For some years now, Cyprus has been back in fashion among German and European entrepreneurs. In a very short time, the island in the Mediterranean has become a legal tax haven in Europe. We explain why.
After the banking and financial crisis in Cyprus in 2013, many foreign entrepreneurs rightly disappeared. The risk of losing money was too high, the situation at the time too uncertain. The disappearance of energetic entrepreneurs was quickly noticed by the government of Cyprus - and acted. With an interesting tax model for EU citizens, the island has transformed itself from a crisis country into an absolute tax paradise in just a few years.
Cyprus grants every EU citizen tax-free salaries, tax-free dividends and no taxes on stock profits. These advantages are bundled in the"NON-Dom program". Means: who owns a GmbH in Germany, must employ itself, and pays on the disbursing managing director salary again taxes. This does not apply in Cyprus. A net salary of up to €19,500 per year may be paid out tax-free. If this is not enough, dividends can be paid out tax-free several times a year. Only social security contributions for the statutory health system"GESY" of about 2.67% are due. Also the well-known 20-28% taxes on stock profits are omitted. Also smaller cost factors such as IHK contributions or trade tax do not result on Cyprus. All these advantages are available to every EU citizen who registers in Cyprus via the"Yellow Slip", receives these tax advantages for 17 years. To take advantage of these benefits, you don't even have to be in the country for a long time. A law states that a stay of 60 days per year (at a stretch or split), is perfectly sufficient. Perfect for expats and digital normads.
In addition, Cypriots also pay only 12.5% capital tax for a Limited in Cyprus. Of course, you get these benefits on top of that when you emigrate to Cyprus and incorporate your Limited there. Compared to some top tax rates like 40% in Germany, this is an enormous saving. So if you have profits over 40,000 Euros per year, you should think about emigrating to Cyprus and setting up your business there.
Cyprus is not on the "black list" of questionable tax havens in Europe, which is good. Although the EU demands uniform minimum tax rates, Cyprus is strictly against it - if the decision-making power lay with each individual EU state, Cyprus says. Due to the above-mentioned tax advantages, Cyprus is therefore the perfect tax haven in Europe for us.
This calculation example was calculated using exactly paid fees
of a sole proprietorship in Germany.
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