Year-End Closing for Software and Tech Companies in Cyprus
· 6 min read · Tsquared Services
Why tech closes are different
Software businesses often sell subscriptions, licences or projects billed in advance, use several payment platforms and pay contractors in many countries. Each creates timing and evidence questions at year-end.
Recognise revenue in the right period
Annual subscriptions paid upfront should usually be spread over the service period, with the unearned portion shown as deferred income. For project work, recognise revenue based on progress. Review contracts with unusual terms before the year closes.
Reconcile payment platforms
Stripe, PayPal, app stores and similar platforms pay out net of fees, refunds and chargebacks. Reconcile gross sales, fees and payouts to platform reports so income and costs are both recorded in full.
Development costs and IP
Track time and costs spent on developing software, separating research from development and maintenance. If you intend to use the Cyprus IP Box regime, keep records linking qualifying expenditure to qualifying IP income, since the relief depends on that evidence.
Contractors and employees
Review contractor agreements and payments, especially for long-term contractors working like employees. Confirm that payroll, Social Insurance and any new-resident exemptions are applied correctly for staff.
Plan the next year
Use your closing figures to update forecasts, runway calculations and investor reporting. Clean year-end numbers make fundraising and due diligence much faster.
Key takeaways
- Defer subscription income received in advance.
- Reconcile payment platforms gross, not just payouts.
- Keep evidence linking IP costs to IP income.
- Review long-term contractor arrangements.
Best practices checklist
- Integrate payment platforms with your bookkeeping software.
- Use time tracking for development work.
- Keep a register of IP assets and related costs.
- Update investor reports straight after the close.
See how we support this industry
This article is general information, not personal tax advice. Contact us for advice on your situation.