Setting Up a Company in Cyprus: A Practical Guide

Published on October 2, 2025 and written by Cyril Jarnias

Cyprus, a sun-drenched island in the heart of the Mediterranean, has established itself as a premier destination for visionary entrepreneurs seeking to establish their international presence. With its favorable tax framework, political stability, and membership in the European Union, Cyprus offers fertile ground for business growth, combining the benefits of a tax haven with the credibility of a respected European jurisdiction.

Why Cyprus Is the Strategic Choice for Your International Expansion

Cyprus stands out as a strategic business hub, offering a unique combination of tax and operational benefits. Its attractive tax regime, with a corporate tax rate of only 12.5%, is one of the most competitive in the European Union. This favorable taxation is complemented by an extensive network of tax treaties, enabling double taxation avoidance with over 60 countries.

The island also benefits from an enviable geographical position, serving as a bridge between Europe, the Middle East, and Africa. This strategic location, coupled with modern infrastructure and a sophisticated banking system, makes Cyprus an ideal springboard for companies targeting international expansion.

Furthermore, the Cypriot regulatory framework, aligned with European directives, offers appreciable legal security while maintaining attractive flexibility for investors. The business environment is strengthened by a skilled, multilingual workforce and a relatively low cost of living compared to other European financial centers.

Key Legal Structures for Your Success in Cyprus

Cyprus offers several legal forms suited to the varied needs of international entrepreneurs. The most popular are:

• Limited Liability Company (Ltd): The most common structure, offering limited liability to shareholders and great operational flexibility.
• Public Limited Company (PLC): Ideal for large companies, with the possibility of issuing public shares.
• Limited Partnership: Allows for a distinction between general partners (unlimited liability) and limited partners (limited liability).
• Branch: A quick option for foreign companies wishing to establish a presence in Cyprus without creating a separate legal entity.

The Ltd remains the preferred choice for its management simplicity and flexibility. It can be incorporated with a single shareholder and a single director, who can be foreign. The minimum required capital is symbolic (1 euro), although more substantial capital is recommended for practical and credibility reasons.

Cypriot companies benefit from great freedom in defining their governance structure, allowing for fine-tuning to the specific needs of each business. This flexibility, combined with the possibility of 100% foreign ownership, makes Cyprus particularly attractive to international entrepreneurs.

Cypriot Taxation: A Major Asset for Your Business

The Cypriot tax regime is designed to attract foreign investment while remaining compliant with international standards. The 12.5% corporate tax rate is one of the most competitive in Europe, but this is just the tip of the iceberg of the tax benefits offered by the island:

• Exemption of dividends received under certain conditions
• Exemption of capital gains on the sale of securities
• 100% deduction of interest on loans for the acquisition of shareholdings
• Favorable tax regime for intellectual property income
• No withholding tax on dividends, interest, and royalties paid to non-residents

Furthermore, Cyprus offers an attractive tax regime for expatriate executives, with a 50% exemption from income tax for salaries exceeding 100,000 euros per year, for a period of 10 years.

The Cypriot VAT system is fully harmonized with EU directives, with a standard rate of 19%. However, certain sectors benefit from reduced rates, such as tourism (9%) and some essential goods (5%).

Cyprus’s tax policy aims to encourage innovation and investment. Research and development expenses benefit from an enhanced deduction, and investments in certain assets may qualify for accelerated depreciation.

Creating Your Company in Cyprus: A Simplified Process for a Quick Start

Creating a company in Cyprus is a relatively simple and fast process, generally achievable within 5 to 7 business days. Here are the key steps:

1. Choose and reserve the company name: Check name availability with the Companies Registry and reserve it.

2. Prepare the incorporation documents: Draft the articles of association and memorandum of association, defining the company’s structure and objectives.

3. Appoint directors and a secretary: At least one director is required, who can be foreign. A local secretary is generally recommended.

4. Open a bank account: Choose a Cypriot bank and deposit the initial capital.

5. Submit the registration application: File all necessary documents with the Companies Registry, along with the registration fees.

6. Obtain the certificate of incorporation: Once approved, your company will receive its certificate of incorporation and registration number.

7. Register with tax and social security authorities: Obtain a VAT number and register with social security if you plan to employ staff.

It is highly recommended to engage a local lawyer or accountant to facilitate this process. These professionals can not only handle administrative aspects but also advise you on the optimal structure for your business.

Cyprus vs Other Offshore Jurisdictions: An Enlightening Comparison

Cyprus stands out advantageously among popular offshore jurisdictions, offering a unique balance between tax benefits and European credibility. Here’s how it compares to other favored destinations:

Cyprus vs Cayman Islands: – Cyprus: 12.5% corporate tax rate, EU member, extensive network of tax treaties. – Cayman Islands: No corporate tax, but stronger perception as a tax haven and limited access to the European market.

