Cyprus offers 2% -- can you do better?

A couple of years ago, IP Finance posted a question: "Intellectual property tax havens: where's best?"  This question didn't receive many responses at the time, but IP Finance's readership has grown greatly since May 2010 and the same question, posted today, might attract far more answers.

This slightly historical musing has been prompted by the news, from Stefan Nolte of Shanda Consult, Cyprus, that 2% is the effective tax rate on income from IP in Cyprus. Stefan writes:

"A recent amendment to the tax law, in force since 06 July 2012, provides 80 % tax exemption on income from IP. The remaining 20 % of the income from IP are taxed at ordinary 10 % corporation tax, which results in an effective tax rate of 2 % on the income from Intellectual Property. 

Intellectual Property includes: patents, brand names, software development, copyrights on music, visual productions (film, TV etc), book etc. 

Income from IP: income from the sales of IP or from license fees received for granting the right to use IP. 

Depreciation of IP development costs or IP purchase costs is 20 % annually".

Can readers from other jurisdictions improve on this? And can they also warn of possible downsides that low-tax seekers might not appreciate if locating their IP portfolios in tax havens?

Switzerland: World-Class Chocolates, Watches, and IP Tax Benefits

I don’t have much of a sweet tooth but, when I reach for chocolate, I want it to be Swiss. Yum! But Switzerland is not only home to great chocolate, reliable watches, defenders of the Vatican and, arguably, the world’s best tennis player; it’s also home to highly beneficial tax rates for IP owners.

The applicable tax rate for Swiss-registered IP owners or Swiss subsidiaries of foreign IP owners varies, but may often be reduced below 8% based on corporate structuring. Ask your tax professional for advice on your entity's structure! In addition, because Switzerland has double taxation treaties with numerous countries, a company can benefit from a reduced withholding tax on foreign-generated royalties – in many cases to 0%.

The Swiss Federal Institute of Intellectual Property houses registrations of patents, trade marks, copyrights and designs – a true one-stop-shop! It is headquartered in Bern. Brush up on your German before arrival, bitte, because German is the official language in this fourth most-populous city in Switzerland. Though less populous than Zurich or Geneva, Bern is also Switzerland’s capital and home to its Parliament. Bern can also boast being the home of Albert Einstein at a time when he began working on his most famous scientific breakthroughs. One of his former Bern residences has since become a museum.

On arrival, make a beeline for the Kursaal Bern. Just as you can satisfy all your IP needs within the Swiss Federal Institute of Intellectal Property, you can satisfy all of your accommodation, nourishment and entertainment needs at the Kursaal Bern. It houses the Hotel Allegro, a gambling casino, conference center, several restaurants, a rooftop beer garden, and a cigar lounge operated in cooperation with Davidoff, as well as a Toblerone chocolate historical exhibit in the Kursaal Tower section of the property. Of course, Toblerone is available for purchase in the open-round-the-clock hotel gift shop!

Bears are a symbol of the city. Live bears had been kept here in bear pits for public amusement since the city’s founding in 1191, but today can be visited in BärenPark Bern, which opened in 2009. In fact, legend has it that Bern got its name from the hunting of bears here at the time of the city’s founding (from the German word for bears, bären).

Finally, UNESCO recognizes Bern’s medieval city center as a World Heritage Site, so be sure to save time to explore the Old City and to see the Zytglogge, the “Time Bell” medieval clock tower. You can also walk along the shopping arcades that stretch for six kilometers through the city – among the longest covered shopping areas in Europe.

An IP Tax Haven Amidst Cool Beaches

A couple of weeks ago IP Finance team blogger Jeremy posted this request from a reader seeking information on which countries are good tax havens for intellectual property portfolios. Reader comments and responses pinpointed Luxembourg, Netherlands, Belgium, Ireland, the Cayman Islands and the Channel Islands among others. As many IP practitioners may have reason to visit these locations for client matters, each week we’ll feature an IP Trip Planner for one of these IP- and tax-friendly locales.

This week, I’m starting with the Cayman Islands. With New York in the midst of very hot weather and my air conditioning malfunctioning, I’m dreaming of a trip to Cayman – if I have to sweat out the heat wave, I would rather be on a tropical beach!

Located in the Caribbean Sea, the Cayman Islands is made up of three islands governed together – Grand Cayman, Cayman Brac and Little Cayman – with George Town (on Grand Cayman) as its capital. And, as the Cayman Islands is a self-governing British Overseas Territory, European IP practitioners can rejoice in basing IP in a tax free jurisdiction with laws similar to the UK but with more enjoyable beaches.

The General Registry Office in Grand Cayman maintains a register of companies, patents and trademarks. Several global hotel brands have properties nearby where you might opt to stay for some beach-side rest and relaxation: Ritz-Carlton, Westin, and Marriott. In addition, there are many independent local hotels and villas along the beach, the favorite being the Caribbean Club villas on Seven Mile Beach in Grand Cayman.

Hungry? In George Town, go to Grand Old House, which is indeed located in a grand old house that was built in 1908. Have a meal on Seven Mile Beach at Mezza, a Mediterranean/ French/ Caribbean fusion restaurant. Or try Deckers, a lively spot on Seven Mile Beach that features al fresco dining and live music on Thursday, Friday and Saturday nights – be sure to order the Blood Orange Mojito, a house specialty!

If you can find some time for fun in the sun, Cayman offers many options. SCUBA diving, snorkeling, fishing, sailing, hiking, shopping and – my personal favorite – lazing on the beautiful sandy beaches.

The best part about Cayman Islands trip planning is that the Islands’ “Worry Free Hurricane Guarantee” covers cancellation prior to travel or compensation if travel is cut short due to hurricane weather. Many hotels offer penalty-free cancellation, though some have a one-night penalty, for cancellations up to 48 or 24 hours (depending on property) prior to expected arrival. Check with your hotel when booking for details about its hurricane guarantee.