The Tax Incentives Scheme (for natural and legal persons) for Investing in Innovative Enterprises concerns the amendment of the Income Tax Law in order to create an attractive incentive through tax relief to legal or natural persons investing in innovative companies, either directly or through an investment fund.
The tax exemption is subject to the following provisions:
For an individual:
(a) the amount deductible from taxable income may not exceed 50% of the taxable income of that individual in the tax year in which the investment is made.
(b) the deduction, to the extent not granted due to the above limitation, may be carried forward and granted over the next five (5) years, subject to the above percentage limitation and the amount deductible may not exceed in total one hundred and fifty thousand euros (€150,000) per year.
For a legal entity:
(a) the amount deductible from taxable income may not exceed thirty percent (30%) of the expenses incurred either directly, or through an investment fund, or through an alternative trading platform and only for equity investments.
(b) the deduction, to the extent not granted due to the above limitation, may be carried forward and granted over the next five (5) years, subject to the above percentage limitation and the amount deductible may not exceed in total one hundred and fifty thousand euros (€150,000) per year.
Criteria for Certification
The classification of an SME as ‘innovative’ is being evaluated, as follows:
To be certified an enterprise must meet the requirements of the innovative SME definition:
A small and medium-sized enterprise (SME) qualifies as an ‘innovative SME’ if upon application in one of the below Categories and assessment as follows:
The enterprise shall submit a certificate/certificate from an approved auditor, in which it is certified that the research and development expenses, as recognized on the basis of international accounting standards, represent at least ten percent (10%) of its total operating expenses:
It is understood that the certificate/certificate shall be consistent with the audited financial statements of the enterprise, which demonstrate the expenses for research and development in at least one (1) of the three (3) previous fiscal years.
The company submits a business plan describing the capacity to develop new or clearly improved products, services or processes with high technological or industrial risk, which are characterized as innovative in their sector or market.
Companies that meet at least one of the following criteria, during the last three (3) years:
(a) The company has secured funding from one of the SME Instrument (Phase I or Phase II), EIC Pathfinder and EIC Accelerator programs of the
EU Financial Program Horizon 2020, or from one of the EIC Pathfinder and EIC Accelerator programs of the EU Financial Program Horizontal Europe 2021-27.
(b) The company has received a Seal of Excellence in the programs mentioned above.
(c) The company has secured funding from the Innovation programs PRE-SEED, SEED or INNOVATE or from other corresponding Innovation Programs that will be announced within the framework of the National Framework Programs for Research and Innovation of the Foundation for Research and Innovation.
(d) The company has secured a Startup Visa.
Applications should be submitted via email at the email address: [email protected].
More information can be found on the webpage https://www.gov.cy/service/ekdosi-pistopoiitikou-kainotomou-epicheirisis/.
Contact person: Ms. Elena Poulli at +357 22 691 921, [email protected] or [email protected], +357 22 691 927
Relevant Documents
2025. All rights reserved.
Terms of use & Privacy Policy
Web Design & Development by Tabs and Spaces