Registration of TM in Cyprus and IP-box regime

Registration of TM in Cyprus can be carried out in one of three ways:

• directly through the Patent Office of Cyprus, located in Nicosia;
• within the framework of registration of TM in Europe through the Office for Harmonization in the Internal Market (OHIM), located in the city of Alicante (Spain);
• within the framework of the international registration of TM by applying through the World Intellectual Property Organization (WIPO) in Geneva.

The law of Cyprus does not contain a definition of the concept of a trademark (a sign/mark for goods and services).

To register a trademark in Cyprus without waste of money and time, contact the lawyers of Law&Trust International. Our specialists will answer any questions you may have about this field during personal conversation in the office, by phone or in chat.

The European Court of Human Rights gave the following clarification: "The concept of a sign/mark is not limited to its visual representation: as a result, both sounds and smells can be considered within the concept of a sign/mark".

The legislation of the European Union determines that a designation can be registered as a trademark only if it can be represented graphically and is able to make goods and services of one enterprise distinguishable from similar goods and services of other enterprises (Article 2 of the Directive of the Council of the EU No. 89 / 104 EEC of 21 December 1988). Based on the judicial precedent of December 12, 2002 in the case of C-273/00 "Ralf Sieckmann" v. The German Patent and Trademark Office, so-called “Sieckmann criteria” were worked out, according to which, the image must be clear, accurate, complete, accessible, meaningful, long-term and objective, in order to be able to be registered as a TM.

According to the legislation of Cyprus, the following can be registered as trademarks: words (letters, letter and word combinations, phrases), images, combined signs (containing both verbal and visual elements), 3D forms, colour marks, as well as sounds that can be represented graphically (using a musical staff)can also be registered as TM.

Theoretically, smells and tastes/flavors can also be registered as TM, however in practice the foregoing creates great difficulties due to the fact that smells are difficult to accurately represent graphically, and the taste, in order to be registered as a TM, must have a distinctive character. So flavoring TM can be registered for medicines.

Let’s consider two types of grounds for refusing to register a trademark in Cyprus.

Absolute grounds for refusing to register a trademark in Cyprus

• trademarks that do not have distinctive character;
• trademarks consisting solely of marks, features and signs that traditionally serve in trade activities to indicate quality, quantity, purpose, aim, value, geographical origin, time of production of goods or provision of services, i.e. - trademarks that are descriptive in nature;
• trademarks that consist solely of signs or features that are included in the current language of commercial activity or express the established methods of trading;
• trademarks that are contrary to public policy or morals;
• trademarks that mislead the consumer;
• trademarks prohibited by law.

Relative grounds for refusal to register TM in Cyprus

Grounds for refusal of registration are considered to be relative ones, which are taken into account in the case of bringing justified arguments.

Relative grounds for refusal to register a trademark:

A trademark may not be registered if, as a result of its comparison with the trademark registered earlier, it was found that:

• the trademarks are identical to each other, and the goods / services are identical or similar to the extent of confusion among themselves so that they can be confused by the consumer;
• the trademarks are identical to each other or similar to the extent of confusion with each other, and at the same time, earlier trademark has already formed business reputation, and the registration of a later trademark will bring its rightholder an unfair advantage and / or damage the reputation of earlier trademark.

Procedure for registration of a trademark in Cyprus

Procedure for the registration of a trademark in Cyprus requires mandatory representation of the applicant's interests in the patent office of Cyprus by a local lawyer who has obtained a special license to practice law in Cyprus.

After the registrar verifies the trademark for the absence of absolute and relative grounds for refusing to register TM, information on the trademark is published in the Official Journal of Cyprus.

Term of registration of TM in Cyprus is 12 months. In certain cases (if there are objections from the right holders of similar trademarks registered earlier), the registration period may be delayed up to 1.5 years.

Upon completion of the registration procedure of the applicant's trademark, a certificate of registration of the trademark is issued, which is valid for 7 years from the date of submission of the application for registration.

Upon expiry of the above period, legal protection of the mark can be renewed at will of the rightholder each time for the next 14 years.

Cyprus regime of IP-BOX

This regime is effective from January 01, 2012 and represents a program that regulates the taxation of royalties for Cypriot companies that possess the objects of intellectual property.

The foregoing program applies to all categories of intellectual property, including in respect of patents and trademarks.

The IP-Box regime of Cyprus applies to all TMs and patents owned by a Cyprus company, regardless of the jurisdiction in which the TM is registered.

The essence of the IP-BOX regime

• exemption from taxation of 80% of the profit received from the sale of intellectual property in Cyprus;
• exemption from taxation of 80% of gross profit obtained from the use of intellectual property in Cyprus;
• when calculating the tax base of profits in Cyprus obtained from the use of intellectual property objects, the expenses incurred by the company in connection with the receipt of this income are accounted for and are subject to amortization in equal shares within 5 years starting from the year of registration of the intellectual property object (i.e. annually 20% of expenses are allowed to be deducted);
• Cyprus has a wide range of intellectual property objects, in relation to which this regime can be used;
• effective tax rate in Cyprus is 2.5% or lower.

Example of the application of preferential taxation in respect of intellectual property in Cyprus

• Annual income - 200;
• Expenses - 50;
• Profit - 150;
• Tax exemption of 80% - 120;
• Profit taxable - 30;
• 12.5% income tax - 3.75%.

Features of the Cyprus IP-BOX regime

• income tax of 12.5% in Cyprus creates an effective rate of 2.5% for taxation in respect of intellectual property;
• 2.5% - the lowest effective rate in Europe;
• the given rate is much lower than in other countries, assuming similar IP-modes (UK - 10%, the Netherlands - 5%, Luxembourg - 5.7%).

IMPORTANT!

In order for the tax authorities of the CIS countries to recognize the costs of royalty payments to the Cypriot company, the company in Cyprus (the rightholder of IP object) must necessarily conduct actual activities and incur certain costs for the development and renewal of these intellectual property objects. Also, a Cypriot company can not be affiliated with a company that pays royalties.

Take advantage of the IP-Box regime until June 30, 2016.

At the same time, tax privileges for this regime can be used until the middle of 2021.