Cyprus vs Dubai: – Cyprus: Favorable taxation, European legal framework, easy access to the EU market. – Dubai: Free zones with 0% corporate tax, but legal environment less familiar to Western businesses.

Cyprus vs Malta: – Cyprus: Simpler administrative procedures, generally lower operational costs. – Malta: Complex tax refund system, higher nominal corporate tax rate (35% before refunds).

Cyprus’s key advantage lies in its unique combination of attractive taxation, EU member status, and an extensive network of tax treaties. This configuration offers an optimal solution for businesses seeking to combine tax optimization and international legitimacy.

Social Obligations in Cyprus: A Framework Favorable to Employers

The Cypriot social system, while protective for employees, remains competitive for employers, contributing to the island’s attractiveness for international businesses.

Social contributions: – Employer: 8.3% of gross salary (capped) – Employee: 8.3% of gross salary (capped) – Additional contributions for social cohesion and training funds

Leave and working time: – Minimum of 20 days paid leave per year – Standard 38-hour work week – Overtime premium

Employment protection: – Probation period generally from 6 months to 2 years – Severance pay based on seniority

Cyprus also offers incentives for hiring qualified foreign personnel, with simplified procedures for obtaining work permits for non-EU nationals in certain key sectors.

The Cypriot social security system covers major risks (illness, unemployment, retirement) while maintaining reasonable costs for employers, contributing to a business-friendly environment.

Opening a Corporate Bank Account in Cyprus: Keys to Success

Opening a corporate bank account in Cyprus is a crucial step in establishing your company. Although the process has become more complex in recent years due to strengthened anti-money laundering regulations, it remains manageable with good preparation.

Steps to open a bank account:

1. Choose the bank: Select from major Cypriot banks (Bank of Cyprus, Hellenic Bank) or international banks present on the island.

2. Prepare the documentation: – Certificate of incorporation – Company articles of association – Proof of company address – Passports and proof of residence for directors and shareholders – Detailed business plan – Source of funds (crucial for due diligence)

3. Meet with the banker: An in-person meeting is often required, although some banks now offer online procedures.

4. Due diligence process: Banks will conduct thorough checks on the company and its beneficial owners.

5. Account activation: Once approved, make an initial deposit to activate the account.

It is highly recommended to use a local intermediary (lawyer or accountant) to facilitate this process. Their knowledge of the specific requirements of each bank can significantly speed up account opening.

Promising Sectors in Cyprus: Investment Opportunities in 2025

Cyprus offers fertile ground for various business sectors, benefiting from its strategic position and favorable tax environment. Here are the most promising areas for investors in 2025:

1. Information and Communication Technology (ICT): Cyprus is heavily investing in digital infrastructure, attracting numerous startups and tech companies.

2. Financial Services and Fintech: The island’s status as a financial center continues to strengthen, with growing interest in innovative fintech solutions.

3. Tourism and Hospitality: A traditional sector in constant evolution, with a focus on luxury and sustainable tourism.

4. Renewable Energy: Cyprus aims to significantly increase its share of renewable energy, creating opportunities in solar and wind power.

5. Real Estate and Construction: The Cypriot real estate market remains dynamic, particularly in the high-end and commercial segments.

6. Education and Training: The island is positioning itself as a regional educational hub, attracting investments in higher education institutions.

7. Shipping Services: Cyprus is an important center for shipping services, offering opportunities in fleet management and related services.

These sectors often benefit from specific government incentives, such as grants, enhanced tax deductions, or simplified administrative procedures, enhancing their attractiveness to foreign investors.

Recruiting in Cyprus: Building a Talented Team for Your Success

Recruiting in Cyprus provides access to a pool of qualified and multilingual talent, combining local and international expertise. Here’s how to optimize your recruitment process:

1. Understand the local labor market: – Highly educated workforce, with a high rate of university graduates – Excellent command of English, often considered a second working language – Competitive salaries compared to other European destinations

2. Recruitment channels: – Online platforms: LinkedIn, Indeed, Ergodotisi (popular local site) – Specialized recruitment agencies – University networks for recent graduates – Networking events and job fairs

3. Legal framework: – Fixed-term or indefinite contracts – Probation period generally from 6 months to 2 years – Compliance with anti-discrimination laws in the recruitment process

4. Attracting international talent: – Simplified procedures for work permits for non-EU nationals in certain key sectors – Attractive tax regime for high-income expatriate executives

5. Corporate culture: – Value cultural diversity – Offer training and development opportunities – Provide work-life balance, highly valued in Cyprus

It is recommended to collaborate with local HR experts to effectively navigate the Cypriot recruitment landscape. They can help you understand cultural subtleties, salary expectations, and best recruitment practices on the island.