Cyprus IP Box Calculator 2026
Illustrate Cyprus IP Box tax on eligible net IP profit using a user-supplied documented nexus percentage, an 80% deemed deduction and the 2026 corporate rate of 15%.
Illustrative profit breakdown
- 80% deemed deduction40.0%
- Profit after deduction and tax51.0%
- Corporate tax9.0%
Compared with simple 15% scenario
The 80% deduction applies only to net profit from an eligible intangible asset to the extent supported by a documented nexus ratio. At the 15% corporate rate, 3% is possible only with 100% nexus and no other adjustments. This tool does not derive nexus from expenditure or decide eligibility, other deductions or losses.
Disclaimer: These calculators provide general estimates based on the 2026 Cyprus tax framework and standard assumptions. They do not account for every personal circumstance, allowance or exemption and are not tax advice. Speak to us before acting on any figure.
How the Cyprus IP Box works
The Cyprus IP Box can reduce tax on documented eligible intellectual-property profit. It grants an 80% deemed deduction on the net profit from qualifying intellectual property, leaving just 20% of that profit exposed to the 15% corporate tax rate. The simple effective rate is 3% only when the documented nexus fraction is 100%. The regime is built on the OECD modified nexus approach, so relief is tied to the development substance behind the asset — the more R&D you carry out yourself, the larger the slice of profit that enjoys the deduction.
The calculation method
The tool takes a net IP-profit input and a documented nexus percentage. It applies 80% to that fraction, then taxes the remaining profit at 15%. It does not derive the nexus ratio from expenditure records.
| Step | Treatment |
|---|---|
| IP profit input | Net profit attributable to an eligible asset after related expenses |
| Nexus percentage | Documented ratio entered by the user |
| Deemed deduction | 80% of nexus-adjusted profit |
| Taxable portion | Input profit less the nexus-adjusted deduction; 20% remains only at full nexus |
| Corporate tax rate | 15% |
| Effective rate | 3% only at full nexus in this simple model |
Worked example: €1,000,000 of qualifying profit
Assume a company has €1,000,000 net profit from an eligible software asset and a fully documented 100% nexus fraction.
- Deemed deduction: 80% × €1,000,000 = €800,000 deducted.
- Taxable profit: the remaining €200,000.
- Tax due: €200,000 × 15% = €30,000 — an effective rate of 3%.
In the simple comparison with 15% tax on the same profit and no other adjustments, tax would be €150,000: a modelled difference of €120,000. Actual tax can differ with eligibility, losses and other reliefs. Read the detail in our IP Box regime guide or, if you run a software business, our IP Box for SaaS guide.
Related guides & services
Frequently asked questions
The regime gives an 80% deemed deduction on qualifying IP profit, so only 20% of that profit is taxed at the 15% corporate rate. That produces 3% only on fully nexus-eligible profit with no other tax adjustments. A lower documented nexus ratio gives a higher effective rate on the total IP profit.
Qualifying assets are those covered by the OECD modified nexus approach, principally patents and copyrighted software. Marketing-related intangibles such as trademarks, brands and image rights do not qualify. The relief is therefore aimed squarely at genuine research, development and software activity.
The nexus approach links relief to substance. The qualifying fraction of profit reflects how much of the underlying R&D you carried out yourself or through unrelated parties, versus IP you acquired or outsourced to related parties. The more development you do in-house, the larger the share of profit that gets the 80% deduction.
Not automatically. Acquisition costs and related-party outsourcing enter the overall expenditure calculation but not ordinarily qualifying expenditure. The OECD approach permits a limited uplift in some circumstances. Calculate the documented ratio for each eligible asset.
Copyrighted software can be an eligible asset, but SaaS revenue alone does not establish qualifying IP income. Asset ownership, income attribution, eligible R&D expenditure and documentation need to be checked. Unrelated-party outsourced R&D can count toward the nexus numerator under the modified approach.
The 80% deduction is applied to nexus-adjusted net qualifying profit. It is claimed in the company tax computation with records of the asset, income, directly related expenses and R&D expenditure. This tool accepts a documented nexus percentage; it does not calculate one.
Other calculators
Cyprus Corporate Tax Calculator 2026
Estimate your Cyprus company tax at the 2026 rate of 15%.
Cyprus Income Tax Calculator 2026
See your Cyprus income tax across the 2026 bands.
Cyprus 2025 vs 2026 Tax Calculator
Compare 2025 and 2026 tax bands on the same taxable income.
Cyprus Net Salary Calculator 2026
Estimate gross-to-net pay with 2026 tax, employee Social Insurance and GHS.
Want the exact number — and a plan to lower it?
Book a free, no-obligation consultation. We'll review where you stand and show you exactly how we can help your business or personal finances in Cyprus.
- Contact during business hours
- Fixed fees, no obligation
- Part of the Philippou Law Firm group