How to Set Up a Company in Cyprus as a Foreigner (2026)

Why Cyprus

Cyprus offers one of the most favourable tax environments in the EU:

• 12.5% CT on taxable income — tied with Ireland for the EU's lowest rate (among non-distribution-based systems)
• IP Box at 2.5% effective rate: 80% deduction on qualifying IP income — effective CT rate of 12.5% × 20% = 2.5% on qualifying profits from qualifying IP
• Participation exemption on dividends: Dividends received by a Cyprus company from subsidiaries are generally fully exempt from CT and Special Defence Contribution (SDC)
• No capital gains tax on sale of shares (with exceptions for companies owning Cypriot immovable property)
• Non-domicile regime: Individuals moving to Cyprus who are non-domiciled (living in Cyprus for under 17 of the past 20 years) pay no SDC (Special Defence Contribution) on dividends or interest received — effectively meaning dividends from a Cyprus company to a non-dom Cyprus resident are free of all Cyprus tax at the personal level
• 60+ double tax treaties (reduced treaty network since loss of Russia treaty, suspended 2023)
• EU membership: full EU access, EU directives, EU regulatory frameworks

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Step 1: Formation process

Cyprus companies are registered at the Department of Registrar of Companies and Official Receiver (RCOR).

• Required elements:
• Company name (unique; must end in "Limited" or "Ltd")
• Registered office in Cyprus
• Directors: at least 1; no nationality/residency requirement, but having Cypriot-resident directors is essential for substance (management and control test for 12.5% rate)
• Secretary: mandatory
• Shareholders: at least 1; no restriction
• Share capital: minimum €1 (no meaningful minimum)

Formation via a Cypriot law firm or company services provider: Most non-residents engage a Cyprus law firm, accountancy firm, or registered corporate service provider (CSP) — regulated by CySEC.

Cost: €800–1,500 for incorporation (professional fees + government fees) Timeline: 5–10 business days

Government fee: Based on authorised share capital (minimum €105 for smallest authorised capital)

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Step 2: The management and control requirement

For a Cyprus company to pay the 12.5% CT rate, it must be tax-resident in Cyprus. Cyprus tax residency is determined by management and control: the board must make key decisions from Cyprus.

• What this means in practice:
• At least two Cyprus-resident directors (standard for a well-structured Cyprus company)
• Board meetings held in Cyprus (or by video conference with directors physically in Cyprus)
• Key management decisions documented as being made in Cyprus
• Corporate secretary maintaining company in Cyprus

Nominee director services are widely available in Cyprus from registered CSPs: €1,500–3,000/year per nominee director. Standard arrangements include nominee services agreements, powers of attorney, and resignation letters.

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Step 3: IP Box — the 2.5% effective rate

The Cyprus IP Box provides an 80% deduction from taxable income attributable to qualifying IP assets. At 12.5% × 20% = 2.5% effective CT rate.

Qualifying IP assets: patents, copyrighted software, utility models, and other qualifying assets.

Nexus approach: The 80% deduction is only available in proportion to R&D expenditure incurred by the Cyprus company (or related outsourced R&D). You cannot simply own IP in Cyprus without having developed it there.

• Practical implications:
• If a Cyprus company genuinely develops software (with developers employed in Cyprus or working for the Cyprus entity on a cost-plus basis), the IP income from licensing that software qualifies for the 2.5% rate
• If IP was developed entirely elsewhere and then transferred to Cyprus, only future incremental R&D can qualify
• Get a tax ruling (ruling from the Cyprus Tax Commissioner) before relying on this regime

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Step 4: Non-dom personal tax regime

For founders who relocate to Cyprus:

• SDC (Special Defence Contribution) exemption: Non-domiciled Cyprus tax residents pay 0% SDC on dividends and interest (SDC is 17% on dividends and 30% on interest for domiciled residents). This means a non-dom Cypriot resident receiving dividends from their Cyprus company pays:
• Company level: 12.5% CT
• Personal level: 0% (no withholding, no SDC for non-doms)
• Combined effective tax on profits: 12.5%

To become tax-resident in Cyprus: Spend more than 183 days in Cyprus in the calendar year. Alternatively, use the "60-day rule" — spend at least 60 days in Cyprus if: you're not tax-resident in any other country for that year AND you don't reside in any other country for more than 183 days in aggregate AND you have a home (owned or rented) and professional activity in Cyprus.

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Real cost (Year 1)

Note: if you are Cyprus-resident yourself and serve as a director, cost reduces by the nominee director fees.