Cyprus Tax FAQ

The corporate tax rate in Cyprus is 15% as of January 2026. This applies to all company profits. However, the effective tax rate for Non-Dom entrepreneurs is much lower because dividends are virtually tax-free.

For a Non-Dom entrepreneur earning 100,000 EUR through a Cyprus company, the effective tax rate is approximately 5%. This includes 15% corporate tax on profits and just 2.65% GHS on dividends, with no income tax on dividend distributions.

The total cost to set up a Cyprus limited company is approximately 2,100 EUR. This includes registration (700 to 1,000 EUR), legal documents and apostilles (350 to 500 EUR), and registered office (around 600 EUR for the first year).

Annual costs include accountant fees (2,000 to 3,000 EUR), registered office renewal (500 to 800 EUR), annual company levy (350 EUR), and audit fees. Total: approximately 3,000 to 5,000 EUR per year.

All Cyprus limited companies are required to have their financial statements audited annually by a licensed auditor, regardless of size or turnover.

Company registration typically takes 5 to 10 business days with the Registrar of Companies. Opening a corporate bank account adds another 4 to 8 weeks.

Every registered Cyprus company must pay an annual levy of 350 EUR by June 30 each year. Failure to pay results in penalties and potential deregistration.

Company registration can be handled entirely by your appointed service provider or lawyer. Physical presence in Cyprus is not required to incorporate a company.

Non-Dom status is a tax classification for residents who were not born in Cyprus and have not been tax resident there for 17 or more of the last 20 years. It exempts you from Special Defence Contribution on dividends, interest, and rental income.

Non-Dom status lasts for 17 years from the year you first become a Cyprus tax resident. No renewal is needed.

Any individual who was not born to Cypriot parents and has not been a Cyprus tax resident for 17 or more of the last 20 years qualifies automatically. Most foreign nationals who move to Cyprus qualify.

Non-Dom residents are exempt from the Special Defence Contribution (SDC), which would otherwise apply at 5% on dividends, 30% on interest, and 3% on rental income. The only remaining charge on dividends is 2.65% GHS.

Non-Dom status is technically automatic for qualifying individuals, but it must be formally elected through your tax return filing. Your accountant handles the paperwork.

Non-Dom status expires after 17 years of Cyprus tax residency. It cannot be revoked earlier unless you were domiciled in Cyprus originally. Temporary absences from Cyprus do not affect the 17-year clock.

If you have Non-Dom status, you pay 0% income tax on dividends. The only charge is a 2.65% contribution to the General Healthcare System (GHS), capped at 180,000 EUR of dividend income.

The GHS contribution on dividends is 2.65% for all Cyprus tax residents, including Non-Doms. On 100,000 EUR of dividends, this means 2,650 EUR. The cap is 180,000 EUR of income, so the maximum GHS on dividends is 4,770 EUR per year.

For Non-Dom residents, foreign dividends are exempt from both income tax and SDC. Only the 2.65% GHS contribution applies.

Domiciled residents pay 5% Special Defence Contribution on dividends from 2026, plus 2.65% GHS, totaling 7.65%. Non-Dom residents avoid the 5% SDC entirely.

The 60-day rule allows you to become a Cyprus tax resident by spending just 60 days per year in Cyprus, instead of the standard 183 days. You must not be tax resident in any other country, must have a permanent home in Cyprus, and must carry on business or be employed in Cyprus.

You can become tax resident with as few as 60 days under the 60-day rule, or 183 days under the standard rule.

You must: (1) spend at least 60 days in Cyprus, (2) not spend 183+ days in any single other country, (3) maintain a permanent home in Cyprus, (4) have business activities in Cyprus (be a director, employee, or owner of a Cyprus company), and (5) not be tax resident in any other country.

The 60-day rule requires a formal rental contract or property ownership in your name. Short-term holiday rentals and Airbnb stays do not satisfy the permanent home requirement.

The 60-day rule is designed for people who travel frequently. The key restriction is not spending 183+ days in any single other country. Time can be split across multiple countries as long as the 60-day minimum in Cyprus is met.

The 183-day rule requires only physical presence (183+ days). The 60-day rule requires fewer days (60+) but adds extra conditions: you must have a Cyprus home, Cyprus business connection, and not be tax resident elsewhere.

