By Nexora Cyprus editorial team · General information — seek advice for your circumstances
Portugal’s current Article 50-A provides an 85% deduction limited by its qualifying-expenditure nexus formula. It includes registered rights in patents, industrial designs or models, and copyright in computer programs. Separate accounting and other eligibility conditions apply; ancillary services are excluded. The older 50% figure is not the current rule.
Portugal’s standard mainland corporation-tax rate for periods beginning in 2026 is 19%, under the transition in Law 64/2025. The 17% rate shown in the amended main provision applies from 2028. Reduced rates and additional charges require a separate assessment.
This arithmetic excludes Portuguese municipal and state charges, reduced-rate eligibility, other company income, Pillar Two and all shareholder taxes. It does not establish which jurisdiction has the lower total cost. The earlier claim of a €375,000 Cyprus saving on €5 million of qualifying profit used outdated Portuguese figures and cannot support a decision.
Revenue, accounting profit and qualifying IP profit are different measures. Applying 3% or 2.85% directly to annual recurring revenue would not reproduce this example.
Assumes €1 million eligible net profit and a full nexus fraction
| Item | Cyprus | Portugal |
|---|---|---|
| Illustrative eligible profit | €1,000,000 | €1,000,000 |
| Deduction at full nexus | 80% = €800,000 | 85% = €850,000 |
| Remaining base | €200,000 | €150,000 |
| Standard 2026 rate used | 15% | 19% |
| Tax in this limited calculation | €30,000 | €28,500 |
| Tax / assumed eligible profit | 3% | 2.85% |
For each product, identify ownership of the protected right, developer agreements, customer contracts, income streams and attributable costs. Establish which expenses enter the nexus numerator and denominator, including acquired IP and related-party development.
A software company does not qualify merely because it describes itself as SaaS. Separate licensing income from implementation, support and other services. Verify registration requirements in Portugal and the conditions for qualifying intangible assets in Cyprus before calculating relief. Neither an incorporation certificate nor a generic adviser letter establishes eligibility.
A Cyprus IP company combined with a Portuguese operating company is not automatically a valid or tax-efficient structure. Cross-border ownership, management, permanent establishments and transfer pricing require analysis in both countries. This comparison makes no guaranteed setup-time or investor-acceptance claim.
Portugal CIRC Article 50-A sets the IP deduction and eligibility framework. CIRC Article 87 and transitional rates distinguish the 2026 rate from later rates.
Cyprus Income Tax Law 118(I)/2002 provides the domestic corporate-tax and qualifying-IP framework. Read the Cyprus IP Box guide alongside the relevant regulations and project facts. Reviewed 21 September 2026; general information.
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.
— References linked in this article
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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