Cyprus is a well established and widely used jurisdiction for establishing and operating international holding, financing, licensing and trading companies. The corporate tax regime in Cyprus offers attractive tax benefits such as a low (10%) headline corporation tax rate, exemption of dividend income and gains on the sale of securities, absence of withholding taxes on dividend and interest payments to non-residents, and so on.

Due to tax legislative changes in certain other European jurisdictions in recent years, the Cyprus Government felt that Cyprus was losing some of its tax competitive advantage in the area of attracting innovative high tech intellectual property (IP) holding activities. In particular, some major European international financial service centres such as the Netherlands and Luxembourg have introduced special tax incentive legislation often referred to as IP/Patent/Innovation Box regimes. Similar sort of taxation regimes also exist in many other European countries, including Belgium, Liechtenstein, Switzerland and Ireland....