The Cyprus Tax Office has introduced a new tax deduction scheme for Scientific Research and Research and Development (R&D) costs.
The research and development expenses that are eligible to be deducted from the taxable income of the legal owner of the IP assets will equal to 120% of the actual R&D expenses incurred (100% of the actual R&D expenses plus 20% increased allowance).
This specific deduction will apply only for the years 2022, 2023 and 2024.
Specifically, the new provisions of the Law provide that, all R&D expenses incurred by a person or legal entity who carry on a business and are the legal owners of the related intellectual property asset, will be treated as tax deductible.
This additional deduction cannot be claimed together with the 80% deduction provided under the Cyprus IP regime.
Should the R&D expenses be capitalised then the owner of the IP can claim this deduction over the duration of the asset’s lifetime with a maximum of 20 years.
