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Cyprus

Cyprus for EU Holding, Tax Planning and IP Structures

Cyprus is one of the most practical EU jurisdictions for holding companies, IP structures and cross-border tax planning. It combines an English-law corporate system, access to the full EU market, a predictable regulatory environment and one of the lowest effective tax rates in Europe. Founders, funds and tech companies use Cyprus when they need an EU-based structure that investors respect and banks accept, without the costs of larger Western European hubs.

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Cyprus Company Structures

Table of contents
  • Best Use Cases for Cyprus Structures
  • Basic Company Requirements
  • Tax Residency & Substance Requirements
  • Shelf Companies vs New Incorporation
1.

Best Use Cases for Cyprus Structures

Cyprus works well for holding vehicles that own EU and non-EU subsidiaries, licensing and royalty structures under the Cyprus IP Box regime, EU-based management companies and technology firms that need stable banking, compliance and EU nexus. For Web2 and Web3 businesses, Cyprus offers clear company law, recognised accounting standards and access to EU free-movement rights for capital, services and IP.

2.

Basic Company Requirements

A Cyprus private limited company requires at least one shareholder, one director, a registered office and a company secretary. Directors can be individuals or companies. Most founders appoint a mix of local and foreign directors depending on the substance they need.

3.

Tax Residency & Substance Requirements

For the company to be treated as a Cyprus tax resident, management and control must be exercised in Cyprus. In practice this means the majority of directors are Cyprus residents, board meetings are held in Cyprus and key commercial contracts are reviewed and executed in Cyprus. Meeting these substance requirements gives access to the twelve point five percent corporate tax rate, EU directives and Cyprus’s growing treaty network. It also positions the company as an EU-resident entity for investor onboarding, exchange listings and banking due diligence.

4.

Shelf Companies vs New Incorporation

Shelf companies exist but most high-growth founders incorporate a new company so that share capital, ownership and governance can be aligned with future fundraising.

Taxation and Banking

Tax Framework and Treaty Network

Cyprus has a favourable tax regime backed by EU directives and more than 60 double tax treaties.

Corporate Income and Capital Gains Tax

Corporate income tax is 12% on business profits. There is no tax on gains from the sale of shares and many other securities. Dividend income received by a Cyprus company is often tax exempt.

Withholding Tax and IP Box Regime

No withholding tax on dividends paid to non resident shareholders, except in targeted anti avoidance cases. IP income can be taxed at an effective rate of about 2.5% under the Cyprus IP Box regime.

Outbound Payments and Royalties

Cyprus does not levy withholding tax on dividends to non residents, interest to non residents and most royalties paid to non residents.

VAT Treatment of Financial and Crypto Transactions

The standard VAT is 19%. Financial transactions and exchange of crypto for fiat are usually VAT exempt under EU rules.

Banking Access and AML Standards

Cyprus banks are conservative but accessible for companies with real substance, clean ownership and proper documentation. EU AML standards apply. Cyprus companies are used widely for EU operating groups that need stable banking, card acquiring and access to European payment institutions.

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FAQ

Why choose Cyprus for an EU company?

Cyprus offers an English-law corporate system, access to the EU market, a predictable regulatory environment and one of the lowest effective tax rates in Europe, while remaining cost-efficient compared to larger EU hubs.

What types of businesses use Cyprus companies?

Cyprus is commonly used for holding companies, IP and royalty structures, EU management companies, technology firms and groups that own both EU and non-EU subsidiaries.

What company structure is used in Cyprus?

The standard structure is a Cyprus private limited company, which requires at least one shareholder, one director, a registered office and a company secretary.

Can foreign founders own a Cyprus company?

Yes. Shareholders and directors can be individuals or corporate entities, and founders often combine local and foreign directors depending on substance requirements.

When is a Cyprus company tax resident?

A company is treated as Cyprus tax resident when management and control are exercised in Cyprus, typically through Cyprus-resident directors, board meetings held locally and key decisions made in Cyprus.

What tax benefits apply to Cyprus companies?

Cyprus applies a 12% corporate income tax rate, no tax on gains from the sale of shares and many securities, and frequent dividend tax exemptions for dividend income received.

Does Cyprus apply VAT to crypto transactions?

The standard VAT rate is 19%, but financial transactions and the exchange of crypto for fiat are usually VAT-exempt under EU rules.

Is banking available for Cyprus companies?

Cyprus banks are conservative but accessible for companies with real substance, transparent ownership and proper documentation, and they operate under EU AML standards.

Are shelf companies commonly used in Cyprus?

Shelf companies exist, but most high-growth founders prefer incorporating a new company so ownership, governance and share capital match future fundraising plans.

Is Cyprus suitable for Web3 and technology companies?

Yes. Cyprus offers clear company law, recognised accounting standards, stable banking and EU free-movement rights for capital, services and intellectual property.