Cyprus Company formation

FLANECON LIMITED are specialists in Cyprus company formations and our offices are based in Nicosia, the capital city of Cyprus. We have an excellent knowledge and understanding of the Cyprus market.

• For a quotation to incorporate a company in Cyprus or for more information please click here.
• For a Cyprus ready made shelf company click here
• Double Taxation Agreements click here.

Corporate Income Tax

As from 1 January 2026, the standard corporate income tax rate in Cyprus is 15% (the previous rate of 12.5% applied up to 31 December 2025.

A Cyprus tax-resident company is taxed in Cyprus on income accrued or derived from all chargeable sources in Cyprus and abroad. A non-Cyprus tax-resident company is taxed in Cyprus on income derived from business activities carried out through a permanent establishment in Cyprus and on certain Cyprus-source income.

Corporate Tax Residence

A company is tax resident in Cyprus if its management and control are exercised in Cyprus. In practice, this normally requires that strategic decisions are taken in Cyprus, board meetings are properly held and documented in Cyprus, Cyprus-resident directors participate meaningfully in decision-making, and the company has adequate substance and governance in Cyprus.

As from 2026, a company incorporated under the Cyprus Companies Law is, by default, considered tax resident in Cyprus unless an applicable double tax treaty provides otherwise.

The issue of tax residence must be assessed carefully where a Cyprus company is also managed or controlled from another jurisdiction, or where another jurisdiction may also claim tax residence under its domestic law. In such cases, the relevant double tax treaty, if applicable, and the company’s place of effective management, governance and substance become particularly important.

Double Tax Treaty Network

Cyprus has an extensive network of double tax treaties. Treaty benefits are not automatic. They normally require that the company is properly tax resident in Cyprus, has sufficient substance, is the beneficial owner of the relevant income where required, and satisfies the applicable anti-abuse rules, including principal purpose test and limitation provisions where relevant.

A Cyprus company that cannot properly obtain a Cyprus tax residence certificate may not be able to rely on Cyprus double tax treaty benefits.

Withholding Tax

As a general rule, Cyprus does not impose withholding tax on dividends and interest paid to non-Cyprus tax residents. Cyprus also does not impose withholding tax on royalties paid to non-residents where the relevant rights are not used in Cyprus.

Royalties for rights used in Cyprus are subject to withholding tax at 10%, or 5% in the case of cinematographic films, unless reduced or eliminated under an applicable double tax treaty or EU legislation.

Specific anti-abuse and defensive tax measures apply in relation to payments to companies in EU blacklisted jurisdictions and, from 2026, to certain related companies located in low-tax jurisdictions. These rules must be reviewed separately before making outbound dividend, interest or royalty payments.

Dividends, Securities and Capital Gains

Dividend income received by a Cyprus company is generally exempt from corporate income tax, subject to anti-avoidance rules and specific conditions. Dividends from foreign companies may also be exempt, provided that the relevant participation exemption conditions are met.

Profits from the disposal of securities are generally exempt from corporate income tax. However, this should not be stated without qualification. Capital gains tax may apply where the disposal relates to immovable property situated in Cyprus or shares in companies directly or indirectly deriving value from Cyprus-situated immovable property.

Capital gains tax is imposed at 20% on gains from the disposal of immovable property situated in Cyprus, and on gains from the disposal of shares in companies holding Cyprus-situated immovable property, subject to the conditions and exemptions of the Capital Gains Tax Law. As from 1 January 2026, the relevant property-rich company threshold for indirect holdings is reduced to 20% of the market value deriving from Cyprus immovable property.

Tax Losses and Group Relief

Tax losses may be carried forward and set off against taxable profits of the next seven years. Losses cannot be carried forward indefinitely. Carry-back of losses is not generally available.

Group relief may be available between Cyprus tax-resident group companies, subject to the conditions of Cyprus tax law.

Reorganisations

Qualifying corporate reorganisations, such as mergers, divisions, transfers of assets and exchanges of shares, may be carried out on a tax-neutral basis where the statutory conditions are satisfied. This treatment is not automatic and must be reviewed in advance by reference to the relevant provisions of Cyprus tax law, corporate law and, where applicable, VAT and capital gains tax rules.

Transparency and Beneficial Ownership

The names of directors, secretary and registered shareholders of a Cyprus company are publicly available through the Registrar of Companies. In addition, Cyprus companies must submit beneficial ownership information to the central beneficial ownership register. Access to beneficial ownership information is restricted and is not generally open to the public, but it is available to competent authorities, obliged entities and other persons where access is permitted by law.

Banks, auditors, lawyers, administrative service providers and other obliged entities are required to collect and verify beneficial ownership, source of funds, source of wealth and other KYC information under anti-money laundering legislation.

Basic Company Requirements

The most common form of Cyprus company used for international business is the private company limited by shares.

A Cyprus private company must have at least one shareholder, at least one director, a company secretary and a registered office in Cyprus. There is no general legal requirement that the director or shareholder must be Cyprus-resident. However, where Cyprus tax residence and substance are required, the composition of the board, the place of decision-making and the company’s real presence in Cyprus are important.

The director and shareholder may be the same person. A shareholder may be an individual or a legal entity. In a single-member private company, the sole director may also act as secretary, subject to the Companies Law.

Cyprus companies must maintain proper accounting records, prepare annual financial statements and comply with annual filing obligations. In most cases, financial statements are subject to statutory audit by a licensed auditor. For certain small private companies, a statutory review engagement may be available instead of a full statutory audit, provided that the statutory thresholds and conditions are satisfied.

Main Business Vehicles

The main business vehicles in Cyprus are:

1. private company limited by shares;
2. public company limited by shares;
3. branch of a foreign company;
4. partnership;
5. limited partnership;
6. other regulated or specialised vehicles, depending on the activity.

The choice of vehicle depends on the nature of the business, regulatory requirements, tax residence, substance, banking needs, liability considerations and the intended ownership structure.