The Cyprus IP Box benefit in one line
80% of your qualifying IP profit is exempt from corporate tax.
Combined with the 15% standard CIT rate that applies after the January 2026 tax reform, this brings the effective rate on IP profit down to as low as 3%.
The calculation, step by step
Step | What it means |
IP Income | Royalties, licence fees, and software/SaaS revenue tagged as IP Income. |
− Direct Costs | Costs of earning that income (hosting, support, royalties paid). |
= Net IP Income (OI) | Profit before applying the nexus fraction. |
× Nexus Fraction | The share of profit that qualifies (see the R&D Ratio article). |
= Qualifying Profit (QP) | Eligible for the deduction. |
− 80% Deduction | 80% × QP is deducted from taxable profit. |
= Taxable Profit | OI − 80% × QP. |
× CIT Rate | 15% from January 2026 onwards (was 12.5% before the tax reform). |
= IP Box Tax Due | What you actually pay on this IP profit. |
Worked example
A company with one software product earns €500,000 IP income, has €100,000 direct costs, and a nexus fraction of 90%:
Net IP income = €400,000
Qualifying profit = €400,000 × 90% = €360,000
Deduction = 80% × €360,000 = €288,000
Taxable profit = €400,000 − €288,000 = €112,000
Tax @ 15% = €16,800 (versus €60,000 without IP Box, saving €43,200)
Effective rate = 16,800 / 400,000 = 4.2%
At a 100% nexus fraction the effective rate drops to the floor of 3% (15% × 20%).
Where to see it
Each IP asset has a Tax Savings tab with the side-by-side comparison: tax without IP Box vs. tax with IP Box, plus your annual saving and effective rate. The IP Box overview shows the combined company-level numbers as four KPI cards: Profit eligible, Tax-exempt portion, Estimated tax, and Your tax rate.
Things to keep in mind
All numbers in Cybooks are estimates. The official IP Box claim is filed with your annual corporate tax return.
If direct costs exceed IP income, OI is set to zero (no negative carry-forward).
The CIT rate Cybooks uses depends on the tax year: 12.5% before 2026, 15% from 2026 onwards.