22 pages
Canonical definitions of the terms that appear across Cyprus structuring work. One term, one page, one authoritative answer.
An administrative service provider is a firm licensed and supervised in Cyprus to incorporate and administer companies, provide registered office and directors, act as nominee shareholder and manage trusts. The licence carries anti-money laundering obligations, and providing these services without one is a regulatory offence.
Yes. A Cyprus company may be wholly owned by non-residents, with no nationality restriction, no local shareholder requirement and no minimum capital of consequence. What non-residents cannot avoid is beneficial ownership disclosure and the anti-money-laundering file that precedes incorporation.
Controlled foreign company rules attribute the undistributed income of a low-taxed foreign subsidiary back to its controlling parent, taxing it before any dividend is paid. Cyprus applies them under the EU anti-tax avoidance directive, and so does every other member state.
An individual who spends more than 183 days in Cyprus in a calendar year is Cyprus tax resident. No other condition applies. It is the simpler of the two routes to residency, and unlike the 60-day rule it requires no Cyprus tie, no permanent home and no limit on days spent elsewhere.
The 60-day rule makes an individual Cyprus tax resident on 60 days of presence rather than 183, if four conditions are met. From 1 January 2026 the former requirement not to be tax resident elsewhere was removed, so the rule now has four conditions rather than five.
A written opinion of the Commissioner of Taxation on how Cyprus tax law applies to a specific proposed transaction. It costs 1,000 euro, or 2,000 euro for a decision within 21 working days. It binds the Tax Department to the facts and the taxpayers named in the request, and it does not bind the taxpayer or the courts.
A Cyprus Alternative Investment Fund is a collective investment vehicle authorised and supervised by CySEC. Three forms exist: the AIF, the AIF with a limited number of persons, and the registered AIF, which is not itself authorised but must be managed by an authorised manager.
Cyprus charges corporate income tax at 15 percent from 1 January 2026, raised from 12.5 percent. A company incorporated in Cyprus is tax resident here unless a treaty provides otherwise, and the management and control test applies alongside that. Dividends from a qualifying participation and gains on disposals of securities sit outside the charge.
A Cyprus International Trust is a trust where the settlor and beneficiaries are not Cyprus tax residents in the year before establishment and at least one trustee is resident in Cyprus throughout. It carries strong statutory protection against foreign forced heirship and a long challenge window.
The Cyprus IP Box gives an 80 percent notional deduction on qualifying profit from qualifying intangible assets, principally patents and copyrighted software. The benefit is limited by the OECD modified nexus fraction, so it tracks the research the company itself funded. At the 15 percent corporate rate applying from 2026, the effective rate at full nexus is 3 percent.
Cyprus non-domiciled status exempts a Cyprus tax resident from Special Defence Contribution on dividends and interest. It applies to individuals whose domicile of origin is outside Cyprus and who have not been resident for 17 of the previous 20 years. It does not remove the GESY health contribution.
The Cyprus tonnage tax system charges qualifying shipowners, charterers and ship managers by reference to the net tonnage of their vessels rather than on profit. It is an EU-approved regime, and electing into it replaces corporate income tax on qualifying shipping activities.
The deemed dividend distribution rules treated a proportion of undistributed profits as though they had been paid out, triggering Special Defence Contribution. The 2026 reform abolished them for profits earned from 1 January 2026, while 2024 and 2025 profits remain within them until 31 December 2027.
Economic substance is the evidence that a Cyprus company is genuinely managed and controlled in Cyprus rather than administered from elsewhere. Cyprus applies a management and control test for corporate tax residency. Substance is proportionate to the business, so there is no fixed headcount or office size that satisfies it.
GESY is the Cyprus General Healthcare System, funded by contributions from employees, employers, the self-employed and holders of other income including dividends and rent. Contributions are levied on income up to an annual cap of 180,000 euro across all sources combined.
A nominee director is a director appointed by a licensed provider to sit on a company's board. The role carries the full legal duties of a director, including the duty to exercise independent judgement, so a nominee can decline to act on an instruction that would breach those duties.
The notional interest deduction allows a Cyprus company to deduct a notional return on new equity introduced from 2015 onwards, capped at 80 percent of the taxable profit generated by that equity. It puts equity funding closer to debt funding, which is deductible.
The participation exemption removes foreign dividends received by a Cyprus company from Cyprus tax in most cases. It applies unless the paying company is more than half engaged in investment activity and is taxed at an effective rate significantly below the Cyprus burden, a threshold set at 7.5 percent from 2026.
A permanent establishment is a taxable presence a company creates in another country, either through a fixed place of business or through a dependent agent who habitually concludes contracts there. It is created by people and places, not by where customers are located.
The Special Defence Contribution is a Cyprus tax on dividends and interest, separate from income tax. It applies only to individuals who are both Cyprus tax resident and domiciled in Cyprus. Non-domiciled residents are outside it entirely, which is what non-dom status delivers.
Transfer pricing rules require transactions between related parties to be priced as unrelated parties would price them, and documented. Cyprus operates a formal regime with local file thresholds of 5 million euro for goods, 10 million for financing and 2.5 million for other categories from 2026.
Where two countries both treat the same person as tax resident, a double tax treaty decides which one wins. For individuals the test runs in a fixed order: permanent home, centre of vital interests, habitual abode, nationality, then agreement between the two tax authorities. For companies there is no automatic test, only agreement.
Each term above is defined on its own page. These are the numbers those definitions carry, with the 2026 changes marked.
| Corporate income tax | 15 percent, for tax years beginning on or after 1 January 2026. The rate was 12.5 percent to 31 December 2025. |
|---|---|
| Corporate tax residence | Incorporation in Cyprus, or management and control exercised in Cyprus. Either is sufficient from 1 January 2026, unless a treaty provides otherwise. |
| IP Box, effective rate | 3.0 percent at a nexus fraction of 1.0. That is 15 percent on the 20 percent of qualifying profit left after the 80 percent deduction, so it is the best available outcome rather than a typical one. |
| Dividends to non-resident shareholders | No withholding tax. |
| Individual tax residence | More than 183 days in Cyprus. Or the 60 day rule, which carries four conditions from 1 January 2026, reduced from five. |
| Non-domiciled status | 17 of the previous 20 years, so it is a rolling test rather than a fixed countdown from arrival. |
| VAT | 19 percent standard rate. Registration is compulsory once taxable supplies exceed 15,600 euro in any 12 months. |
| Audit | A review engagement under ISRE 2400 is available instead of a full audit below 300,000 euro net turnover and 500,000 euro gross assets, in each case for two consecutive years, for financial years beginning on or after 6 February 2026. |
| Annual company levy | Abolished from 2024 by Law 25(I)/2024. Unpaid levies for the years 2011 to 2023 remain due. |
| Stamp duty | Repealed. |
It starts with three questions: where your revenue comes from, what you own, and where you are tax resident. From there, the conversation is about what you are building and where you want to take it. After the call, you receive a written proposal covering the recommended structure, the implementation roadmap, and a fixed fee quote.
