🇨🇾 Cyprus Company Formation
12.5% corporate tax, IP Box at 2.5%, zero withholding. The EU holding jurisdiction that still works.
Updated April 2026
Corp Tax
12.5%
IP Box
2.5%
WHT Dividends
0%
Non-Dom Regime
17 years
Tax Treaties
67
Tax System
Rates and incentives
| Tax | Rate | Note |
|---|---|---|
| Corporate income tax | 12.5% | On worldwide profit. One of the lowest standard rates in the EU. |
| IP Box (Art. 9A) | 2.5% | 80% notional deduction on qualifying IP income. OECD-compliant nexus approach. |
| Withholding — dividends | 0% | No WHT on dividends paid to residents or non-residents. |
| Withholding — interest | 0% | EU Interest & Royalties Directive applies. |
| Capital gains on shares | 0% | Exempt. 20% CGT applies only to Cypriot immovable property. |
| Notional Interest Deduction | NID | Deduction on new equity capital — reduces effective tax rate on equity-financed activity. |
Why Cyprus
Key advantages
EU membership with full directive access
Parent-Subsidiary Directive eliminates WHT on dividends within the EU. Interest & Royalties Directive covers cross-border payments. Full access to the EU treaty network from a single entity.
IP Box — 2.5% effective rate on qualifying income
Patents, software copyright, and utility models — income from qualifying IP taxed at 2.5%. Compliant with OECD modified nexus requirements. Trademarks and brand assets do not qualify.
Non-Domiciled regime — 17 years of SDC exemption
New residents who are not Cyprus-domiciled pay zero Special Defence Contribution on passive income. 60-day rule available — no need for 183 days if other conditions are met.
67 double tax treaties
Extensive network covering UK, Germany, India, China, UAE, South Africa, and Canada. Practical for structuring cross-border IP flows, holding structures, and management fees.
CySEC licensing hub
MiFID investment services, AIFM/UCITS fund management, EMI and payment institution licences — all EU-passported from one jurisdiction with a business-friendly regulator.
What We Build
Full scope of implementation
- ✓Cyprus Ltd registration and corporate documentation
- ✓IP Box application and qualifying IP transfer coordination
- ✓Substance setup: registered office, Cyprus-resident director
- ✓Non-Dom and 60-day tax residency filing for the founder
- ✓Bank account opening — full KYC file preparation
- ✓Annual audit coordination (mandatory for all Cyprus companies)
- ✓Transfer pricing documentation for intragroup transactions
Who This Is For
Ideal client profiles
2025 – 2026
What has changed
⚠ France–Cyprus DTA terminates 1 January 2026
France notified Cyprus in 2023. From 2026: loss of reduced WHT rates on dividends, interest, and royalties. French-resident beneficial owners in Cypriot structures face materially higher tax exposure. Restructuring required before year-end 2025.
Pillar Two minimum tax — in force from 2024
15% global minimum tax applies to MNE groups with consolidated revenue above €750M. Most mid-market structures are unaffected.
Transfer pricing — full documentation rules now apply
Arm's-length documentation required for all intragroup transactions. The Cyprus Tax Department is actively auditing related-party arrangements.
MiCA regulation — crypto fully regulated
Cyprus-based crypto-asset service providers (CASPs) operate under the EU MiCA framework, providing EU-wide passporting for digital asset businesses.
Common Questions
FAQ
Is Cyprus still a good holding jurisdiction in 2025?
Yes — for the right structure. 12.5% CIT, 0% WHT on dividends and interest, full EU directive access, and 67 tax treaties remain intact. The key constraint is substance: Cyprus strictly enforces economic presence requirements. Real directors, real decisions, and real activity in Cyprus are the baseline.
What qualifies for the Cyprus IP Box 2.5% rate?
Patents, utility models, and copyright software developed by the Cyprus entity. Trademarks and brand assets do not qualify. The OECD nexus approach requires that qualifying R&D expenditure is incurred by the Cyprus company. Acquired IP is subject to a 30% uplift cap on eligible costs.
What is the Cyprus Non-Dom regime?
Individuals who have not been domiciled in Cyprus for 17 of the last 20 years are exempt from Special Defence Contribution on dividends and interest for up to 17 years. Combined with the 60-day tax residency rule, it creates one of the most efficient personal tax positions available inside the EU.
Does the France–Cyprus DTA termination affect my structure?
Only if your structure has French connections — French-resident shareholders, IP flows to France, or management in France. From 1 January 2026, treaty protections disappear. If that describes your situation, restructuring before year-end 2025 is not optional.
Is an annual audit mandatory in Cyprus?
Yes, for every Cyprus company regardless of size or activity. The Companies Law (Cap. 113, Art. 151) requires audited financial statements submitted annually to the Registrar and Tax Department. There are no exemptions for dormant or small companies.