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Your 2025 Guide to Setting Up a Business in Cyprus (Expats Edition)

Setting up a business in a foreign country often feels like a blend of paperwork, uncertainty and crossed fingers. But Cyprus offers a unique combination, EU market access, a clear legal system and a well-established business services sector that’s used to working with expats. That said, structure and compliance still matter. This guide walks you through what to expect when registering a company in Cyprus as a non-Cypriot resident, and what it takes to stay compliant after your business is live.

1. Who Can Register a Business in Cyprus?

Almost anyone. Cyprus allows 100% foreign ownership of companies, and there is no requirement to reside in the country. You can register as an individual or through another entity and most types of businesses such as consultancy, trading, services & real estate, can be set up with minimal restrictions.

You’ll need:

  • A valid passport or national ID (for EU citizens)
  • Proof of address
  • Details of directors, shareholders, and the company’s intended activity

Most expats choose to register a Private Limited Company (Ltd), the most flexible and recognised structure under Cypriot law.

2. Step-by-Step: How to Register

Here’s a streamlined process you can expect when working with a professional services provider:

1. Choose a Name

Check name availability and reserve it through the Registrar of Companies. The name must not resemble an existing registered entity.

2. Appoint Directors & Shareholders

You’ll need at least one director and one shareholder (can be the same person). At least one Cyprus-resident director is recommended to establish tax residency.

3. Prepare Incorporation Documents

The Memorandum & Articles of Association must be drafted and certified by a licensed advocate in Cyprus. These documents outline the company’s structure and purpose.

4. Register the Company

Submit the necessary forms (HE1, HE2, HE3) to the Registrar. You will receive the Certificate of Incorporation once approved.

5. Register for Tax & VAT

After incorporation, you will register with the Cyprus Tax Department to obtain a Tax Identification Code (TIC) and VAT number (if needed).

6. Set Up a Bank Account

Opening a corporate bank account in Cyprus is increasingly regulated, especially for foreign-owned companies. Be prepared for due diligence checks and delays.

3. Tax Advantages (When Done Properly)

Cyprus is known for its 12.5% corporate tax rate and its non-domicile regime for individuals. Here are the key benefits you may be eligible for:

  • Corporate Tax: Flat 12.5% on worldwide corporate income if the company is tax-resident
  • No Withholding Tax: On dividends paid to non-resident shareholders
  • IP Box Regime: Effective 2.5% tax rate on qualifying intellectual property
  • Personal Income Tax: First €19,500 is tax-exempt; higher rates apply thereafter
  • Non-Domicile Status: For qualifying expats, no Special Defence Contribution (SDC) on dividend or interest income

However, these benefits require correct structure, substance and reporting. Trying to “game” the system is a quick way to lose tax residency or raise red flags with regulators.

4. Residency & Work Permits (If You Plan to Live Here)

If you intend to live in Cyprus while running your company, you will need to consider your residency status:

  • EU Nationals: Can live and work freely but must register after 90 days
  • Non-EU Nationals: May apply for Temporary Residence Permits, Investor Visas, or set up under the Fast-Track Business Activation Mechanism
  • Digital Nomad Visa: Offers residence for remote workers with non-Cyprus-based income (up to 1 year, renewable)

It’s worth noting that residency status does not automatically make you a tax resident, nor vice versa.

5. Ongoing Requirements

Once your company is live, you will need to stay compliant with these obligations:

  • Annual Financial Statements (audited)
  • Annual Tax Return (submitted online via TaxisNet)
  • VAT filings, if registered
  • Employer Returns if you hire staff

It’s advisable to work with a licensed accountant or advisory firm to manage filings, as late submissions attract automatic penalties.

6. Common Mistakes to Avoid

  • Appointing only foreign directors → jeopardises tax residency
  • Delaying VAT registration → penalties accrue retroactively
  • Using offshore nominee services without substance → may trigger audits
  • Treating incorporation as a one-time exercise → non-compliance creeps in
  • Relying on free advice → not tailored, not up to date, not worth it

Conclusion

Cyprus remains one of the most practical EU destinations for expats starting a business, provided you approach it correctly. Clear structure, proper documentation and trusted professional support go a long way in turning a smart idea into a stable, tax-efficient operation.

Whether you’re offering consulting services, building a remote team, or setting up a holding company, Cyprus gives you the tools to do it right and the framework to grow with confidence.