IP Box
Cyprus offers a 120% R&D super-deduction on qualifying research expenditure, extended to 2030. Combined with the IP Box's ~3% effective rate on resulting IP income, Cyprus is one of Europe's most competitive jurisdictions for tech and IP-intensive businesses.9 min read · By Nexora Cyprus editorial team · Reviewed by an ICPAC-registered Cyprus tax adviser engaged by Nexora
Quick Summary
Cyprus allows a 120% deduction on qualifying R&D expenditure (extended to 31 December 2030), generating an additional 20% tax deduction beyond the standard 100% expense relief. At the 15% CIT rate, the incremental benefit is 3% of qualifying R&D spend. Combined with the IP Box (~3% effective rate on resulting IP income), Cyprus is one of Europe's most incentive-rich jurisdictions for tech and IP-intensive businesses.
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 R&D super-deduction and the IP Box operate at different stages of the IP lifecycle and are not mutually exclusive. The strategy for a Cyprus-based IP and technology company would typically be:
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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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