Cyprus offers a very useful intellectual property tax regime. The law provides some tax exemption for intellectual property income. More specifically, 80% of the worldwide intellectual property royalty income of a Cyprus tax resident company (net of direct expenses) is exempt from income tax. In addition, 80% of the gains from the sale of intellectual property by Cyprus resident companies (net of direct expenses) are also exempt from income tax and all expenses of a capital character for the acquisition or development of intellectual property are tax deductible in the year in which it arose and for the following four consecutive years.

Companies registered in Cyprus, if managed and controlled from Cyprus, receive a tax clearance certificate. In order for the company to retain its management and control in Cyprus, the majority of the company's board of directors must be resident in Cyprus, the company's secretary and registered office must be located in Cyprus, the board of directors must hold its meetings in Cyprus and, should the shareholders of the Company hold some of their meetings in Cyprus whenever possible. The tax authorities have also increased their requirements and are now examining the granting of powers of attorney by companies. If a general power of attorney is issued by the company allowing someone who is not a tax resident of Cyprus to act on their behalf, this may result in the company not being tax resident.