Everything a founder needs to know about Cyprus

Cyprus has two routes to tax residency. The standard route requires 183 days on the island in a calendar year. The 60-day rule is the faster route for founders who split their year between countries. To qualify in the same tax year, you must spend at least 60 days in Cyprus, spend no more than 183 days in any other single country, maintain a permanent home here (owned or rented), and carry on business in Cyprus, be employed in Cyprus, or hold a directorship in a Cyprus tax resident company. Since the 2026 tax reform, you no longer need to show that you are not tax resident in another country. Both routes produce full Cyprus tax resident status with access to Non-Dom status.

Non-Dom status is available for 17 years out of any 20 consecutive tax years as a Cyprus tax resident. It exempts dividend and interest income from Special Defence Contribution. Cyprus-domiciled individuals pay it at 5% on dividends from profits earned from 1 January 2026, and at 17% on dividends from earlier profits. It does not exempt salary, rental income, or capital gains from immovable Cyprus property. Founders who become Cyprus-domiciled before the 17 years expire lose the status permanently, which is why the timing of your domicile declaration matters.

Not necessarily, but retaining a foreign company after relocation creates risk if it has management and control in its home country, which can include a director who has since moved abroad. The more common approach is to interpose a Cyprus holding company above the existing trading entity, or to redomicile, depending on your jurisdiction. The right answer depends on your country of origin, the nature of the business, and existing contractual obligations.

Exit tax exposure varies by country. Germany can impose exit tax on shareholdings of 1% or more for founders who have been German tax resident for at least 7 of the last 12 years. The Netherlands applies a preserving assessment on gains in substantial interests (5% or more) payable for up to ten years after departure. The UK changed its non-dom rules in April 2025, introducing a four-year residence threshold. Each of these requires specific planning before departure, not after arrival in Cyprus.

Cyprus taxes employment and self-employment income at standard rates up to 35%, with a 50% exemption on employment income above EUR 55,000 available to qualifying new residents for up to 17 years. Dividends and interest received by a Non-Dom individual carry zero SDC. There is no wealth tax, no inheritance tax, and no capital gains tax on the disposal of shares in non-property-owning companies.