Company Formation in Cyprus - Relocation to Cyprus
Company formation in Cyprus, combined with Cyprus residency, offers substantial tax advantages. The corporate tax rate of 12.5% is one of the lowest in Europe, and there is no withholding tax.
The Non-Dom status provides an exemption from the defense tax for 17 years. The 12.5% can effectively be viewed as the final tax rate on corporate profits. Most capital gains are entirely tax-free.
Inhaltsverzeichnis
General Information about Cyprus
The small island nation of Cyprus is located in the eastern Mediterranean and offers, in addition to a Mediterranean lifestyle, interesting travel opportunities both within and outside Europe due to its geographic location.
Key Facts about Cyprus
- Member of the European Union since April 1, 2004
- Not a member of the Schengen Area
- Not a member of NATO
- Official languages: Greek and Turkish (English is widely spoken)
- Capital: Nicosia
- Government system: Presidential Republic
- Population: 1.24 million (2021)
- Gross Domestic Product: 28.41 billion USD (2021)
- Internet TLD: .cy
- Currency: Euro (EUR)
- Country code: +357
Key Facts about the Tax System in Cyprus
- Personal income tax rate: 0% – 35%
- Social contributions: 8.8% (employee) and 8.8% (employer)
- Corporate tax rate: 2.5% (Intellectual Property), 12.5% (standard)
- Withholding tax: 0% (dividends)
- VAT rate: 19% (standard), 9% (reduced), 5% (heavily reduced), 3% (very heavily reduced)
Important Developments in Cyprus
Implementation of the EU Regulation ATAD-3 (Anti-Tax Avoidance)
Increase of the minimum wage to 900 EUR (gross)
Implementation of the EU Regulation on the Global Minimum Tax
Company Formation in Cyprus
Company formation in Cyprus is highly popular as it offers significant tax advantages when implemented correctly, especially compared to high-tax countries. With a corporate tax rate of 12.5% and tax exemption on dividends, a Cyprus Limited Company provides substantial advantages over sole proprietorships.
The process of forming a company in Cyprus requires, first, a name reservation, the drafting of the company’s articles of association in Greek, provision of a registered office, signature by a lawyer licensed in Cyprus, and submission of the necessary documents to the relevant commercial registry.
Typically, this process takes two to three weeks. Afterward, a tax number and VAT ID must be applied for, and in many cases, registration with the social security authorities as an employer is also necessary.
The latter is always required if employees are to be hired. Especially when relocating to Cyprus, it makes sense to become an employee of your own Cyprus Limited Company in order to establish an employment relationship and prove a source of income.
Target Audience
Who is a company formation in Cyprus suitable for? It primarily depends on your business model and the goals you aim to achieve. Typically, clients from the following industries and groups hire us for assistance:
- Marketing / Sales / Media
- Coaching / Speakers / Writers
- IT / Programming
- HR / Recruiting
- Remote Workers
- Trade
- Manufacturing
- Services
- Logistics
- Commission-based Businesses
Advantages
- 12.5% corporate tax on company profits
- 0% withholding tax/dividend tax
- Well-educated workforce
- Favorable geographic location
- Good logistics (several international airports)
- Member of the European Union
- Stable presidential republic
Legal forms in Cyprus
What legal forms exist in Cyprus? The most common legal form for corporations is undoubtedly the Cyprus Limited (LTD), while the legal form for sole entrepreneurs is called Sole Proprietor. From a tax and social security perspective, the Sole Proprietor status is unattractive, as in addition to income tax of up to 35%, an additional 17.6% in social contributions are incurred.
Taxes and contributions for legal entities in Cyprus
| Tax or Levy Type | Tax rate / Tax burden | Basis |
| Corporate Tax | 12,5% | Profit |
| GESY-Contribution | 2,65% | Profit distributions |
| Value Added Tax | 19% | Revenue |
Key features of the Cyprus Limited
- Legal form: Legal entity that acquires its own legal personality upon registration in the commercial register
- Number of shareholders: Minimum one shareholder, maximum 50 shareholders
- Share capital: No minimum share capital required, but 1,000 EUR is common
- Liability: Limited liability of shareholders to the extent of their contributions, the company is liable with its own assets
- Management: At least one natural person required
- Accounting: Obligation to maintain accounts
- Bodies: Shareholders’ meeting, management, supervisory board (optional)
Non-Dom Status in Cyprus
The Non-Dom Status in Cyprus allows individuals to be exempt from the Cypriot defense tax for 17 years and establish a tax residence with a minimum stay of only 60 days, which can be maintained permanently. To qualify, it is first necessary to become a resident, i.e., to establish domicile in Cyprus. The following conditions must be met:
Domicile in Cyprus
No tax domicile in Cyprus
60 days minimum stay in Cyprus
Exclusive tax liability in Cyprus
Year-round residence in Cyprus
Year-round employment in Cyprus
“Non Dom but not domiciled” – This means you are a resident but not tax-domiciled. You must provide documentation to prove that you meet these requirements when applying.
