By Nexora Cyprus editorial team · General information — seek advice for your circumstances
Article 9(1)(d) provides an additional 20% deduction for qualifying scientific research and R&D expenditure incurred in 2025–2030. It excludes expenditure concerning a qualifying intangible asset for which the IP Box under Article 9(1)(k) has applied in any year, including the current year.
This is a deduction from taxable income, not a refundable cash grant or a 20% tax credit. Eligibility depends on the expenditure and the taxpayer’s circumstances.
The provision covers scientific research and R&D recognised under international accounting standards, incurred by a person carrying on a business who economically owns the intangible asset that results or may result. A project being described as innovative does not establish eligibility.
Capital expenditure follows the deduction rules in Article 9(1)(l). The additional deduction follows the years in which that deduction is allowed. Expenditure to acquire machinery, plant or buildings is excluded from this paragraph; separate capital-allowance rules may apply.
Assume a profitable company has €1,000,000 of qualifying revenue expenditure already included in its ordinary deductible costs. The additional deduction is €200,000. At the 2026 corporate income tax rate of 15%, that reduces current tax by €30,000 if there is sufficient taxable profit. It is not a €200,000 cash payment.
This example assumes the relevant asset has never benefited from the IP Box. It excludes grants, capitalisation, loss restrictions and other adjustments.
The restriction refers to IP Box use in any year, including the current year. A company should review the history of each asset and map expenditure to it before claiming. Do not simply apply the additional R&D deduction first and then an IP Box deduction to the same asset.
The law permits a taxpayer to waive the additional deduction partly or wholly for a tax year. Any choice needs an asset-level review and documentation of the intended treatment.
Consult Income Tax Law 118(I)/2002, Article 9(1)(d), (k) and (l). This explanation is general information; the claim requires review of the actual expenditure and tax computation.
Cyprus Tax Department documents and Cyprus Tax Reform 2026 material publish the controlling material for this topic. Check the current law, form, circular or portal instructions before acting; this article is general information and the live official material prevails.
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Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Tax laws change frequently. Consult a qualified Cyprus adviser for guidance specific to your situation. The information on this page is general guidance only and does not constitute legal, tax, accounting, immigration or financial advice. Specific advice should be obtained based on the facts of each case.
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Read each reference alongside the claim it accompanies and check current amendments before relying on it. General information — seek advice for your circumstances.
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