 10 AO), the Austrian Corporate Income Tax Act (§ 10a KStG) and the Romanian Fiscal Code. We will update this guide when the law or official practice changes.