Comparison
Cyprus IP Box (80% exemption, effective ~3%) vs Portugal Patent Box (50% exemption, effective ~10%) under the 2026 regimes. Eligibility scope, nexus rules, software vs patent treatment, and which wins for a typical SaaS founder.10 min read · By Nexora Cyprus editorial team · Reviewed by an ICPAC-registered Cyprus tax adviser engaged by Nexora
Headline
Cyprus IP Box exempts 80% of qualifying profit; with 15% CIT the effective rate is ~3%. Portugal's Patent Box exempts 50% of qualifying profit; with 21% CIT the effective rate is ~10.5%. Cyprus is materially more generous AND has broader eligibility (copyrighted software qualifies without a patent).
Cyprus IP Box vs Portugal Patent Box 2026
| Dimension | Cyprus IP Box | Portugal Patent Box |
|---|---|---|
| Exemption percentage | 80% of qualifying profit | 50% of qualifying profit |
| Base CIT | 15% | 21% (+ municipal 1.5% + state 3-9% on tier) |
| Effective rate on qualifying IP income | ~3.0% | ~10.5% (federal) — higher with state/municipal surcharges |
| Patents qualify | Yes | Yes |
| Copyrighted software qualifies | Yes (broad) | Yes (since 2014 reform, with conditions) |
| Trademarks / brand IP | No (OECD-compliant exclusion) | No |
| Nexus approach | OECD Modified Nexus (with 30% uplift) | OECD Modified Nexus (with 30% uplift) |
| Documentation requirement | Annual expense-attribution + nexus calc | Annual expense-attribution + nexus calc |
| Capital-gains-on-IP-sale exemption | Yes (separate participation exemption) | Partial |
| Personal regime stacking | Non-Dom 0% SDC for 17 years | IFICI (post-NHR) — narrower, 10 years |
Both regimes recognise copyrighted software as qualifying IP under the OECD Modified Nexus Approach. The practical difference: Portugal's Patent Box requires the software to be 'protected by copyright' AND for the company to have demonstrated R&D activity — somewhat stricter documentation expectation than Cyprus's IP Box.
Cyprus IP Box accepts copyrighted SaaS code based on a tax-adviser legal opinion supported by R&D records. Portugal increasingly requests a third-party IP-protection certification (such as filed copyright registration with INPI or equivalent).
HypoCo has €5M qualifying IP profit after the nexus fraction (assume 1.0). Tax outcomes:
Cyprus IP Box at the corporate level + 17-year Non-Dom regime at the founder level: corporate ~3% + 0% Cyprus SDC on dividends to non-dom founder = end-to-end ~3% effective.
Portugal Patent Box at the corporate level + the new IFICI personal regime (replaced NHR from 2024): corporate ~10.5% + IFICI 20% on Portugal-source income for 10 years (narrower scope than NHR was). End-to-end materially higher than Cyprus.
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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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