Relocating to Cyprus to Start a Business: What You Should Know

Cyprus has long been an attractive destination for entrepreneurs and investors due to its strategic location, business-friendly environment, favorable tax regime, and high quality of life. Whether you’re seeking to tap into the European Union market or benefit from Cyprus’s low corporate taxes, relocating your business to this Mediterranean island in 2025 can be a game-changer.

In this article, we will explore the essential factors you should consider when relocating to Cyprus to start a business, including the legal requirements, tax advantages, and market opportunities.

Why Cyprus Is an Attractive Destination for Business Relocation

Before diving into the logistics of relocating your business, it’s important to understand why Cyprus has become an increasingly popular destination for business owners:

Favorable Tax Environment: Cyprus offers one of the lowest corporate tax rates in the European Union at just 12.5%, making it a highly attractive destination for businesses. Additionally, the country has a range of tax incentives, including exemptions on dividend income, capital gains tax, and tax treaties with over 60 countries.
Strategic Location: Situated at the crossroads of Europe, Asia, and Africa, Cyprus offers excellent access to international markets, particularly in the Eastern Mediterranean and the Middle East. This makes it an ideal location for businesses engaged in international trade, logistics, and shipping.
Business-Friendly Regulations: Cyprus has a streamlined regulatory environment that supports entrepreneurship. The country ranks highly for ease of doing business, with minimal bureaucracy, low compliance costs, and an efficient company registration process.
EU Membership: As a member of the European Union, Cyprus offers businesses access to the EU market with over 500 million consumers. Businesses in Cyprus also benefit from EU trade agreements, simplified regulatory processes, and free movement of goods and services.
Skilled Workforce: Cyprus boasts a highly educated and multilingual workforce. Many professionals in the country speak fluent English, making it easy for international businesses to communicate and collaborate.
High Quality of Life: Cyprus offers an excellent quality of life, with a warm climate, beautiful beaches, and a relaxed lifestyle. For entrepreneurs looking to relocate, this quality of life can be a significant advantage, as it can help attract talent and increase employee satisfaction.

Key Legal Requirements for Starting a Business in Cyprus

When relocating to Cyprus to start a business, there are several legal requirements you must meet to ensure your business operates smoothly within the local framework. Here are the key steps to follow:

1. Choose the Right Business Structure

The first step in starting your business in Cyprus is selecting the appropriate legal structure. The most common types of business structures in Cyprus are:

Private Limited Company (Ltd.): The most popular structure for international entrepreneurs. A Cyprus Ltd. offers limited liability protection, meaning shareholders’ personal assets are protected from business debts. It requires at least one shareholder and one director, who can be non-residents of Cyprus.
Sole Proprietorship: If you plan to operate the business alone, this simple structure might be the best option. However, it does not offer liability protection, meaning your personal assets may be at risk.
Partnerships: Cyprus also allows general and limited partnerships, where two or more individuals or entities can operate a business together. This structure may be appropriate for some types of ventures but requires careful planning of liability responsibilities.

2. Register Your Company

Once you’ve chosen your business structure, the next step is to register your company with the Cyprus Registrar of Companies. To complete the registration, you will need to submit the following documents:

Memorandum and Articles of Association: These outline the company’s objectives, internal regulations, and the powers of shareholders and directors.
Director and Shareholder Information: You must provide the details of the company’s directors and shareholders, including their names and addresses.
Registered Office Address: A physical address in Cyprus is required for official correspondence.

Once registered, your company will receive a Certificate of Incorporation that confirms its legal standing.

3. Apply for Business Licenses and Permits

In Cyprus, businesses are required to obtain a business license from the local municipality where the company will operate. This ensures that your business complies with local zoning laws and health regulations.

Specific businesses, such as those in food, healthcare, or the beauty industry, may require additional permits and licenses. It’s important to research and obtain any industry-specific licenses to operate legally in Cyprus.

