Cyprus is the new-generation offshore: eurozone member, 12.5% tax, zero withholding on dividends. After EU reforms it only works with real presence.
Cyprus business taxes
| Tax | Rate | Comment |
|---|---|---|
| Corporate income tax | 12.5% | One of the lowest in the EU |
| Dividends to non-residents | 0% | No withholding |
| Interest and royalties to non-residents | 0% | Subject to substance |
| VAT | 19% | Above the threshold |
Compare 12.5% in the calculator with Hong Kong and the UAE.
Who it fits
- Holdings over operating companies in the EU, Asia and the Middle East.
- Brand and IT owners licensing IP into the operating business.
- Those planning EU relocation: residency plus Notional Interest Deduction cuts tax on debt financing to nearly zero.
Substance: a mandatory condition
A "mailbox" no longer works: dividend and royalty benefits require a real office, resident directors, employees and decision-making in Cyprus. Budget: from EUR 15,000-25,000 per year. Without substance, standard withholding rules apply.
Opening a company
- An Ltd via a lawyer - 5-10 days, remotely.
- Tax registration (TIC), VAT where needed.
- Bank: Bank of Cyprus, Hellenic; EMI for IT structures (Revolut Business, Wise).
- Annual filings and audit are mandatory.
Typical mistakes
- No substance but applying 0% on royalties - back taxes and fines.
- Ignoring CFC rules of the founder's country of residence.
- Nominee directors without real management - banks freeze accounts.
FAQ
Open without a visit?
Yes, registration is remote. Banking and substance need periodic visits.
Running costs?
Agent and filings EUR 3,000-5,000/year + substance EUR 15,000+ + audit EUR 2,000-4,000.
Cyprus or Hong Kong for a holding?
Cyprus - EU assets and investors; Hong Kong - Asia and currency settlements. Compare in the calculator.