The most common mistake is pricing your work off the 15% corporate rate alone. That rate applies to the company's profit, and a Cyprus business meets several other taxes and contributions before that profit reaches you. Build the full list first. Then set your price.
1. Write down what the business actually sells
Start with one sentence: who pays you, for what, and from which country. A UK consultancy billing UK clients, a shop selling to Cypriot customers and a software firm billing across the EU each trigger different taxes. The rate stays the same. The list changes.
If you cannot write that sentence yet, stop here. Every later step depends on it.
- Who pays you (a business, a consumer, a government body)
- Where that payer is based
- Whether you sell goods, services or both
2. Put the corporate tax line in first, and only as one line
Corporate tax is 15% from 1 January 2026, up from 12.5%. The change aligns Cyprus with the OECD global minimum tax framework. Plenty of pages still quote 12.5%, so check the date on anything you read. The Cyprus Tax Department publishes the current position.
Here is the arithmetic, using a round figure for illustration and not a forecast. A company with €100,000 of taxable profit owes €15,000 in corporate tax. That leaves €85,000 in the company. It is not in your pocket yet, and it has not been taxed a second time yet.
3. Add VAT as a separate column, not a cost
Customers pay VAT and the business passes it to the state, so it never counts as profit. The standard rate in Cyprus is 19%. Whether you must register depends on a turnover threshold and on where your customers are. Cross-border sales to EU businesses follow their own rules.
The catch is cash flow. You charge VAT on an invoice, and you owe it to the state even if the client pays late. Treat VAT money as borrowed and keep it out of your operating budget. Before you issue your first invoice, confirm the current registration threshold and return dates on the Tax Department site.
4. Price in the payroll contributions on every salary
Every salary carries contributions on top, including your own if you are a director on the payroll. Employee social insurance is 8.8%, and employer social insurance is also 8.8%. The health contribution (GHS, also called GESY) is 2.65% for an employee and 2.9% for the employer, capped at €180,000 of income.
So a salary of €3,000 a month costs the company more than €3,000. The employer share sits on top, and the employee share comes out of what the worker receives. The Social Insurance Services set the annual ceiling on insurable earnings. Read their published guidance for the current figure and do not rely on a number from a blog.
5. Check the self-employed rates if you are not a company
If you trade as a sole trader and not through a company, the corporate rate does not apply to you. Different rates do. Social insurance for the self-employed is 16.6%. It rose to that level in January 2024, so any source quoting 15.6% is out of date. The GHS rate on self-employed income is 4.0%, which at the €180,000 cap comes to at most about €7,200 a year.
People trip up here. They read the 2.65% employee GHS figure and apply it to their own freelance income. Check your category first. Personal income tax then applies above the €22,000 tax-free band, so the full picture mixes personal and business taxes. A licensed adviser can confirm how they stack.
6. Trace the second layer when profit leaves the company
Profit kept in the company has been taxed once. Paying it out as a dividend can trigger a second charge, the Special Defence Contribution, unless you hold non-dom status. A non-dom pays 0% on dividends and interest for 17 years. That period can be extended in two five-year blocks at €250,000 per block.
Most pricing sheets skip this step. Your take-home depends on whether you draw salary, dividends or a mix, and on whether non-dom status applies to you. It is not automatic. It depends on your history and your passport, so confirm it before you plan around it.
- Salary: payroll contributions apply
- Dividends: Special Defence Contribution applies unless you are non-dom
- Leaving profit in the company: no second charge, but the cash stays locked inside
7. Check your home country's claim on the same income
Cyprus is only one side of the picture. If you leave the UK, for example, your old country's exit rules and any remaining UK-source income can still produce a bill. Nothing described here removes your obligations at home. The 183-day rule and the 60-day rule decide where you are resident, and the two countries can disagree.
Residency and tax status come before everything else, and the answer is rarely a single rate. Write down every country that could claim a share of the same euro. Then ask an adviser to confirm which claim wins.
8. Allow for the paperwork, and only then price
Official processes in Cyprus involve a lot of paper and in-person visits. Expect appointments, certified copies and waiting. That time is a real cost, either yours or an accountant's fee, so it belongs in the price.
Now total the list: corporate tax, VAT cash flow, payroll contributions, the dividend layer, home-country exposure and admin cost. What remains is the margin you can honestly quote.
Two practical notes. Your office location changes your costs, so read where to live in Cyprus before you sign a lease. If the company will buy a vehicle, the guide to buying or importing a car in Cyprus covers the traps that hit the budget. For the wider picture, start from the ClearCyprus home page or browse the blog.
Rules and thresholds change, and guidance online is often out of date, this page included. Confirm each figure with the Tax Department or a licensed Cyprus adviser before you act.
Next step
Take your list from steps 1 to 8 to a licensed Cyprus accountant and ask them to check each line against your situation. If you want an introduction to a vetted provider, ClearCyprus can connect you with one.
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Related reading: Cyprus Business Tax: Build Your Document Pack Before the First Appointment.
Common questions
What is the Cyprus corporate tax rate in 2026?
Corporate tax is 15% from 1 January 2026, up from 12.5%. The rise aligns Cyprus with the OECD global minimum. The rate applies to the company's taxable profit and does not include VAT, payroll contributions or dividend charges.
Is 15% the only tax my Cyprus business pays?
No. A Cyprus business also deals with VAT, social insurance and health contributions on salaries, and possibly a Special Defence Contribution on dividends. Which ones apply depends on your legal form, your customers and your own tax status.
What are the social insurance rates for a self-employed person in Cyprus?
Self-employed social insurance is 16.6%, which rose in January 2024. The self-employed GHS health contribution is 4.0%, capped at €180,000 of income. Employees pay 8.8% social insurance and 2.65% GHS, so do not apply employee rates to freelance income.
Do I pay tax on dividends from my own Cyprus company?
Dividends can attract the Special Defence Contribution unless you hold non-dom status. A non-dom pays 0% on dividends and interest for 17 years, extendable in two five-year blocks at €250,000 per block. Confirm your eligibility with a licensed adviser.
Does moving my business to Cyprus end my tax duties in the UK?
Not automatically. Your UK exit rules and any UK-source income can still produce a bill. Residency is decided by day-count rules in each country, so the two can disagree. Confirm your position with an adviser in both countries.
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