Cyprus has progressive income tax rates from 2026: 0% on the first 22,000 EUR, 20% on 22,001 to 32,000 EUR, 25% on 32,001 to 42,000 EUR, 30% on 42,001 to 72,000 EUR, and 35% on income above 72,000 EUR.

The first 22,000 EUR of annual salary is tax-free in Cyprus as of 2026. Non-Dom entrepreneurs often set their salary at or below this threshold and take remaining profits as dividends at 2.65% GHS only.

Cyprus has no capital gains tax on the sale of shares, bonds, or other securities. Capital gains tax of 20% applies only to the sale of immovable property located in Cyprus.

Cyprus tax residents are taxed on their worldwide income. Non-Dom residents, however, are exempt from Special Defence Contribution on foreign dividends, interest, and rental income, making the effective burden much lower.

The standard VAT rate in Cyprus is 19%. Reduced rates of 9% and 5% apply to certain goods and services. VAT registration is mandatory when turnover exceeds 15,600 EUR.

Cyprus is not a tax haven. It is a full EU member state with transparent tax laws, automatic exchange of financial information under CRS, and full compliance with OECD standards. It has over 65 double taxation agreements.

By relocating your tax residency from Spain to Cyprus and using the Non-Dom regime, it is possible to reduce the effective tax rate from approximately 45% to approximately 5%. Spain may charge exit tax on unrealized gains over 4 million EUR.

Spain charges exit tax on unrealized capital gains if your assets exceed 4 million EUR or you hold more than 25% of an entity worth over 1 million EUR. This applies when you move your tax residency abroad.

Non-residents in Spain pay a flat 24% tax on Spanish-source income (19% for EU/EEA residents). This includes rental income from Spanish property and certain other income sourced in Spain.

You must spend fewer than 183 days per year in Spain, move your main center of economic interests abroad, and formally register your new tax residency in another country. Notify the Spanish tax authority (AEAT) of your departure.

For entrepreneurs with their own company, Cyprus offers the best combination: approximately 5% effective tax rate, EU membership, the 60-day rule, English-speaking environment, and a stable legal framework.

The most effective legal strategy is to relocate your tax residency to a low-tax EU country and structure your income through a local company. Cyprus Non-Dom status allows an effective rate of approximately 5% on business income.

Since Portugal ended its NHR regime in 2024, Cyprus is generally better for entrepreneurs. Cyprus Non-Dom offers 0% on dividends for 17 years, while Portugal now taxes dividends at 28%.

Dubai offers 0% personal tax but requires 183+ days of physical presence, has higher cost of living, no EU membership, and 9% corporate tax from 2023. Cyprus offers approximately 5% effective rate with EU residency and the 60-day rule.

Both have competitive tax regimes. Cyprus Non-Dom offers a simpler structure with approximately 5% effective rate. Malta's imputation system can achieve lower rates but requires more complex structuring and does not offer the 60-day rule flexibility.

Estonia taxes only distributed profits at 20%. Cyprus charges 15% corporate tax plus 2.65% GHS on dividends (approximately 17% total), but the effective rate drops to approximately 5% after deductible business expenses. Cyprus also offers the 60-day rule and warmer climate.

The Yellow Slip, officially called the MEU1 Registration Certificate, is the EU residence document for EU citizens living in Cyprus. It is required for opening bank accounts, registering for tax, and accessing healthcare.

Processing times vary by district. Larnaca and Paphos often issue it the same day or within a week. Limassol and Nicosia may take 1 to 2 weeks due to higher demand.

You need: a valid EU passport, a rental contract in your name, and proof of financial resources (bank statement, employment contract, or company documents). Health insurance is NOT required.

Health insurance is NOT required for EU citizens applying for the Yellow Slip (MEU1) in Cyprus, despite what some sources claim.

If you are a digital nomad who is a Cyprus tax resident (via the 183-day or 60-day rule), you pay taxes in Cyprus on your worldwide income. The Non-Dom regime can reduce the effective rate to approximately 5%.

The optimal structure is: Cyprus Ltd company + Non-Dom status + 60-day rule. Pay yourself a salary up to 22,000 EUR (tax-free from 2026), take remaining profits as dividends (2.65% GHS only). Effective rate: approximately 5%.

Cyprus tax residents pay income tax on employment income at the standard progressive rates (0 to 35%). The Non-Dom regime does not exempt salary income, only passive income like dividends.

