Are you interested in register a company in Cyprus? If so, you’ve come to the right place. In this article, we will provide you with valuable information on how to open a company in Cyprus and take advantage of all the tax benefits and business opportunities this country has to offer.
Benefits of register a Company in Cyprus
Register a company in Cyprus can provide you with numerous benefits. Here are some of the most important ones:
Tax advantages
Cyprus offers an attractive tax system for companies. The corporate tax rate is low, and there are various tax incentives available. This means you can maximize your profits and reduce your tax obligations.
Business opportunities
Cyprus is a thriving business center and offers many opportunities for companies in various industries. Moreover, its strategic location at the crossroads of Europe, Asia, and Africa provides access to international markets and facilitates global trade.
Access to the European market
By register a company in Cyprus, you will have access to the European Union market. This will allow you to leverage the benefits of doing business within the EU and expand your operations to other European countries.
Tax Residence in Cyprus
If you’re considering establishing yourself in Cyprus, obtaining residency in this Mediterranean country can be a pivotal step. Residence in Cyprus offers multiple advantages, such as access to the social security system and the freedom to travel throughout the European Union.
Setting up a business in Cyprus is often the chosen path to gain residency in the country. However, it’s crucial to be aware of the requirements you must meet:
Requirements for Obtaining Residency in Cyprus
- Minimum Stay: To be eligible, you must spend at least 183 days a year in Cyprus.
- Required Documentation: Prepare documents like a passport, a certificate of no criminal record, and demonstrate sufficient income to cover your expenses in Cyprus.
- Application Process: Complete forms, provide the required documentation, and pay the relevant fees.
Obtaining residency in Cyprus comes with a range of advantages, including the benefits of being a resident in a European Union country and Cyprus’ favorable tax advantages.
Non-Dom Status in Cyprus
Cyprus’s Non-Dom Program presents an enticing opportunity for entrepreneurs and affluent individuals seeking to reap significant tax benefits and a favorable environment in the country. This program offers exemptions from taxes on dividends, interests, and income generated abroad.
Additionally, it enables individuals to attain tax residency with a minimal presence requirement of 60 days per year. In this article, we will delve into the advantages and prerequisites of Cyprus’s Non-Dom Program, as well as the details on how to meet the specifications for becoming a non-domiciled resident.
The Numerous Benefits of Cyprus’s Non-Dom Program:
- Tax-Free Dividends: Picture earning dividends from both domestic and foreign investments while being entirely exempt from taxes. As previously mentioned, you will only pay 2.65% if you are a resident in Cyprus, contributing to the national healthcare system. If your company in Cyprus is offshore, you’ll be tax-free.
- No Taxes on Interests: Both individuals and registered companies in Cyprus enjoy complete exemption from income tax on interests. Regardless of whether your income originates from foreign or local sources, you won’t have to pay taxes if you lack tax residency in Cyprus.
- Minimal Presence Requirement: As previously mentioned, this program opens doors for investors seeking maximum flexibility, requiring only 60 days of presence, whether in a single period or multiple visits.
- A Long-Term Security Program: Cyprus’s Non-Dom Program ensures tax benefits for 17 years. This offers stability and facilitates long-term planning and investments.
- Access to Healthcare and Social Security: As a non-domiciled member in Cyprus, you can access the healthcare and social security systems of the European Union. This provides peace of mind and additional benefits for those who choose Cyprus as their tax residence.
- No Remittance-Based Taxes: Would you like to freely maintain, distribute, or move international capital gains? Cyprus’s Non-Dom Program waives all taxes based on remittances.
- Avoiding Taxes on Salaries: If you are a Non-Dom and your income is below €19,500, this regime completely exempts you from income taxes.
Non-Dom Status and the 60-Day Rule
One of the most popular ways to secure residency in Cyprus is through the Non-Dom status. This regime allows non-European Union residents to establish their tax residency in Cyprus and enjoy a favorable tax regime.
Under the 60-day rule, Non-Dom residents of Cyprus only pay taxes in the country on income generated within Cyprus for a maximum of 60 days per year.
This means that in just 60 days, you can be considered a tax resident in Cyprus, in contrast to the 183 days required in many other jurisdictions. An attractive option for digital nomads or entrepreneurs who wish to reside in other countries for the rest of the year.
How to Obtain Residency in Cyprus Under the 60-Day Non-Dom Rule
Below, we’ll explore two specific cases to obtain residency in Cyprus: for European citizens with the “yellow slip.”
Residency for European Citizens with the “Yellow Slip” If you’re a citizen of a European Union country, you can reside in Cyprus without needing a specific visa or residence permit. However, to establish your permanent residence in Cyprus, we recommend obtaining the “yellow slip.”
The “yellow slip,” also known as the Certificate of Registration of Residence, certifies your right to reside in Cyprus as a European citizen. To obtain it, follow these steps:
- Presence Registration: You must register with the Cypriot immigration authority within the first four months of your arrival. This involves submitting documents such as your passport, proof of income, and health insurance.
- Demonstrate Financial Means: As part of the registration process, you may need to demonstrate that you have sufficient financial resources to support yourself in Cyprus without relying on the social assistance system. This could include establishing a business in Cyprus or gaining employment.
