Nexus fraction:
Standard corporate tax
Part of your profit does not qualify because some R&D was bought from related parties or the IP was acquired. Doing more R&D in-house or with unrelated parties would raise your nexus fraction.
Enter what the IP cost to develop or buy (step 2). Without it, no profit qualifies for the IP Box.
Your IP costs exceed your IP income by . Under the IP Box, only 20% of a loss from qualifying IP can be set off or carried forward: .
How we calculated it
| Net IP profit (income less direct costs) | |
| Nexus fraction | |
| Qualifying profit | |
| IP Box deduction (80% of qualifying profit) | |
| Taxable IP profit | |
| Corporate tax at 15% |
Estimates based on the tax legislation in force at the time of publication. Not tax advice.
How the Cyprus IP Box works
- Qualifying IP: patents, copyrighted software, utility models, plant and genetic protection rights, orphan drug designations and extensions of patent protection. Certain other non-obvious, useful and novel IP also qualifies for smaller businesses. Marketing IP such as trademarks does not qualify.
- Qualifying income: royalties, licence fees, compensation and insurance received for the IP, trading income from selling it, and the IP income embedded in products or services.
- Nexus fraction: (qualifying expenditure + uplift) ÷ overall expenditure, capped at 100%.
- Qualifying expenditure is R&D carried out by you or outsourced to unrelated parties.
- The uplift is the lower of 30% of qualifying expenditure and the total of acquisition costs and related-party outsourcing.
- Overall expenditure is qualifying expenditure plus acquisition costs and related-party outsourcing.
- Deduction: 80% of the qualifying profit is deducted. The rest of the profit is taxed at the corporate tax rate, which is 15% from 1 January 2026. With a 100% nexus fraction, that gives an effective rate of 3%.
- Losses: only 20% of a loss from qualifying IP can be set off against other income or carried forward.
- Who can use it: Cyprus tax resident companies and Cyprus branches of foreign companies. Individuals carrying on a business can also claim it, but the remaining profit is taxed at personal income tax rates, not 15%. This calculator assumes a company. income and costs must be tracked for each IP asset (or product family), with documentation of the R&D carried out.
The results are based on the tax legislation in force at the time of publication and are estimates for guidance only, not tax advice. Whether your IP and income qualify depends on the facts. Contact us for a review.