Industry
Marketplace sellers, direct-to-consumer brands and fulfilment businesses trading across the single market.
E-commerce & FBA: short answer
Last reviewed
For an e-commerce business the constraint is rarely corporate tax. It is VAT, and where stock is held. A Cyprus company works well as the contracting and brand-owning entity, and it does not remove registration obligations in the countries where inventory sits.
| Corporate income tax | 15 percent from 1 January 2026 |
|---|---|
| Standard VAT rate | 19 percent, with reduced rates of 9 and 5 percent for defined categories |
| Stock held in another member state | Ordinarily creates a VAT registration obligation there |
| Distance selling within the EU | Handled through the One Stop Shop where the conditions are met |
| Brands and trademarks | Outside the IP Box, which covers software and patents rather than marketing intangibles |
| Withholding on dividends to non-residents | None |
E-commerce founders arrive asking about the corporate rate. It is almost never the binding constraint.
The constraint is that value added tax follows goods, not companies. If inventory sits in a fulfilment centre in Germany, obligations arise in Germany. Incorporating in Cyprus does not change that, and no structure does, because the rule attaches to where the stock is.
For a fulfilment-by-Amazon seller this matters acutely, because the platform moves inventory between countries as a matter of its own logistics. A seller can acquire obligations in a member state through a stock transfer they did not initiate and were not asked about.
So the correct sequence for an e-commerce structure is: work out where stock will be held, deal with the registrations that follow, and then decide where the company sits. Done in the other order, the structure is built on the wrong constraint.
The EU One Stop Shop allows a business selling to consumers across member states to account for VAT on those distance sales through a single return in one state, rather than registering in each.
It is a genuine simplification and it has a boundary. The One Stop Shop covers cross-border sales to consumers. It does not cover the obligations that arise from holding stock in a member state, which continue to require local registration.
The practical division is therefore:
A Cyprus company can be the entity that registers and files, and Cyprus is a workable place from which to run that compliance. What it cannot do is make the local registrations unnecessary.
Once VAT is dealt with properly, the Cyprus company earns its place in three ways.
Contracting and margin. Supplier agreements, platform relationships and customer contracts sit in one EU entity, and the trading margin is taxed at 15 percent from 1 January 2026 with no withholding on distributions to non-residents.
Holding. Where the group operates local entities for stock or for market-specific reasons, dividends from qualifying participations arrive exempt in a Cyprus holding company and gains on disposals of securities sit outside the corporate charge. That matters at an exit, which for a successful brand is the event everything is building towards.
Software, where there is any. Many e-commerce operations have built genuine technology: pricing engines, inventory forecasting, subscription logic. Where the Cyprus company funded that development, the IP Box can reach the income attributable to it.
E-commerce is one of the sectors where the operation really can be run from anywhere, which makes it one where the substance question is asked most carefully.
If the Cyprus company is the contracting entity, the decisions that matter to it should be taken here: supplier terms, pricing, market entry, capital allocation. Directors who genuinely participate, real premises and records showing decisions were considered before they were executed are what substance means in this context.
A business whose founder, staff and operations are all in another country, with a Cyprus company issuing the invoices, has a structure that describes something that is not happening. That is the arrangement foreign tax authorities look for, and it is straightforward to avoid by building the entity properly.
No. VAT obligations follow where goods are held and where consumers are, not where the company is incorporated. Holding stock in a member state ordinarily creates a registration obligation there regardless of the company's domicile.
It covers cross-border distance sales to consumers through a single return. It does not cover the obligations that arise from holding inventory in a member state, which still require local registration.
No. Trademarks and other marketing intangibles are excluded. The regime covers software, patents and comparable assets, so proprietary technology built by the business can qualify where the brand cannot.
A 15 percent corporate rate on trading margin, no withholding on distributions to non-residents, and a holding treatment that matters at an exit. The VAT position is handled separately and is usually the larger operational question.
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Guide
Registration is compulsory once taxable supplies exceed 15,600 euro in any 12 months. The standard rate is 19 percent, with reduced rates of 9 and 5 percent, and a zero rate. What decides whether Cyprus VAT applies at all is the place of supply rather than where the company sits.
Services
Incorporation of a Cyprus limited company, from name approval to tax registration.
Holding structures using the participation exemption and Cyprus treaty network.
Transfer of an existing foreign company into Cyprus without breaking legal continuity.
Management and control, governance and the evidence file that supports tax residency.
Bring the facts you have. We will map the structural options, what each one requires, and the point at which the trade-offs actually bite.
