Where Should Tech Companies Hold Their IP in Europe? Why Cyprus Is Increasingly Chosen

When it comes to intellectual property, where a company holds its IP can be just as important as what it owns. Many technology companies continue to hold IP within their operating entities — often in high-tax jurisdictions such as the UK, US, Germany, or France simply because that is where the business originally started.

As companies scale, raise institutional capital, or prepare for liquidity events, this default approach is increasingly questioned. More founders, CFOs, and investors are now reassessing whether their IP structure still supports growth, valuation, and long-term strategy. 

The IP Holding Company as a Strategic Tool

An IP holding company (IPCo) is a dedicated group entity established to own and manage intellectual property, while operating companies license the IP required for their activities. This structure is widely used by international groups and serves purposes far beyond tax.

When implemented properly, an IPCo can:

• centralise ownership and control of core IP assets,
• simplify governance across multiple jurisdictions,
• separate valuable IP from operational and litigation risk, and
• create flexibility for licensing, investment, or exit transactions.

For technology businesses, this structure is often reviewed at key inflection points — rapid growth, international expansion, institutional funding, or pre-exit planning.

Why Cyprus is Increasingly Part of the Conversation

Cyprus has developed into a credible European hub for IP and R&D activities, supported by a stable legal system, an experienced professional ecosystem, and an internationally recognised IP Box regime aligned with OECD and EU standards.

For technology-driven groups, Cyprus is particularly relevant where the core IP relates to:

• software and mobile applications,
• platforms and digital infrastructure,
• algorithms and proprietary technology,
• databases and data-driven solutions,
• patentable inventions and technical innovation.

Where qualifying IP and real R&D activity are present, the Cyprus IP Box regime can reduce the effective corporation tax rate on qualifying IP income to approximately 3%, while remaining fully compliant with substance, transfer pricing, and nexus requirements.

Importantly, Cyprus is not used as a purely mechanical tax solution. The jurisdiction supports substance, governance, and long-term commercial alignment, which is increasingly important for investors and acquirers.

Benefits Beyond Tax

While tax efficiency is a factor, it is rarely the sole driver for IP restructuring.

A well-designed IP structure can also:

• improve transparency and “clean IP” for investors,
• simplify group restructurings and cross-border licensing,
• support future fundraising or M&A transactions,
• enhance valuation by clarifying ownership and control of IP.

For founders and CFOs, these considerations often carry as much weight as headline tax outcomes.

The Importance of Getting the Structure Right

Establishing or migrating IP into an IP holding company is not a box-ticking exercise. It requires careful consideration of:

• where R&D and value creation actually take place,
• how decision-making is exercised within the group,
• how IP is commercialised across markets, and
• how the structure will be viewed in due diligence.

Poorly implemented structures can create friction, risk, and future disputes. Well-implemented structures, by contrast, become an asset in their own right.

When Companies Typically Revisit IP Structures

In practice, IP restructurings tend to occur when:

• institutional investors enter the cap table,
• the business becomes profitable or highly scalable,
• international operations expand rapidly, or
• an exit or strategic transaction is on the horizon.

At these stages, clean, well-governed IP ownership is no longer optional — it is expected.

Final Thought

For technology companies, IP is rarely static. As the business evolves, so too should the structure that holds its most valuable assets. Increasingly, Cyprus is being chosen by international tech groups as a jurisdiction that supports efficient, credible, and future-proof IP and R&D structures — not as a shortcut, but as part of a deliberate strategy for growth and value creation.

How We Can Assist

Our legal team at Spencer West Cyprus, working closely with our partners across key international jurisdictions, advises on the legal and corporate structuring aspects of cross-border IP and R&D reorganisations.

For founders, CFOs, and investors considering a restructuring or reviewing existing IP arrangements, we support informed decision-making through senior legal guidance and coordinated cross-border execution.

To discuss your circumstances in confidence, please contact us at [email protected] or [email protected].