Tax optimisation in Cyprus for entrepreneurs.
Structure. Extract. Build. Cyprus is one of Europe's most entrepreneur-friendly tax environments — 15% corporate tax, 0% on dividend extractions (non-dom), and 3% on IP income. Here's how to structure it right.
The short answer
A Cyprus company pays 15% corporate tax, or an effective 3% on qualifying IP profits. As a non-dom shareholder you take dividends with 0% Special Defence Contribution; domiciled shareholders pay 5%.
- Corporate tax
- 15%
- IP box effective rate
- 3%
- Dividends (non-dom)
- 0%
- Dividends (domiciled)
- 5%
You + Cyprus company
Most efficient structure for consultants, freelancers and solo business owners. Pay yourself salary (minimum) and take profits as dividends at 0% (non-dom).
Company + IP box
Software, patents, algorithms. Hold IP in Cyprus company. Pay 3% on qualifying IP income. Extract dividends at 0%.
Holding + operating
Cyprus holding company above operating subsidiaries. Centralise IP, management and profits. EU directive protection.
The Cyprus entrepreneur tax structure — how it works
The most common Cyprus entrepreneur structure is straightforward: a Cyprus limited company pays 15% corporate tax on its net profits (effective 1 January 2025). The entrepreneur, as a Cyprus tax resident with non-dom status, takes dividends from the company and pays 0% SDC on those dividends. The total tax on earned profits is therefore approximately 15% — significantly lower than the 47–60% effective rates in many Western European countries.
For entrepreneurs with IP or software assets, the IP box reduces this further to an effective rate of 3% on qualifying IP income. A SaaS entrepreneur generating €1M per year in software licensing income pays just €30,000 in tax — versus €450,000+ in Germany or £380,000+ in the UK.
Illustrative estimates only. Actual tax depends on individual circumstances, deductions and applicable reliefs. Tax advice required.
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