Intellectual property refers to a creation of numerous intellectual units, such as literary and artistic works, inventions, designs as well as names, images and symbols used in commerce, for which a monopoly is assigned to the owner or creator of the said units. A related term is intellectual property rights, such as trademarks, patents, copyrights and industrial design rights, which enable the owner of the intellectual property to earn financial benefit and recognition for their products.
Intellectual property can be created by private persons or legal entities. Typically, companies that own intellectual properties find it beneficial to set up an Intellectual Property Holding, in which all these assets are registered and licenced for royalty income generation. Since intellectual property can often be among the most valuable assets of a company, choosing the right jurisdiction of an Intellectual Property Holding requires a careful consideration in order to ensure the most beneficial environment for the company and its assets. Three main aspects to consider before choosing the jurisdiction for incorporation of the Intellectual Property Hold are quality asset protection, legal framework and tax optimisation possibilities.
Benefits of having an IP structure on Cyprus Cyprus has become an important player in the field of Intellectual Property Holdings since it introduced new tax legislation on Royalties in 2012. In addition to a beneficial tax regime, Cyprus can offer its companies a protection afforded by member states of the EU and all major Intellectual property treaties and protocols. Cyprus also has managed to link its world-wide network of double taxation treaties with its outstanding shipping, holding and intellectual property regimes and offers one of the lowest corporate tax rates in the EU – 12.5%. Additional benefits of choosing to register an Intellectual Property Holding in Cyprus:
No withholding tax on payments of interest, royalties and dividends; No taxation on profits generated by the sale of securities and no minimum holding period; Unilateral tax credit relief. Cyprus has also developed a strict Anti-Money Laundering legislation and is consistently positioned in high rankings among the EU Member States for compliance with AML practices and guidelines.
In order for an Intellectual Property Holding registered in Cyprus to benefit from the favourable tax regime, it must be protected by one of the following laws:
Patent law – in Cyprus, the responsible body of issuance of national patent certificates is the Patent’s office of the Department of the Registrar of Companies. In the European Union, patent certificates are issued by the European Patent Office. International Patent Certificates are issued by the WIPO – World Intellectual Property Organization. Trademark law – domestically, protection of trademarks is achieved through registration with the Trademarks’ office. In EU, protection of trademarks is organized through EU regulations on the Community Trademark and the Community Design registration. Cyprus’ tax regime The favourable tax regime for Intellectual Property Holdings is displayed in three possible activities connected with the intangible assets: when income is generated from any form of qualifying intellectual property rights; when income is generated through sale of any form of qualifying intellectual property rights; and providing generous allowances for development or acquisition of intangible assets:
Tax legislation on royalty profits – when receiving royalties for an intellectual property, 80% of the royalty is considered an expense by the Cypriot tax legislation, therefore no tax needs to be paid for the largest part of the royalty profits. The remaining 20% is subject to the traditional corporation tax rate of 12.5%. Additionally, before determination of the royalty profit, it is allowed to deduct from the royalty income all expenses that have incurred during the production of the royalty income. Tax legislation on profits from sale of a qualifying Intellectual Property Rights – The tax legislation on Intellectual Property Rights states that in case a company decides to sell all or part of its intangible assets, it will also enjoy the same favourable taxation as discussed above – 80% of the profit generated by the sale of the qualifying Intellectual Property Rights is deemed as expense and just the remaining 20% is subject to the traditional corporation tax rate of 12.5%. This provision allows companies to be sure that there is a tax efficient solution in case they decide to sell their Intellectual Property Rights. Tax legislation on development or acquisition capital allowances – companies registered in Cyprus are able to write off the total sum of the capital expenditures emerging during the acquisition or development of Intellectual Property. This can be done over the first five years of the use of the intangible asset – in a straight line of 20% starting from the first year and continuing throughout the subsequent four years of the usage of the asset. The described capital allowances are tax deductible, which means that the actual amount of tax paid during the first five years of the asset’s life is even smaller.
A joint-stock company is a form of corporation that acquires legal personality from the date of its incorporation and is commonly used for the conduct of business. The company's share capital consists of the total contributions of its shareholders. The shares can be publicly traded, which provides an incentive for investors needed for further business development. At the time of the incorporation of the company, the shareholders can declare it a closed company, which means that shares can be transferred to any person, but the current shareholders must have a prior disclaimer. At the time of incorporation, shares may be issued in a variety of forms, including bearer, registered, or preferred.
Functions of a joint-stock company The ultimate goal of all businesses is to run a business and make a profit. A joint-stock company is a useful type of company for attracting investors and additional funding in return for the investor receiving shares that give the right to dividends. Stock corporations often grow into large corporations. They are most commonly found in the financial services sector – credit institutions, banks, insurance companies and other payment and financial institutions are very often public companies. These companies obviously need financial stability and plentiful funds in an emergency. Utilization of a trading account While a cash account determines that you can place a trade using only the amount of funds that are in your account, a margin account, on the other hand, involves a line of credit offered by your broker and you can use it to enter more positions that exceed your actual cash balance. When using a margin there is an interest applied for positions held overnight. If interested in margin, the brokerage could offer you several levels of leverage depending on size of your account. For example, if you hold 10,000 USD, leverage of 2:1 would allow you to purchase securities with total value of 20,000 USD. Also, it must be pointed out that in the same manner as higher profits are reachable, you are also subjected to higher losses that can even surpass your initial investment.