Cyprus introduced a Digital Nomad Visa for non-EU/EEA citizens in 2022. It requires a minimum monthly income of EUR 3,500 net from remote work for foreign clients, valid health insurance, and proof of accommodation. It is valid for 1 year and renewable. EU/EEA citizens reside freely in Cyprus using the Yellow Slip (MEU1) and do not need this visa.

Monthly costs for a single person in Larnaca or Limassol: rent 600 to 1,000 EUR, groceries 300 to 400 EUR, utilities 100 to 150 EUR. Total: 1,300 to 2,050 EUR. This is 30 to 50% cheaper than most Western European cities.

Cyprus consistently ranks as one of the safest countries in Europe with very low crime rates. Violent crime is rare, and expats report feeling safe in all major cities.

Larnaca and Paphos are generally the most affordable cities. One-bedroom apartments in Larnaca start from 500 to 700 EUR per month, compared to 700 to 1,200 EUR in Limassol.

Cyprus has a universal healthcare system called GHS (General Healthcare System) funded by contributions. It covers GP visits (free), specialist visits (6 EUR copay), hospital care, and prescriptions (1 EUR copay). Quality is comparable to Western Europe.

English is widely spoken throughout Cyprus, especially in business, government, and urban areas. Most official documents, contracts, and legal proceedings are available in English.

The fastest route is Revolut Business: apply entirely online in 24-48 hours, get a full EU IBAN, and start receiving payments immediately - no branch visit, no waiting weeks. For a traditional local account, visit Bank of Cyprus or Hellenic Bank with your passport, Yellow Slip, proof of address, and proof of income. Processing takes 4 to 8 weeks. Most expats use Revolut Business as their primary account and a local bank for specific local needs.

Revolut Business is the recommended starting point for most entrepreneurs: opens online in 24-48 hours, EU IBAN accepted everywhere, multi-currency accounts, lower fees than local banks, and no need to visit a branch. Local bank options (Bank of Cyprus, Hellenic Bank, Eurobank) are useful for government payments, local cheques, and some formal compliance requirements. The optimal setup is Revolut Business as your main operational account plus a local bank account for Cyprus-specific needs.

Revolut Business allows fully online account opening with no branch visit required, completing in 24-48 hours. Traditional Cyprus banks (Bank of Cyprus, Hellenic Bank) require at least one in-person visit and take 4 to 8 weeks. Many expats open Revolut Business immediately after company formation and use it while the local bank processes their application.

Cyprus participates in the Common Reporting Standard (CRS) and FATCA. Bank accounts are automatically reported to the tax authority of your country of tax residency.

Corporate tax returns are due by March 31 of the following year. Personal tax returns are due by July 31. The annual company levy of 350 EUR is due by June 30.

While not legally required for personal taxes, an accountant is essential for company tax returns, VAT filings, and the annual statutory audit. Most expats use a local accountant for all tax matters. Expect to pay 2,000 to 3,000 EUR per year.

Late filing results in penalties. For corporate tax, the penalty is 5% of the tax due plus interest. For the annual company levy, failure to pay by June 30 results in a 10% surcharge, rising to 30% after extended delays.

Cyprus offers: approximately 5% effective tax rate for Non-Dom entrepreneurs, 60-day rule flexibility, 0% capital gains on securities, no inheritance tax, English as a business language, 340+ days of sunshine, and a stable EU legal framework.

The UK abolished its Non-Dom regime effective April 2025. This has driven significant interest in the Cyprus Non-Dom alternative, which offers similar dividend tax benefits for up to 17 years.

Bulgaria has a flat 10% corporate tax and 5% dividend tax (15% effective). Cyprus offers approximately 5% effective through the Non-Dom regime. Cyprus also provides EU-standard legal protection, English-speaking environment, and better infrastructure.

Cyprus does not have inheritance tax or estate tax. Assets are transferred to heirs without any tax liability, regardless of the value.

Cyprus does not impose any wealth tax on assets, savings, or investments.

Your accountant applies for a TIN with the Cyprus Tax Department after you obtain the Yellow Slip. The process takes 2 to 4 weeks. Both individuals and companies need their own TIN.

Non-Dom status is assessed individually, not per household. If both spouses meet the requirements (not born Cypriot, not tax resident for 17+ of last 20 years), both qualify automatically.

The IP Box reduces the effective corporate tax rate to approximately 3% on profits derived from qualifying intellectual property, including patents and software. It is an additional incentive on top of the standard 15% rate.