4. Register for Taxes

Cyprus has a well-established tax system that supports businesses and entrepreneurs. When starting a business in Cyprus, you will need to:

Register for VAT (Value Added Tax): If your business’s turnover exceeds €15,600, you must register for VAT with the Cyprus Tax Department. The standard VAT rate in Cyprus is 19%, though some goods and services may qualify for reduced rates.
Obtain a Tax Identification Number (TIN): As a business owner, you will need to obtain a TIN to file tax returns and fulfill your obligations.

Cyprus offers several tax incentives for businesses, such as tax exemptions on dividend income, reduced tax rates on intellectual property (IP), and capital gains tax exemptions on profits derived from the sale of securities. This makes Cyprus a highly competitive jurisdiction for international businesses.

5. Comply with Employment Laws

If you plan to hire employees in Cyprus, you must comply with local employment laws, which include:

Employment Contracts: Cyprus requires written employment contracts for all employees. These contracts should specify terms such as working hours, salary, job duties, and termination conditions.
Social Insurance Contributions: Employers are required to register employees with the Social Insurance Department and make contributions for pensions, healthcare, and other social benefits.
Minimum Wage: While Cyprus does not have a national minimum wage, it is important to research industry-specific wages and ensure that compensation is competitive and compliant with local labor standards.

Benefits of Cyprus for International Entrepreneurs

1. Access to a Highly Skilled Workforce

Cyprus boasts a highly educated, skilled, and multilingual workforce, which is one of the key reasons why many international businesses choose to relocate here. Cyprus has a strong education system, and English is widely spoken, particularly in the business and professional sectors. Hiring local talent is a great way to grow your business and tap into the knowledge of the local market.

2. Attractive Tax Regime

As mentioned, Cyprus’s corporate tax rate is one of the lowest in the European Union at 12.5%. Additionally, the country offers numerous tax exemptions and deductions, making it highly attractive to foreign investors. Businesses in Cyprus benefit from:

No Capital Gains Tax on the sale of shares.
Tax exemptions on foreign dividends received.
IP tax regime offering reduced rates for businesses involved in research and development (R&D) and intellectual property (IP) activities.

These tax advantages help maximize your profits and minimize the cost of doing business.

3. Strong Infrastructure and Connectivity

Cyprus benefits from a modern infrastructure, including an advanced telecommunications network, excellent transportation links, and world-class financial services. The country is well-connected to Europe, the Middle East, and Asia, making it an ideal base for international trade and investment.

4. Excellent Quality of Life

Cyprus offers a high standard of living, with beautiful beaches, a Mediterranean climate, and a rich cultural heritage. The relaxed lifestyle and affordable cost of living make it an attractive location for entrepreneurs looking to balance work with leisure.

How B2B Hub Can Help with Company Formation in Cyprus

Relocating and starting a business in Cyprus may seem overwhelming, but B2B Hub is here to guide you every step of the way. Our team of experts specializes in company formation in Cyprus and provides a full range of services to ensure your business is set up for success.

B2B Hub offers:

Company formation: From registering your business to drafting the Articles of Association and securing necessary permits.
Tax registration and compliance: We assist with VAT registration, obtaining your Tax Identification Number, and ensuring tax compliance.
Legal and accounting support: Our professionals provide expert advice on legal matters, employment law, and accounting services.
Bank account opening: We help streamline the process of opening a corporate bank account in Cyprus.
Business consulting: B2B Hub offers strategic advice on market entry, regulatory compliance, and growth strategies.

For inquiries or assistance with relocating and starting a business in Cyprus, please contact us at +44 770 018 3107, visit our website at b2bhub.ltd, or email us at reg@b2bhub.ltd.

Relocating to Cyprus to start a business offers significant advantages, including a favorable tax environment, access to skilled labor, and a strategic location in the heart of the Mediterranean. By following the legal steps, complying with regulations, and seeking professional support from experts like B2B Hub, you can ensure your business thrives in this dynamic market.