As you can see from the above calculations the effective tax exposure of the Company will be anywhere from 3% Corporation Tax to 8.8% Corporation Tax depending mainly whether the asset was acquired or developed internally as well as if R&D costs for improvement and development are carried out by the Company itself or by third parties.
In the case where there are salaries of 5-6-7 of development staff for example these will of course qualify for development/improvement of the asset (R&D) therefore this is on its own a step closer to the minimum 3% of effective tax.
A combination of purchased assets and new assets could also be the case where one asset can enjoy 3% of effective tax and on another asset 5% of effective tax depending on the circumstances mentioned above.
At this point we want to stress out the fact that the IP BOX regime even though simple and straightforward in its explanation it needs proper tax planning and record keeping.
An IP BOX Tax Ruling is required before any benefits from above are enjoyed by a Cyprus Company.
