A Cyprus company can be used as an intermediary licensing company between a foreign licensor and a foreign operating company in a Cyprus treaty location. The Cyprus intermediary licensing company can reduce the taxable profits in the operating location and achieve a double dip effect i.e., the royalties will be tax deductible in the operating location and will be tax free in the ultimate licensor’s jurisdiction (provided he is located in a tax efficient jurisdiction). Any margin remaining in the Cyprus company will be subject to income tax at the rate of 10%.