You do not automatically obtain the Non-Dom status upon your arrival in Cyprus; it is granted only upon application.
If you are unsure how to proceed, we can assist you with the process.
Tax comparison between Germany and Cyprus
In the following examples, we assume that all profits are withdrawn by a natural person with the corresponding tax residence in the respective country and transferred to private assets:
| Basis: €100,000 annual profit | |
 Germany |
 Cyprus |
| 15.000 EUR (15% Corporate Tax) | 12.500 EUR (12,5% Corporate Tax) |
| 15.000 EUR (ca. 15% Business Tax) | - |
| 17.500 EUR (25% Capital Gains Tax) | - |
| 963 EUR (5,5% Solidarity Surcharge) | 2.650 EUR (2,65% GESY) |
|
48.463 EUR (48,46% Total tax burden) |
15.150 EUR (12,5% Total tax burden) |
| -33.313 EUR Taxes per year (-69%) | |
| Basis: €250,000 annual profit | |
|
Germany |
Cyprus |
| 37.500 EUR (15% Corporate Tax) | 31.250 EUR (12,5% Corporate Tax) |
| 37.500 EUR (ca. 15% Business Tax) | - |
| 43.750 EUR (25% Capital Gains Tax) | - |
|
2.406 EUR (5,5% Solidarity Surcharge) |
6.625 EUR (2,65% GESY) |
| 121.156 EUR (48,46% Total tax burden) | 37.875 EUR (12,5% Total tax burden) |
| -83.281 EUR Taxes per year (-69%) | |
| Basis: €1,000,000 annual profit | |
|
Germany |
Cyprus |
| 150.000 EUR (15% Corporate tax) | 125.000 EUR (12,5% Corporate tax) |
| 150.000 EUR (ca. 15% Business tax) | - |
| 175.000 EUR (25% Capital gains tax) | - |
| 9.630 EUR (5,5% Solidarity surcharge) | 26.500 EUR (2,65% GESY) |
| 484.630 EUR (48,46% Total tax burden) | 151.500 EUR (12,5% Total tax burden) |
| -333.130 EUR Taxes per year (-69%) | |
Payroll in Cyprus
| Simplified calculation scheme for the tax burden on wages and salaries | |
| Amount | Designation |
| 900 EUR | Gross salary (minimum wage) |
| - 0 EUR | Income tax (0%) * |
| - 74,70 EUR | Social insurance employee contribution (8,8%) ** |
| - 23,85 EUR | Health insurance NHIS/GESY (2,65%) |
| = 801,45 EUR | Net salary |
* In Cyprus, there is a personal income tax exemption of 19,500 EUR.
** The employee’s and employer’s social security contributions are both 8.8%. The employer’s share has not been considered in this calculation as it is intended for illustration purposes for employees.
Requirements
- Legal age
- Capacity to contract
Process
- Conversation for mutual acquaintance
- Issuance of order and payment of all fees
- Submission of identity proof, proof of residence, and KYC form
- Submission of the powers of attorney prepared by us and signed by you
- Company formation by representation through power of attorney (reservation of company name, creation of articles of association, lawyer appointment, registration in the commercial register)
- Application for tax numbers
- Registration as an employer for social insurance
- Creation of a managing director’s contract
- Submission to the register of beneficial owners
- Opening of a bank account with a Cypriot bank (requires personal presence)
Company formation in Cyprus: Service Overview
- Reservation of company name
- Registered address (12 months)
- Registered agent (12 months)
- Preparation of the articles of association
- Preparation of all powers of attorney
- Registration in the commercial register
- Creation of a valid managing director contract
- Registration for social insurance as an employer
- Entry in the register of beneficial owners
Assistance by a licensed tax advisor in Cyprus
Once your Cyprus Limited is registered in the commercial register, rights and obligations arise, including towards the tax office. To ensure that you don’t miss any deadlines and avoid penalties, you will be supported by an experienced and licensed tax advisor in Cyprus. We would be happy to provide you with a customized offer.
