Cyprus has long marketed itself on a rock-bottom corporate tax rate, and that changed in 2026: the standard rate rose from 12.5% to 15% to align with the OECD's global minimum tax push. It's still competitive by EU standards, just not quite the outlier it used to be. Here's what it takes to start a business in Cyprus in 2026.
1. Which business structure fits you?
Before you register anything, it helps to know what you're actually choosing between.
- Sole trader (self-employed). No separate legal entity, no share capital, and no ongoing filing costs beyond your personal tax return. You're personally liable for business debts.
- Private Limited Company (Ltd). Cyprus's standard limited liability structure, formed with as little as one shareholder and one director, who can be the same person. There's no minimum authorized capital requirement by law, though €1,000 is a common starting point in practice.
Most sole traders convert to a Ltd once annual net profit clears roughly €35,000 to €40,000, the point where the corporate rate plus dividend planning starts to beat personal income tax rates.
2. Register your business
Sole trader
Registration is straightforward and largely free if you handle it yourself, or roughly €150 to €200 if you use an accountant. There are no ongoing annual company fees the way there are for a Ltd.
Ltd
You register with the Registrar of Companies (part of the Department of Registrar of Companies and Intellectual Property, DRCOR) in Nicosia. First, your company name is checked and approved, typically within 2 to 3 business days, then the incorporation filing itself takes another 5 to 7 working days. All-in cost, including government fees and basic legal setup, generally runs €700 to €1,000, plus separate time for bank account opening, which can take several additional weeks.
3. Get your Tax Identification Code
Every individual and company in Cyprus needs a Tax Identification Code (TIC) from the Cyprus Tax Department, free to obtain, and it's what anchors your income tax, VAT, and other filings. Companies also register a Non-Dom application at the same time if relevant to their tax planning, since Non-Dom status exempts dividends from the Special Defence Contribution described below.
4. Check licenses and permits
Cyprus doesn't issue a single national business license. What you need depends on your industry: professional and regulated activities need their own authorization, and certain sectors carry municipal or industry-specific permits on top of standard registration.
5. Understand Cypriot taxes
Sole traders pay progressive personal income tax, with the first €22,000 tax-free and rates rising to 35% above that, the same bands used for employment income. Social insurance contributions add roughly 16.6% on top for the self-employed.
Companies pay corporate income tax at 15% as of 1 January 2026, up from the long-standing 12.5% rate, under Cyprus's alignment with OECD Pillar Two rules. Dividends paid to Cyprus tax-resident individuals also carry a 17% Special Defence Contribution, though Non-Dom status, available to anyone who hasn't been a Cyprus tax resident in the prior 17 years, exempts dividends from this charge entirely, which is a major part of Cyprus's appeal for relocating founders.
VAT is 19% standard, with registration required once turnover exceeds €15,600 over any 12-month period. B2B services to other EU businesses are generally zero-rated under the reverse charge mechanism.
6. Stay compliant
Every Ltd files an Annual Return with the Registrar of Companies, along with an annual audit, a legal requirement for Cyprus companies regardless of size. There's also an annual Registrar of Companies levy of around €350. VAT returns are typically filed quarterly. Annual running costs for a Cyprus Ltd, accounting, audit, and the levy combined, generally land around €3,000 to €3,750.
Cyprus business costs at a glance
| Item | Cost |
|---|---|
| Sole trader registration | Free to ~€200 |
| Ltd formation (name approval + incorporation) | ~€700 to €1,000 |
| Ltd minimum capital | None required (€1,000 typical) |
| Annual Registrar of Companies levy | ~€350/year |
| Tax Identification Code | Free |
| Corporate tax (2026) | 15% |
| Special Defence Contribution on dividends (non-Non-Dom) | 17% |
| VAT, standard rate | 19% |
| VAT registration threshold | €15,600 turnover |
Frequently asked questions
What's the corporate tax rate in Cyprus?
15% as of 1 January 2026, up from the long-standing 12.5% rate, under Cyprus's alignment with OECD Pillar Two rules.
How much does it cost to register a Ltd company in Cyprus?
All-in, including government fees and basic legal setup, generally €700 to €1,000.
What is Non-Dom status in Cyprus?
A status available to anyone who hasn't been a Cyprus tax resident in the prior 17 years, exempting dividends from the 17% Special Defence Contribution that would otherwise apply.
When do I need to register for VAT in Cyprus?
Once turnover exceeds €15,600 over any 12-month period. The standard VAT rate is 19%.
Is an audit mandatory for a Cyprus company?
Yes. Every Ltd must file an annual audit regardless of size, a legal requirement in Cyprus.
Fees and rates above come from the Cyprus Tax Department and the Registrar of Companies as of 2026, and they do change over time, so double check before you file. None of this is legal or tax advice. Talk to a Cyprus-qualified accountant or lawyer about your specific situation.