Decision
What Does a Founder Relocating to Cyprus Pay in 2026?
What Does a Founder Relocating to Cyprus Pay in 2026?: short answer
A Cyprus company pays 15 percent. A founder who relocates and is not domiciled in Cyprus pays no Special Defence Contribution on dividends, and GESY at 2.65 percent capped at 4,770 euro a year. Salary is taxed on bands running nil to 22,000 euro, then 20, 25, 30 and 35 percent.
Reviewed by Doviandi Limited, licensed by ICPAC as an administrative service provider, certificate E645/F/2014.
| Corporate income tax | 15 percent, from 1 January 2026. It was 12.5 percent to 31 December 2025 source |
|---|---|
| Personal income tax, nil band | Up to 22,000 euro of taxable income source |
| Personal income tax, bands above it | 20 percent to 32,000 euro, 25 percent to 42,000, 30 percent to 72,000, and 35 percent above source |
| Dividend, if domiciled in Cyprus | Special Defence Contribution at 5 percent on profits earned from 1 January 2026, reduced from 17 percent |
| Dividend, if not domiciled in Cyprus | No Special Defence Contribution |
| Dividend, either way | GESY at 2.65 percent. Domicile does not affect it |
| Salary, employee side | 8.8 percent social insurance and 2.65 percent GESY, on top of income tax at the bands |
| Salary, employer side | 15.4 percent of gross, of which the 2 percent Social Cohesion Fund has no ceiling |
| GESY ceiling | 180,000 euro of total income across all sources combined, not per source, so the charge stops at 4,770 euro a year |
| GESY maximum charge | 4,770 euro a year, being 2.65 percent of the 180,000 ceiling |
| All-in rate below the GESY ceiling | Flat at 17.25 percent of company profit taken as dividend by a non-domiciled resident, whatever the amount. Best case, on the assumptions set out on the page |
| Where the ceiling bites | A dividend of 180,000, which needs roughly 211,800 of company profit |
| All-in rate above the ceiling | Falls as profit rises, to 15.95 percent at 500,000 and 15.48 percent at a million, approaching 15 percent |
| Gains on crypto-assets | 8 percent under article 20E. Losses offset only against crypto gains of the same year, and mining is outside it |
| Approved share option schemes | 8 percent under article 20D, capped at twice the employee's income from that employer and at 1,000,000 euro per rolling decade |
A founder deciding whether to move a company and themselves to Cyprus, who needs the whole stack rather than the headline rate. Most published material gives the corporate rate or the personal rates, rarely both, and the question only resolves when the two are read together with the route the money takes out of the company.
The company rate is not what a founder pays
A Cyprus company pays 15 percent on its taxable profit, raised from 12.5 percent by the 2026 reform.
That figure answers a question about the company. A founder is usually asking a different one: what is left after the money reaches them personally. Those are two charges with different rules, and the second depends on something the first does not care about at all, which is whether the founder is domiciled in Cyprus rather than merely resident there.
Personal income tax, from 2026
Section 24 of the reform law replaced the Second Schedule. Because the bands are progressive, the rate at the top of a salary is not the rate paid on it, so the table carries the tax as well as the percentage.
| Taxable income | Rate on the band | Tax on the band | Tax to the top of the band | Effective rate on the whole amount |
|---|---|---|---|---|
| Up to 22,000 | Nil | Nil | Nil | Nil |
| 22,000 to 32,000 | 20 percent | 2,000 | 2,000 | 6.25 percent |
| 32,000 to 42,000 | 25 percent | 2,500 | 4,500 | 10.71 percent |
| 42,000 to 72,000 | 30 percent | 9,000 | 13,500 | 18.75 percent |
| Above 72,000 | 35 percent | on the excess | 13,500 plus 35 percent of the excess | rises with income |
Taxable income of 100,000 euro therefore carries 23,300 of income tax, an effective rate of 23.30 percent, and 150,000 carries 40,800, or 27.20 percent. The first 22,000 is free of income tax at every level, not only at low ones.
Taxable income is not gross salary. Social insurance and GESY contributions come out first, and the personal deductions introduced by the same reform reduce it further, so the figures above understate what a given salary leaves.
These apply to employment income, trading profit and most other income taxed under the Income Tax Law. They do not apply to dividends, which sit outside income tax entirely and are dealt with below. Gains on crypto-assets and benefits under an approved share option scheme have their own rates and are not added to other income.
Taking money out by salary
A salary is deductible to the company and taxable to the person, so the 15 percent is not paid on it. What replaces it:
- Income tax at the bands above
- 8.8 percent employee social insurance and 2.65 percent GESY, withheld from gross
- 15.4 percent on the employer side, of which the 2 percent Social Cohesion Fund has no ceiling while the rest stop at the insurable earnings limit
Social insurance and GESY rates are set by decree rather than in the statute, so they move on a different clock from the bands and are worth checking each January rather than assumed.
Taking money out by dividend, where domicile decides it
A dividend is paid out of profit the company has already taxed at 15 percent. It carries no income tax, and no social insurance. What it carries instead depends on domicile:
- Domiciled in Cyprus. Special Defence Contribution at 5 percent on profits earned from 1 January 2026, reduced from 17 percent by the reform.
- Not domiciled in Cyprus. No Special Defence Contribution at all. This is what Cyprus non-dom status does, and on a dividend it is the whole of the benefit.
- Either way. GESY at 2.65 percent. Domicile has no effect on it.