- Establish an Address in Cyprus: You must provide a contact address in Cyprus, which can be either residential or commercial.
- Obtain Non-Dom Status in Cyprus: This will not only grant you the 60-day rule in Cyprus but also allow you to enjoy tax benefits to reduce your taxes compared to other countries.
Once you’ve completed these steps, you’ll receive the “yellow slip,” which legally permits you to reside and work in Cyprus.
How to Apply for NON-DOM Status in Cyprus
Now that you’re aware of all these tax and social advantages, why not consider relocating to Cyprus? To apply for non-domiciled status, you must complete the following process:
- As a European Union citizen, your first step is to obtain a registration certificate known as the “yellow slip,” allowing you to reside and work in Cyprus. Remember that all non-Cypriot passport holders must obtain this registration certificate from the immigration department before approaching the tax authority for residence.
- The next step is to register with the tax authority to receive a tax identification number. This may require spending at least 183 days in Cyprus and submitting all relevant tax declaration forms. After completing your 183-day stay, you’ll become eligible for a tax residency certificate, which may be required by entities and financial authorities in other countries. Once you’ve successfully registered as a tax resident in Cyprus, you can obtain non-domiciled status.
- If you wish to qualify as non-domiciled in Cyprus, you can submit an application at the Ministry of Interior to obtain a registration certificate. If you’ve already moved, you can request the application from your tax advisor or select an immigration package tailored for non-domiciled individuals. This status can be applied for by employees, self-employed individuals, retirees, or visitors in Cyprus. As a European Union citizen, you can also formally apply for family members, providing the required documents for each of them.
- The necessary documents for obtaining tax residency in Cyprus with non-domiciled status include a rental agreement or property certificate, a copy of your passport, tax registration forms, the immigration yellow slip, proof of social insurance payments, a source of income, and evidence of not being born in Cyprus.
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Setting Up a Company in Cyprus Effectively step by step
If you are interested in optimizing your tax obligations in Cyprus, it’s important to have a source of income. That’s why many entrepreneurs choose to register a company to take advantage of the NON-DOM status in Cyprus.
Planning Stage:
Step 1: Find a service provider familiar with Cypriot dynamics who can advise you throughout the process. We collaborate with a specialized company in this field.
Step 2: Select an appealing name for your company and define the corporate structure, including directors, a secretary, and a registered address.
Step 3: Once you have chosen the name for your company in Cyprus, the Department of Registrar of Companies and the Official Receiver (DR-COR) will ensure the exclusive use of that name for a specific period. After securing your company’s name, you can proceed to the incorporation stage.
Incorporation Stage:
Step 4: It’s time to prepare all the necessary documentation for the incorporation of your company in Cyprus. Imagine that you are signing the deed of constitution and the company’s articles, which will give a name and purpose to your business. This process will also include the address of subscribers, share capital, and other relevant details.
Step 5: When you have all your documents ready, it’s time to submit them. You will need to submit signed forms and other required documents. Don’t forget to include the affidavit signed by a Cypriot lawyer.
Step 6: Approval! After going through the review and approval process by the DR-COR, your company will be officially incorporated. Get ready to receive the signed deed of constitution and articles, certificates of directors and shareholders, the certificate of registered office, and the certificate of incorporation.
Post-Incorporation Stage
Step 7: Now that your company has come to life, it’s time to open a bank account. With a company in Cyprus, you have the flexibility to choose a bank in any country of your choice, whether for your local or international operations.
Step 8: Taxes are a part of life, right? It’s crucial to obtain the Tax Identification Number (TIN) for your company in Cyprus and register for VAT if your turnover is expected to reach or exceed 15,600 euros annually. Nevertheless, paying taxes in Cyprus is quite minimal and contributes to the development of this beautiful nation, ensuring that future generations can enjoy these benefits.
Step 9: If you plan to hire personnel for your Cypriot company, make sure to register as an employer with the Ministry of Labor, Welfare, and Social Security. You’ll receive a unique employer identification number and will be ready to expand your team.
Once again, I’d like to remind you that you can ESTABLISH YOUR COMPANY IN CYPRUS with us HERE.
How to tax a company in Cyprus?
Cyprus’s tax system serves as an attractive feature for both businesses and individuals looking to establish themselves in the country. Cyprus has designed its tax system to promote foreign investment and foster business development.
Tax System in Cyprus
Cyprus’s tax system is based on fundamental principles of taxation. The country boasts double taxation treaties with over 60 nations, which prevent double taxation for residents and companies engaged in international business.
Types of Taxes in Cyprus
Corporate Tax in Cyprus
- Cyprus levies a corporate tax rate of 12.5%, one of the lowest in Europe. This makes Cyprus an appealing choice for businesses seeking to minimize their tax burden. Some intellectual property-based companies may qualify for the IP box regime, allowing them to pay just 2.5% in tax. For more information, you can refer [HERE]
Personal Income Tax in Cyprus
- Personal income tax in Cyprus is applied progressively, with rates varying based on income levels. Tax rates range from 0% to 35%. It’s important to note that Cyprus offers a significant tax advantage—the first €19,500 is tax-exempt.