Advantages & disadvantages of trading accounts When discussing advantages of trading account it is worth mentioning that this type of account is relatively easy to open online, which means that you are not subject to geographical constraints of your location.
Advantages There are a large number of online brokerage companies offering various types of trading accounts and it is up to you to find the most suitable one for your needs. In addition to being easy to set up and access over online if needed, all assets in trading account are held electronically, which means no physical transaction is taking place.
If used with caution, margin can give you huge advantage in terms of profit when executing trades from your trading account. In addition, many brokerages offer different tools to make sure you are making the correct investment decision, as well as help traders to avoid emotionally based trades. Trading account offers another benefit: the possibility to keep and trade variety of different financial instruments in the same account. Although, some traders chose to open multiple accounts and keep each class of financial instruments in separate accounts.
Disadvantages Nevertheless, worth remembering is the fact, that since the trading account allows gaining higher returns than investing accounts, also the risk of losing is greater and may exceed your initial investment. Potential high profits are pretty attractive, but you should also remember about the risks.
Serbia emits 6.8 metric tons per capita of CO2. 27200 km² of Serbia's territory is covered in forests. and forest land comprises 35% of all the land in the country. The number of road motor vehicles per 1000 inhabitants in Serbia is 165.
A holding company is a company that lawfully holds (owns) shares in other companies. Usually it is an LLC or LP that holds enough equity in another company to control and manage its operations and profits. As such, a holding company is often only used to control other business structures: it can be a corporation, LP, or LLC rather than manufacturing its own goods or offering services. Holding companies can also be used to own some type of property. Equity holdings are widely used as owners of real estate, intellectual property rights, stocks, and other assets. When a company is wholly owned by a holding company, it is known as a subsidiary.
Purpose of a holding company
One advantage of a holding company is that the holding company's assets are very well protected against losses, claims and other risks. In the event of the bankruptcy of one of the companies, the holding structure will result in a loss of capital and a decrease in net assets, but the creditors of the insolvent company will not be able to claim any assets of the holding company in the context of the dispute. For example, a large corporate structure can be organized in the form of a holding company with only one subsidiary in order to own its IP rights or, alternatively, to own real estate or equipment or to operate as a franchise company. By building such a complex multi-layered holding structure, each subsidiary bears quite limited financial and legal responsibility alongside the parent company itself, which makes them a good solution for asset protection. The creation of a holding company structure can also reduce tax liability, which can be achieved by incorporating some parts of the company into jurisdictions with reduced or exempt taxes.
Holdings also allow private persons to protect their income or assets. Instead of owning assets personally and bearing full responsibility for one’s debts, possible lawsuits and other risk factors, holding structure can hold the assets instead, thus, putting only holding company’s assets at steak.
Main activities of a holding company include supervising the subsidiary companies it owns. It can recruit and fire staff, if required, however, managers of the subsidiaries will be held responsible for their decisions regardless. Even though the parent company does not manage daily operations of the subsidiaries, the holding shareholders should have a picture of what is going on and how these subsidiary companies work in order to evaluate the performance and financial data.
Benefits of having a holding structure In addition to everything previously mentioned, there are other major benefits of having a holding structure.
Full operational control over all subsidiaries:
A holding company has full supervision and control over directors’ board of the subsidiary. Parent company has the authority recruit staff, including directors.
Can be used to own property:
A holding company can hold different types of property, including, but not limited to real estate and intellectual property rights as well as other assets.
A holding company can not only hold, but also utilize and even pledge it’s property as well as invest it.
Risk minimization:
Holdings are often used to own assets, thus usually such structures are owners of numerous valuable assets. Holding corporate structure provides legal opportunity to protect these assets from claims, damages, lawsuits and other risks.
Holdings can be organized in several different ways. This allows quite flexible asset distribution between all subsidiaries.
Holdings company can own and use property:
Putting your company’s intellectual property rights or any other assets into a holding structure may be very beneficial in terms of legal protection against potential risks.
Flexibility of participation in risky investment projects:
A holding company participating in high-risk investment projects can protect shareholders of a daughter company.
Board of directors of each of the companies must act in the best interests of their company:
The parent company and its subsidiaries are recognized as separate legal entities each, each having separate board of directors. The board of directors is liable for the company’s activities as well as they are bound to act in the best interests of the represented business.
Tax planning solution:
The holding structure may be set up entirely in a different jurisdiction, which offers decreased or exempted taxes.
The holding can be quite a beneficial structure, especially considering that it often has lower tax rates than a trust would usually have applied.
Before you even create the documents, you need to make two decisions to determine how to proceed: In which jurisdiction will you incorporate your company? And which legal form will you choose? These two factors determine a variety of things, such as the incorporation process, the documents required, and the taxes your company must pay. Visit our website to learn more about the main jurisdictions and legal structures.
After you have decided on the location and legal form of your company, you need to think about the company name and legal address. There are usually specific requirements that the company name must meet, but these vary from country to country, so it is best to check the availability of your desired name before creating any documents. A legal address can usually be rented along with virtual office services if required.