Company Formation & Tax in Cyprus
One of the EU's leading holding jurisdictions — the Ltd, a new 15% corporate tax, a strong participation exemption and English common law.
Cyprus is one of the EU's most established holding and trading jurisdictions, built on English common law, a wide treaty network and a strong participation exemption. The key 2026 change is the headline rate: corporate tax rose from 12.5% to 15% on 1 January 2026 — so older guides quoting 12.5% are out of date.
Choosing an entity
The standard vehicle is the private Ltd (limited liability company under the Companies Law, Cap. 113). There is no meaningful minimum capital, and a company needs at least one director and one secretary (both can be non-residents). Registration is with the Department of Registrar of Companies and Intellectual Property (DRCIP), typically in around 8–12 working days, after which the company registers with the Tax Department within 60 days for its tax number, and files its ultimate beneficial owners with the UBO registry. An annual audit is mandatory.
Corporate tax and VAT
| Tax | Rate |
|---|---|
| Corporate income tax (from 2026) | 15% (was 12.5%) |
| IP Box (effective) | ~2.5% |
| VAT (standard) | 19% |
| VAT registration threshold | €15,600 |
| Outbound dividend withholding | 0% |
As of 1 January 2026 the corporate income tax rate is 15% (up from 12.5%), aligning Cyprus with the OECD Pillar Two minimum — still among the lowest in the EU. The system's real strength for groups is structural: a broad participation exemption (dividends from subsidiaries and gains on the sale of shares are generally exempt), no withholding tax on outbound dividends, interest or royalties, and an IP Box giving an effective rate near 2.5% on qualifying IP income. VAT is 19% standard, with registration mandatory above €15,600 (one of the EU's lowest thresholds) or immediately for intra-EU trade. The 2026 reform also cut the SDC on dividends to domiciled residents and abolished the deemed dividend distribution rules.
Frequently asked questions
What is the corporate tax rate in Cyprus?
15% from 1 January 2026 (raised from 12.5% as part of OECD Pillar Two alignment) — still among the lowest in the EU.
Does Cyprus charge withholding tax on dividends?
No — there is generally no withholding tax on dividends, interest or royalties paid to non-residents.
What is the Cyprus VAT rate?
19% standard; registration is mandatory above €15,600 turnover, or immediately for intra-EU trade.
Official sources
This guide is general information prepared by ARM Management and is current as at June 2026. It is not legal or tax advice; rules and thresholds change. Confirm against the Cyprus Tax Department, or with an advisor, before acting.
Set up in Cyprus with confidence.
ARM Management advises international companies on Cyprus holding and trading structures, registration and tax compliance, alongside wider EU and GCC structuring. Begin with a confidential conversation.