Intellectual property licensing companies
Intellectual property of any kind, like patents, trademarks and copyrights, are often being held in various international jurisdictions, like Cyprus, Malta or Gibraltar, with a very low or even zero income tax rates. By incorporating intellectual property licensing companies, it’s feasible to transfer the title of an intellectual property with the right to sub-license and then exploit it in other countries. Then this International (offshore) company will be in a position to receive franchise fees and royalty payments from franchisees and licensees, accumulating income in a low-tax or even a tax-free jurisdiction.
All royalty payments are often subject to withholding taxes in the country of origin, while there is also the possiblity of being taxed again in the country of domicile. Thus by incorporating international property licensing companies in countries with a wide Double Taxation Treaties network, like Cyprus, Ireland, Malta and others, enterprises and groups can avoid or at least mitigate double taxation.
The benefits of licensing IP in Cyprus
Cyprus is a full EU member since 2004 and boasts the lowest corporate tax rate in Europe, which is a mere 10%, while under the country’s treaty network, any withholding taxes over royalty payments can be reduced, and in certain cases may be zeroed. But this is not the only reason why you need to consider Cyprus for the establishment of international property licensing companies –much like in the formation of financing companies . The capital requirements are low, just as the maintenance expenses, there is no capital tax over capital contributions into companies that reside in Cyprus, the incorporation procedures are fast and fairly simple and finally there is a chance of achieving income tax exemption for gains upon the sale of the intellectual property.