Whether salary or dividend is the better route is a separate question, and it turns on more than the rates.
Worked example
A relocated founder, not domiciled in Cyprus, with no income other than the dividend. Two sizes, because the GESY ceiling changes the answer
Profit of 150,000, below the ceiling. Corporate income tax at 15 percent is 22,500, leaving 127,500 distributable. Special Defence Contribution is nil on non-domicile. GESY runs at 2.65 percent on the whole 127,500, because that is under the 180,000 ceiling, giving 3,378.75. Total tax 25,878.75, an effective rate of 17.25 percent, and 124,121.25 reaches the founder.
Profit of 500,000, above it. Corporate income tax is 75,000, leaving 425,000 distributable. GESY applies only to the first 180,000 of income, so the charge is its maximum of 4,770 rather than 2.65 percent of the dividend. Total tax 79,770, an effective rate of 15.95 percent, and 420,230 reaches the founder.
Both figures are best cases. Each assumes Cyprus tax residence, non-domicile, no other income using the ceiling, and no salary. Taking no salary is a choice with consequences elsewhere: the 60 day residency route requires a business, employment or an office in a Cyprus tax resident company, and a company with no payroll is answering a harder question about where it is managed.
Illustrative only. Figures are assumptions used to show the mechanics of the calculation, not a representation of any actual client outcome or of the result you would obtain.
Those two numbers describe the whole shape. Up to the point where the dividend reaches 180,000, the all-in rate is flat at 17.25 percent whatever the profit, because 15 percent of the profit plus 2.65 percent of the 85 percent that survives it is the same proportion every time. That point arrives at roughly 211,800 of profit.
Above it the personal charge stops growing while the corporate one stays proportional, so the all-in rate falls as profit rises: 16.91 percent at 250,000, 15.95 at 500,000, and 15.48 at a million, approaching 15 percent from above without reaching it. A progressive personal system does the opposite to the same money, which is the comparison a founder is usually making.
Two charges a founder will meet that sit outside all of this
Crypto-assets. Article 20E taxes gains on the disposal of crypto-assets at 8 percent. Disposal is defined widely and includes gifting, exchanging one crypto-asset for another, and using one as a means of payment, so a swap is a disposal even though nothing has been cashed out. Losses offset only against crypto gains of the same year and cannot be carried forward or group relieved. Assets acquired through mining are outside the article.
Share options. Article 20D taxes the benefit under an employer incentive scheme approved by the Commissioner at 8 percent, capped at twice the employee's income from that employer in the year the vesting period ends, and at 1,000,000 euro per rolling decade. The scheme must carry a minimum three year vesting period, the rights must not be transferable before it ends, and the exercise price must be at least half the value of the shares at approval. It does not apply to a person connected with the company, which for a founder holding shares is the point to check first.
Why the headline rate travels badly
Three figures get quoted as the Cyprus answer, and each is true of something narrower than the claim made for it.
- 15 percent is what the company pays before anything reaches the shareholder.
- Zero on dividends describes a non-domiciled resident and only the Special Defence Contribution part, with GESY still running at 2.65 percent.
- Nil to 22,000 is the first band of a progressive scale that reaches 35 percent, not a general exemption.
None of them is wrong. Each becomes wrong when it is quoted as the answer to the founder's question, which is what the whole stack costs on their own numbers.
Common questions
What are the Cyprus personal income tax bands for 2026?
Nil on taxable income up to 22,000 euro, 20 percent from 22,000 to 32,000, 25 percent from 32,000 to 42,000, 30 percent from 42,000 to 72,000, and 35 percent above 72,000. They were set by section 24 of the Income Tax (Amendment) (No. 4) Law 2025, N.244(I)/2025, with effect from 1 January 2026.
What is the Cyprus corporate tax rate in 2026?
15 percent, raised from 12.5 percent with effect from 1 January 2026. Any source still quoting 12.5 percent is describing the position to 31 December 2025.
Does a non-domiciled resident pay anything on a Cyprus dividend?
Yes, GESY at 2.65 percent, subject to a ceiling of 180,000 euro of total income across all sources. Non-dom status removes the Special Defence Contribution, which for a domiciled resident is 5 percent on profits earned from 1 January 2026, but it does not remove GESY.
How are crypto gains taxed in Cyprus from 2026?
At 8 percent under article 20E on the disposal of crypto-assets. Disposal includes sale, gift, exchanging one crypto-asset for another and using one as a means of payment. Losses offset only against crypto gains of the same tax year, with no carry forward and no group relief, and assets acquired through mining fall outside the article.
Technical definition
The rates come from the Income Tax (Amendment) (No. 4) Law 2025, N.244(I)/2025, Official Gazette No. 5070 of 31 December 2025, which by section 25 took effect on 1 January 2026. Section 24 replaced the Second Schedule, setting the corporate rate at 15 percent and the personal bands. New articles 20D and 20E introduced separate charges on approved share option schemes and on gains from crypto-assets.
Practical implications
The gap between a domiciled and a non-domiciled resident is the largest single number on a founder's page, because Special Defence Contribution applies to one and not the other. GESY does not follow domicile, so a non-domiciled resident taking dividends still pays it until total income reaches the ceiling.
Common misconceptions
That 15 percent is what a founder pays, when it is what the company pays before anything reaches the shareholder. That non-dom status removes every charge on a dividend, when it removes one of two. And that the bands apply to dividends, when dividends sit outside income tax entirely.