Moving your company to Cyprus in 2026

Why Cyprus works for business owners

Cyprus combines three things few countries offer together. It is inside the European Union, so your company keeps access to EU directives, EU banking and a large network of double tax treaties. Its corporate tax is 15%, low by EU standards. And its personal tax rules for newcomers are among the most favourable in Europe.

The last point is the one most people underestimate. Corporate tax is only half of the bill. What really matters to an owner is what reaches their pocket after the company pays out dividends. In Cyprus, a non-dom resident can receive those dividends without paying the Special Defence Contribution.

What changed with the 2026 tax reform

The reform was published in the Official Gazette on 31 December 2025 and most of it applies from 1 January 2026. The changes that matter most to business owners are these:

Two changes deserve a closer look. Abolishing the deemed dividend distribution means profits can stay in the company without triggering a tax on dividends nobody was paid. And the new incorporation test means a company registered in Cyprus is now generally tax resident there, unless a treaty decides otherwise.

How company profits are taxed

The company pays 15% on its taxable profit. Some income is treated more favourably:

• Dividends received by a Cyprus company from its subsidiaries are generally exempt, which is why Cyprus works well as a holding company location.
• Gains on the sale of shares are generally exempt, except shares in companies that own Cypriot real estate.
• Qualifying intellectual property income can benefit from the IP box: 80% of the qualifying profit is exempt, which leaves an effective rate of about 3% at the new 15% rate.

Dividends paid by a Cyprus company to non-resident shareholders carry no Cypriot withholding tax, with one exception: a withholding tax applies when the recipient is an associated company in a jurisdiction on the EU's list of non-cooperative countries or, since 2026, in certain low-tax jurisdictions. Check the rate that applies before you distribute.

How you are taxed as the owner

If you move to Cyprus yourself, two separate taxes apply to you.

Income tax applies to salaries, director's fees and business income, on a progressive scale: 0% up to €22,000, 20% up to €32,000, 25% up to €42,000, 30% up to €72,000 and 35% above. Newcomers with a first employment in Cyprus may qualify for a 50% exemption on salaries above €55,000, for up to 17 years, if they were not resident in the previous 15 years.

Special Defence Contribution applies to dividends and interest. This is where the non-dom regime comes in. If you do not have a Cypriot domicile of origin, you pay 0% Special Defence Contribution on dividends for 17 of the last 20 years. After that, Cyprus now lets you extend the exemption twice, for five years each time, by paying €250,000 per period. Dividends still carry the 2.65% contribution to the national health system (GESY), on up to €180,000 of income a year.

Read the details in our guide to the 60-day rule and the non-dom regime.

Becoming tax resident in Cyprus

There are two ways to become tax resident as an individual:

1. The 183-day rule: you spend more than 183 days in Cyprus in the calendar year.
2. The 60-day rule: you spend at least 60 days in Cyprus, you do not stay more than 183 days in any other single country, you work, run a business or hold a directorship in a Cypriot company, and you keep a permanent home in Cyprus, owned or rented.

Since 2026 the 60-day rule no longer requires you to prove that you are not tax resident anywhere else. If you end up resident in two countries, the treaty between them decides.

Setting up the company, step by step

1. Choose the structure. A new trading company, a holding company above your existing one, or moving the seat of an existing company. Each has different tax effects in your home country.
2. Register the company with the Registrar of Companies: name, memorandum and articles, registered office, directors and company secretary, and the register of beneficial owners.
3. Register for tax with the Tax Department and, if needed, for VAT and social insurance as an employer.
4. Open bank accounts in Cyprus or with an EU payment provider. Banks will ask for the business plan, the source of funds and evidence of substance.
5. Build substance: a local office, board meetings held in Cyprus, directors who really decide there, and the staff the business needs.
6. Arrange your own residency: an EU citizen registers residence; a non-EU citizen needs a permit, for example permanent residency through a €300,000 investment.

Substance: what makes the structure hold

Substance is what turns a Cyprus company from a risk into a solid structure. Your home country will look at where the company is really managed. If decisions are taken from Madrid, Munich or Milan, that country can claim the company is resident there, or apply its controlled foreign company rules and tax the profits in your hands.

In practice, substance means a real office, directors with the knowledge and authority to decide, board meetings and key decisions in Cyprus, and people doing the work. How much you need depends on the activity and on your home country's rules.

Who Cyprus suits best

Cyprus fits holding companies, service and consulting businesses, technology companies with intellectual property, and owners who want an EU base with clients or staff in Europe. It suits less well businesses that need to sell mainly inside the UAE or Latin America, or owners who want to pay no personal tax at all on salary, which is where Dubai is stronger.

Before you move: what to check at home

Moving the company is not enough if you stay where you are. Before anything else, check:

• Exit tax: Spain, Germany and France tax unrealised gains on your shares when you leave, above certain thresholds. See our exit tax guide.
• Your own tax residency: where you live, where your family is and where your interests are.
• Controlled foreign company rules in your home country, if you keep living there.
• The double tax treaty between your country and Cyprus.

This guide is general information, not tax or legal advice. Every case needs individual analysis.