Tools

Freelancer vs Cyprus Ltd

Answer 6 questions to get a personalised recommendation: Sole Trader, Cyprus Ltd, or a Holding Structure — with estimated tax rates.

Annual net income€80,000

€20K€500K

Income from outside Cyprus70%

0% (all Cyprus)100% (all foreign)

Do you have employees?

Do you plan to raise investment?

Are you non-domiciled in Cyprus?

Significant passive income? (dividends, investments)

Recommended structure

Cyprus Ltd (Private Company)

A Cyprus Ltd makes strong sense at €80,000/year. The 12.5% corporate rate plus 0% on dividends as a non-dom gives you an estimated effective rate of ~10% — materially lower than the sole trader rate of ~25%.

Estimated Effective Tax Rate

Sole Trader

~25%

Cyprus Ltd

~10%

Estimates assume ~20% deductible expenses. Actual rates vary. Non-dom status: Yes.

Key advantages for your profile

✓12.5% flat corporate tax — one of the lowest in the EU
✓As a non-dom, dividend extraction is 0% tax — highly efficient
✓Limited liability protects personal assets
✓Easier to bring in co-founders, issue options, or raise investment
✓Can accumulate retained earnings at low tax rates
✓Your high % of foreign income suits a Cyprus Ltd receiving foreign-source income

Risks / complications

!Annual audit required (audited financial statements mandatory)
!Company secretarial obligations: annual returns, registered office
!Payroll setup required if paying yourself a salary
!Minimum 2 weeks to incorporate; legal/accounting fees €500–2,000/year
!Director and beneficial ownership obligations under CRS/BEPS

Recommended next steps

1.Engage a Cyprus lawyer to incorporate the company (€800–1,500 typical)
2.Open a corporate bank account (allow 3–5 weeks)
3.Register for corporate tax and VAT with the Tax Department
4.Appoint a local registered agent and company secretary
5.Set up payroll if you take a director's salary
6.File annual audited accounts and corporate tax return

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