The Cyprus Parliament voted on July 17 to amend certain provisions related to all types of capital-nature intangible assets (other than intellectual property within the old Cyprus IP box and goodwill), effective January 1, 2020. The amendments will become law following publication in the Cyprus Gazette, which is expected in the near future.
Abolishing the balancing statement requirement on intangible asset disposals is a welcome development for companies wishing to acquire or develop existing high-potential IP as well as for start-ups. In essence, no clawback of previously claimed tax amortization, coupled with the fact that Cyprus does not tax gains realized upon capital-nature intangible asset disposals, helps intangible asset owners achieve a stable tax effective tax rate and better manage deferred tax accounting considerations.
Further, the amendment about carrying forward unused tax amortization capacity provides clarity to taxpayers.
Existing Cyprus IP companies should review their 2020 calculations in order to assess whether the amendments impact their taxable income by the upcoming July 31, 2020 deadline for submitting the 2020 provisional corporate income tax return and their first 2020 provisional corporate income tax installment payment.