Immigrating to Cyprus
If you want to immigrate to Cyprus, there are several things to consider: After all, you don’t want to waste time, money, or energy on experiments and aim to reach your goal as quickly as possible: starting a new chapter in life and peacefully focusing on your business activities.
Target audience
Who emigrates to Cyprus and why? Typically, our clients are individuals who cite various reasons for their emigration to Cyprus, such as:
- Mediterranean lifestyle
- Good weather year-round
- Geographical location
- A fresh start abroad
- Romantic reasons
- Frustration in their home country
- Access to skilled labor
- Low cost of living
- gooExtremely low taxes
Advantages
- Low food prices
- Low energy costs
- Low real estate prices (rent/buy)
- Very low taxes
- Favorable geographical location
- Good flight connections
- Uncomplicated immigration thanks to the freedom of establishment for EU citizens
Taxes and contributions for individuals
| Type of tax or levy | Type of tax or levy | Basis |
| Income tax | 0% - 35% | Earned income (self-employed and employed work) |
| Social contributions | 16,6% | Earned income (self-employed and employed work) |
| Value-added tax (standard rate) | 19% | Goods and services |
| Value-added tax (reduced rate) | 9% | Accommodation, restaurants, catering services, public transportation |
| Value-added tax (severely reduced rate) | 5% | Books, magazines, newspapers |
| Value-added tax (very reduced rate) | 3% | Theater, Musicals |
| Income tax table (2024) | |
| Taxable annual income (EUR) | Tax rate (%) |
| 0 - 19.500 EUR | 0% |
| 19.501 - 28.000 EUR | 20% |
| 28.001 - 36.300 EUR | 25% |
| 36.001 - 60.000 EUR | 30% |
| 60.000 EUR and above | 35% |
Establishing residence in Cyprus
To ensure that you comply with the local registration requirements, settle in Cyprus as quickly as possible, and avoid costly mistakes, give us the task of assisting you with establishing residence in Cyprus.
This will help you avoid expensive errors, wasted time, and unpleasant experiences. We are well-versed in Cyprus and will let you benefit from our insider knowledge.
Real estate market in Cyprus
The real estate market in Cyprus follows different rules than the German market. Not all offers visible online are actually available. They are primarily meant to attract interest and establish contact with the realtor. A good realtor is often essential, as their local and market knowledge ensures that you can find a suitable property that meets your standards.
Employment contract in Cyprus
As part of the company formation in Cyprus, we also create a valid, bilingual employment contract that complies with the legal requirements. Cyprus has a working time law, meaning that only one full-time job per person is permitted. Exceptions apply for executive mandates.
Requirements
When immigrating to Cyprus, there are two groups of people: EU citizens, who enjoy the freedom of establishment, and citizens from third countries. The procedure for EU citizens is relatively simple, while the procedure for citizens from third countries is much more complex. If you do not hold EU citizenship, please contact us so we can discuss your individual options. For citizens of the European Union, the following applies:
- Valid rental contract
- Valid employment contract
- Correct application submission
- Appointment with the Immigration Police
- Personal attendance at the appointment with the immigration authorities
Process
After you have commissioned us to professionally assist you with your relocation or immigration to Cyprus, one of our qualified team members will get in touch with you.
In the next step, we will request some documents from you. Then, we will prepare the necessary, personalized powers of attorney, which you will sign and return to us with notarized certification.
We will submit the documents in the correct format to the immigration authority and schedule the appropriate appointments. We will also coordinate with you regarding the bureaucratic processes.
At each appointment, one of our team members will accompany you, providing support in case of communication difficulties, offering valuable translation services, and ensuring that everything proceeds smoothly and efficiently.
Typically, you will receive your Certificate of Residence or “Yellow-Slip” on the spot.
Residency in Cyprus: Overview of Services
- Access to our network of real estate agents in Cyprus
- Arrangement of all official appointments
- Police registration
- Application for personal tax number
- Application for personal social security number
- Certificate of Residence
- Personal assistance by our staff
- Valuable information and recommendations about Cyprus
Hundreds of clients rated us with "Excellent"
How we can assist you
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Together we will figure out how we can help you to achie your goals.
