Transferring a Business to Cyprus: Benefits and Challenges

Relocating a business to Cyprus is becoming an increasingly popular solution for entrepreneurs seeking a stable European jurisdiction. Cyprus offers a favorable tax system, clear regulatory rules, and the possibility of business immigration, making it an optimal destination for company relocation. However, the process requires preparation and professional guidance—a qualified lawyer can assist foreign clients in correctly completing documentation and avoiding errors during redomiciliation.

Business Relocation Formats in Cyprus

Transferring a company to Cyprus can be done in several ways, depending on the owner’s jurisdiction and objectives:

• Redomiciliation – transferring an existing company under Cypriot law without liquidation. The legal entity retains its history, bank accounts, and contracts.
• Setting up a subsidiary – suitable for holdings and international groups. The Cypriot company gains the right to operate within the EU and optimize taxes.
• Registering a new legal entity – applicable when starting with a clean reputation or changing the business direction.

To select the optimal scheme, owners are advised to consult a lawyer who can assess the original jurisdiction and tax risks associated with relocation.

Step-by-Step Redomiciliation Procedure

The process of transferring a business to Cyprus is strictly regulated under the Companies Law (Cap. 113) and involves several stages:

1. Checking redomiciliation eligibility – not all countries allow the transfer of legal entities. A lawyer evaluates whether the original jurisdiction permits company exit.
2. Preparing corporate documents – submission of the articles of association, board resolutions, certificate of incorporation, and confirmation of no outstanding debts.
3. Filing with the Registrar of Companies – after document review, the Cypriot registrar issues temporary approval to continue operations.
4. Obtaining permanent status – upon completion, the company receives a Continuation Certificate and becomes a Cypriot tax resident.

Each stage requires strict adherence to deadlines and submission procedures. Documentation errors can result in registration refusal or loss of company status.

Taxes and Business Benefits

After relocation, the company becomes a tax resident of Cyprus when managed from the country. Key advantages include:

• Corporate tax: 12.5%, one of the lowest in the EU.
• IP Box regime: under the “nexus approach,” part of the profits from qualifying intangible assets may be taxed at a substantially reduced effective rate due to partial exemption of qualifying profits.
• No dividend tax on payments to non-residents.
• VAT: 19%, with possible reimbursement for export operations.
• No currency control or restrictions on capital movement.

These benefits make Cyprus a strategic choice for IT, consulting, finance, and trading companies. For owners considering business immigration, Cyprus provides simplified procedures for obtaining residence permits for company directors and investors.

Challenges and Legal Risks

Despite the liberal regime, relocating a business to Cyprus requires precise legal preparation. Common challenges include verifying the source of capital, coordinating financial reporting, and complying with AML/KYC requirements. It is also important to consider potential tax consequences in the original country, especially if redomiciliation involves closing the previous legal entity.

Professional legal support is crucial for successful business immigration. A lawyer guides clients through all stages—from document preparation and communication with the registrar to obtaining permits for directors and employees. This support ensures company continuity, avoids tax disputes, and enables transparent integration of the business into the Cypriot legal system.