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The judgement calls founders actually face, with the conditions that push the answer one way or the other.
For a Cyprus company, foreign dividends are exempt in most cases under the participation exemption, and are charged only where the payer is predominantly passive and taxed below 7.5 percent. For an individual, the answer turns on domicile rather than on the source of the dividend.
There is no single answer, because the deciding variable is where the engineering is funded rather than which rate is lowest. Cyprus, Ireland, Estonia and the Netherlands each win under different conditions, and the choice should follow the team and the customers.
Not directly. The deduction is available to a company that is tax resident in Cyprus, which turns on management and control rather than on incorporation. A foreign-incorporated company can access it only by becoming Cyprus tax resident, redomiciling, or transferring the asset into a Cyprus entity.
There is no legal requirement for a Cyprus company's directors to be resident in Cyprus. But corporate tax residency follows incorporation in Cyprus or management and control exercised in Cyprus, and where another country also claims the company it is management and control that decides. A board that meets and decides abroad is the clearest way to fail that test.
Only on their own facts. Domicile is personal and is not shared between spouses, so each individual is assessed separately on their domicile of origin and their own residence history. One spouse can be non-domiciled while the other is deemed domiciled.
A model can qualify where it rests on a legally protected asset, most often copyright in the training and inference code, and where the company funded the development. Trained weights alone sit on weaker ground than the code that produces them, so the claim is usually built around the system rather than the model file.
Yes. Copyrighted software is a qualifying intangible asset, so a Cyprus company licensing or embedding its own software can claim the 80 percent deduction. Whether meaningful benefit follows depends on the nexus fraction, which measures how much of the development the company funded itself rather than acquiring from a related party.
Yes, and in two separate ways. The company must be Cyprus tax resident on the management and control test, and the nexus fraction independently requires that the company funded the development itself. Satisfying one does not satisfy the other.
Until you have been Cyprus tax resident for 17 of the previous 20 tax years, at which point you are deemed Cyprus domiciled and Special Defence Contribution begins to apply. From 1 January 2026 a person with a foreign domicile of origin may extend the status by up to two further five-year periods for a lump sum.
There is no statutory number. Cyprus applies a management and control test rather than a headcount test, so what is required scales with the activity, the value carried and the relief being claimed. A passive holding company and an operating software business are not asked for the same thing.
Start by confirming the licence, because providing company administration and directorships in Cyprus is a regulated activity. After that the questions that separate providers are who signs, what happens when they disagree with you, and what the fee actually includes.
A nominee director sits on the board and owes duties to the company. A power of attorney authorises someone to act on your behalf and creates no board seat. They solve different problems, and using a power of attorney to run a company from abroad undermines the management and control position.
Timing decides the outcome. Cyprus exempts gains on the disposal of securities and charges no Special Defence Contribution on dividends for a non-domiciled resident. Both depend on residency being established before the disposal, and on the departure jurisdiction not retaining a claim.
Yes, and for most software groups it is the preferred structure. A Cyprus IP holding company owns the code and licenses it to an operating company for a royalty. The nexus fraction is maintained by having the IP company itself fund the development, through its own staff or unrelated contractors.
The real costs are an annual assurance engagement, a banking process measured in weeks, substance that has to be genuine and paid for, and the fact that none of the advantages reach a founder who stays tax resident somewhere else.
The company that funds the development should own the code. Ownership split from funding produces a weak nexus fraction, a transfer pricing problem and an assignment gap at diligence. Deciding this before the spending starts is worth more than any restructuring afterwards.
A Cyprus holding company receives most foreign dividends free of Cyprus tax under the participation exemption, pays no withholding tax on dividends out to non-residents, and is exempt on gains from disposing of shares. The combination makes it efficient at holding subsidiaries and at receiving a sale price.
Incorporation is the cheapest part of a Cyprus structure and the least consequential. A licensed provider supplies the registered office, resident directors, statutory records and filings that the residency position depends on, and several of those services may only be provided under a licence.
Book a confidential consultation with Doviandi. We will review your corporate, IP, and residency position against the 2026 Cyprus tax framework.