Cyprus has signed over 65 double taxation agreements (DTAs) with countries including the UK, Germany, France, Spain, Russia, and the USA. These prevent the same income from being taxed in two countries.

The NID allows Cyprus companies to deduct a notional interest on new equity capital from taxable income. The deduction is based on the 10-year government bond yield of the country where the funds are used, with a minimum floor. This can reduce effective corporate tax below 15%.

It depends on your structure. If you are a sole proprietor or freelancer, you would need to restructure through a Cyprus entity. If you already have a company, you may continue operating it, but Cyprus tax residency will apply to your worldwide income.

Rental income in Cyprus is subject to income tax at the standard progressive rates (0 to 35%). The Special Defence Contribution (SDC) on rental income was abolished from 1 January 2026 for all Cyprus tax residents - this 3% charge no longer applies to anyone. GHS contributions of 2.65% also apply on rental income up to the EUR 180,000 annual cap.

If you are a Cyprus tax resident, your worldwide rental income is taxable in Cyprus. For Non-Dom residents, foreign rental income is exempt from SDC (3%). Income tax at standard rates applies, but double taxation agreements with over 65 countries prevent being taxed twice on the same income.

North Cyprus (the Turkish Republic of Northern Cyprus) is not recognized internationally and is not part of the EU or the Republic of Cyprus tax system. All Cyprus Non-Dom status, tax residency, company formation, and banking discussed on this site refers exclusively to the Republic of Cyprus, which controls the southern part of the island.

US citizens are taxed by the USA on their worldwide income regardless of where they live - this is a unique feature of the US tax system. Moving to Cyprus reduces your local Cyprus tax to approximately 5%, but you still owe US taxes on the same income. The US-Cyprus tax treaty and the Foreign Earned Income Exclusion (FEIE, up to ~USD 130,000 in 2026) can offset some US liability, but full elimination requires renouncing US citizenship.

The US-Cyprus tax treaty was signed in 1984 but has very limited scope - it does not fully prevent double taxation the way most modern treaties do. US citizens living in Cyprus can use the Foreign Tax Credit (FTC) to offset US taxes with taxes paid in Cyprus, but the low Cyprus rates mean the credit may not fully eliminate the US liability.

Cyprus is one of the most popular holding company jurisdictions in Europe. A Cyprus holding company benefits from: 0% withholding tax on dividends received from EU subsidiaries, 0% capital gains on disposal of shares, participation exemption on dividends (subject to conditions), and over 65 double taxation agreements. The standard corporate tax rate is 15%.

The Yellow Slip (MEU1) is the residence registration certificate for EU/EEA citizens. It is unlimited in duration and acts as proof of EU residence rights in Cyprus. The Pink Slip (MEU3 or ARC - Alien Registration Certificate) is issued to non-EU/EEA nationals and is a time-limited residence permit that must be renewed. Both are required to open bank accounts, register for tax, and access healthcare.

GHS contributions of 2.65% apply to: employment salary, self-employment income, dividends, rental income, and certain pension income. The annual cap is EUR 180,000 across all income types - meaning maximum GHS is EUR 4,770 per year regardless of how high your income is. Employer GHS contributions are separate and also apply at 2.90% on salary.

GHS contributions fund the national General Healthcare System and give you access to public healthcare in Cyprus: free GP visits, EUR 6 specialist copay, EUR 1 prescription copay. GHS is not private health insurance - coverage is at public healthcare quality. Many expats supplement GHS with private health insurance (EUR 50 to 150 per month) for faster access and more choice of doctors.

UK citizens can relocate to Cyprus, but as non-EU nationals they need a residence permit rather than the EU Yellow Slip. The most common route is the Category F permit (persons of independent means) or setting up a Cyprus company and obtaining a permit as a company director or employee. UK citizens can still access the Non-Dom regime once tax resident.

When leaving Spain, you must submit Form 030 (change of tax residency) to the AEAT and file a 'baja consular' at the Spanish consulate in Cyprus if you intend to stay abroad permanently. You must also file the Modelo 190 exit tax return if you have assets over the threshold. Failure to formally deregister means Spain may continue treating you as a tax resident for up to 5 years.

VAT registration is mandatory when your turnover exceeds EUR 15,600 in any 12-month period. Voluntary registration below this threshold is also possible, which allows you to reclaim VAT on business expenses. The standard VAT rate is 19%. B2B services to EU businesses use the reverse charge mechanism and do not require Cyprus VAT registration.