By Nexora Cyprus editorial team · General information — seek advice for your circumstances
Quick Summary
Qualifying R&D expenditure in 2025–2030 can obtain an additional 20% deduction. At 15% corporate tax, the incremental deduction corresponds to 3% of eligible expenditure, if it can be used. The asset exclusion in Article 9(1)(d) must be checked before combining relief with IP Box.
Cyprus provides a 120% deduction for qualifying research and development expenditure. This means that for every €100 of eligible R&D spending, the company can deduct €120 from its taxable income — a net tax benefit equivalent to 3% of qualifying expenditure (the additional 20% deduction at the 15% CIT rate).
The super-deduction was originally introduced for a limited period and has now been extended to 31 December 2030, providing certainty for multi-year R&D projects.
Value of the Super-Deduction
On €1,000,000 of qualifying R&D spend: €1,200,000 deduction × 15% CIT = €180,000 tax saved. That's €30,000 more than a standard 100% deduction would produce.
Qualifying expenditure for the super-deduction includes:
Expenditure on the acquisition of IP or technology from related parties does not qualify for the super-deduction. Capital expenditure on equipment may qualify for capital allowances separately.
The additional 20% R&D deduction covers qualifying expenditure incurred in 2025–2030. It excludes expenditure on an eligible intangible asset for which IP Box has applied in any year, including the current year (Article 9(1)(d)).
Cyprus Ministry of Finance tax incentives and OECD Action 5 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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