IP rights in the FinTech Revolution
With venture capital investment for FinTech reaching $17bn in 2016, there is a articulated demand to discuss protection in the innovative field, both from the entrepreneur and the investor side.
As the digital revolution sweeps through the financial services industry, organisations are continuing to invest heavily in financial technology (FinTech) to advance their digital transformation. To protect their investment and obtain maximum value some pre planning will give the investment increased value by the time the venture is ready for an exit.
A reputable and fully transparent financial center, a full member of the European Union and a well-established holding company jurisdiction, Cyprus has implemented an IP regime, to stimulate the growth driving sectors of IP exploitation and Research and Development. Resting on a sound legal system based on Common Law principles, and the conclusion of International Conventions on the Protection of Intellectual Property, the Cyprus new IP Regime guarantees maximum protection and certainty for IP owners.
IP protection in Cyprus
The protection of IP rights is dealt extensively in Cyprus. There is a comprehensive system in place that guarantees that the results of innovation and creativity are protected at a European and an International level.
- As far as patents are concerned, a new invention is protected in the following ways in Cyprus:
- A national patent certificate is granted by the Department of Registrar of
- Companies and Official Receiver.
- A European Patent issued by the European Patent Office.
- An International Patent under the provisions of the Patent Cooperation Treaty, administered by the World Intellectual Property Organization (WIPO).
Copyrights are protected under Law N.59/76 on the Protection of Intellectual Property which offers protection at a national level.
Cyprus being a signatory to the Bern Convention for the Protection of Literary and Artistic Works which covers broad range of rights, including software copyrights. This guarantees protection to all the Convention member states with no further process being required.
Also complemented with the beneficial tax provisions, that render the Cyprus tax system as one of the most favourable in the EU, featuring a 12.5% corporate tax rate, no withholding tax on outgoing payments (interest, dividends, royalties) and no exit taxes.
Cyprus, offers an extensive double tax treaty network that ensures withholding tax optimization on royalty payments that may arise from the contemplated IP arrangements and access to all EU Tax Directives.
Qualifying IP Rights include amongst others:
Patents, software copyrights.
- 80% of the qualifying profit income received from qualifying IP rights after deducting qualifying direct expenses is exempt from taxation.
- 80% of the profit from sale of the qualifying IP right is also exempt.
- The acquisition cost and related capital expenditure for the development of the IP can amortised in the year incurred and the 4 following years. In effect a 20% tax allowable amortisation on straight line basis.