Value Added Tax (VAT) in Cyprus
- Cyprus applies a standard 19% VAT rate to most goods and services. However, there are certain exemptions and reduced VAT rates for specific categories of goods and services.
Dividend Distribution in Cyprus
- Whether your income is €1,000 or €10 million, the tax rate remains the same. Moreover, you can distribute your company’s dividends to your bank account, paying only 2.65% on the first €180,000.This results in a total tax rate of just 15% in Cyprus, a remarkable benefit for living in Europe, in my opinion. And that’s not all; if your earnings exceed €180,000, you won’t have to worry about paying more on your dividends. The maximum you’ll pay when distributing dividends in Cyprus annually is around €5,000.
In addition to these taxes, Cyprus also imposes other taxes and fees, such as capital gains tax, property taxes, and municipal levies.
Income Tax in Cyprus in depth
| Taxable income | Tax Rate | Tax amount | Cumulative tax |
| 0 – 19.500€ | 0% | 0€ | 0€ |
| 19.501€ – 28.000€ | 20% | 1.700€ | 1.700€ |
| 28.001€ – 36.300€ | 25% | 2.075€ | 3.775€ |
| 36.301€ – 60.000€ | 30% | 7.110€ | 10.885€ |
| > 60.000€ | 35% | * | * |
In accordance with the law, tax residents will be subject to personal income tax rates based on their earnings. If your annual income is up to €19,500, your tax rate is 0%! If you earn up to €28,000, you’ll pay a 20% of Income tax, and up to €36,300, a 25% rate.
As your income increases, the tax rates will adjust accordingly. For example, those earning around €60,000 will pay a 30% tax rate, and those surpassing €60,000 will be subject to a 35% tax rate.
But that’s not all because income from dividends, interests, foreign-derived salaries, and profits from the sale of securities are exempt from personal income tax.
Tax concessions in Cyprus
There are concessions available that can offer you even more tax benefits. If you were not a tax resident in Cyprus before starting your employment, you can still obtain concessions! You can enjoy a 20% exemption on income tax or €8,550 for five years.
And that’s not all; if you earn more than €100,000 over ten years from the start of your employment, you could receive a 50% exemption. Even foreign pensions can benefit from a 5% tax exemption if they exceed €3,420. However, if your tax liability exceeds this amount, you may opt for regular taxation.
Conclusion
In conclusion, opening a company in Cyprus can be an attractive option due to its tax benefits, business opportunities, and access to the European market. However, it is important to follow the proper steps and comply with the legal and tax requirements to establish and manage your company successfully. Don’t miss the opportunity to take advantage of all that Cyprus has to offer.
if you need a consultancy with our tax lawyers you can request it here.
FAQs
- What are the personal income tax rates in Cyprus?
- In Cyprus, personal income tax rates vary based on income, with a tax rate of 0% for annual incomes up to €19,500 and 35% for incomes exceeding €60,000.
- What tax benefits does the Non-Dom Program in Cyprus offer?
- The Non-Dom Program in Cyprus provides tax exemptions on dividends, interests, and income generated abroad, along with the opportunity to become a tax resident with a minimum presence requirement of 60 days per year.
- What tax exemptions are available in Cyprus for non-domiciled individuals?
- Non-domiciled individuals in Cyprus enjoy tax exemptions on dividends, interests, salaries earned abroad, and profits from the sale of securities.
- How can I apply for NON-DOM status in Cyprus?
- To obtain NON-DOM status in Cyprus, as a European Union citizen, you must first obtain a registration certificate known as the “yellow slip.” You must then register with the tax authority, meeting a requirement of at least 183 days of presence in Cyprus.
- How long is the Non-Dom program in Cyprus valid?
- The Non-Dom program in Cyprus offers tax benefits for a period of 17 years, providing long-term security and planning opportunities.
- What is the corporate tax rate in Cyprus?
- Cyprus applies a corporate tax rate of 12.5%, one of the lowest in Europe.
- Can I obtain tax concessions in Cyprus if I wasn’t a tax resident before starting to work?
- Yes, you can obtain tax concessions in Cyprus even if you weren’t a tax resident before beginning work. This includes a 20% income tax exemption or €8,550 for five years, and a 50% exemption if you earn over €100,000 over ten years.
- What is the process for setting up a company in Cyprus?
- The process for establishing a company in Cyprus involves choosing a name, preparing incorporation documents, submitting forms, and gaining approval from the Department of Registrar of Companies. Additionally, you’ll need to open a bank account and obtain a tax identification number.
- What are the requirements to register as an employer in Cyprus?
- To register as an employer in Cyprus, you need to obtain a unique employer identification number through the Ministry of Labour, Welfare, and Social Insurance.
- What documents are required to obtain tax residency in Cyprus with non-domiciled status?
- Required documents include a lease agreement or property certificate, a copy of your passport, tax registration forms, the immigration “yellow slip,” proof of social insurance payments, a source of income, and evidence of not being born in Cyprus.
If you want to plan your international tax structure you can do it here.
