By Nexora Cyprus editorial team · General information — seek advice for your circumstances
A useful comparison starts with the same revenue, deductible business costs, hiring plan and cash needed by the owner. Revenue is not profit, and profit is not automatically the amount available for personal spending.
A company pays its own expenses and taxes before dividends can be considered. A model that pays €30,000 salary and €30,000 dividends out of €60,000 before-tax business profit, without allowing for employer costs and company tax, does not balance. Do not base incorporation on such a comparison.
Structure comparison — amounts require a case-specific calculation
| Issue | Self-employed individual | Limited company |
|---|---|---|
| Legal structure | The individual carries on the business | A separate company contracts and holds assets |
| Income tax | Personal rates on taxable income | 15% standard corporate rate from 2026; specific relief requires eligibility |
| Taking money out | Record drawings separately from deductible expenses | Assess salary, dividends and loans separately |
| Contributions | Self-employed SI and GHS rules | Employer/employee charges on remuneration and relevant shareholder charges |
| Accounts | 2026 audited/reviewed-accounts turnover threshold: €120,000 | Company audit or eligible statutory review requirements |
| Administration | Individual tax, SI and VAT obligations as applicable | Company records, registry filings, tax and other applicable registrations |
Non-dom SDC relief is not a general exemption for business income. It may affect qualifying dividends or passive interest; GHS and foreign taxes require separate consideration. The employment exemption under Article 8(23A) has its own conditions and does not follow automatically from incorporating or paying a salary above €55,000.
The self-employed person pays social insurance at 16.6% on the applicable insurable earnings. GHS is a separate 4% charge on relevant self-employment earnings. Their bases, limits and any coordination exemption must be checked separately.
Use the actual occupational category and current official earnings schedule. A person with lower actual earnings may apply for assessment on those earnings under the Social Insurance rules; it is not an automatic reduction. Do not use invented class averages or assume one combined annual contribution cap.
Limited liability does not remove every personal responsibility. No fixed €30,000, €40,000 or €80,000 profit level proves that one structure is best for all founders. Obtain a comparison based on your circumstances.
An asset transfer is not automatically tax-free because the asset is outside property CGT. Income-tax and VAT treatment are separate. Discuss the proposed transfer through company formation.
Tax Department: self-employed accounts threshold. From tax year 2026 the turnover threshold for audited/reviewed self-employed accounts rises from €70,000 to €120,000.
Social Insurance registration and contributions and 2026 occupational earnings categories.
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Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Tax laws change frequently. Consult a qualified Cyprus adviser for guidance specific to your situation. The information on this page is general guidance only and does not constitute legal, tax, accounting, immigration or financial advice. Specific advice should be obtained based on the facts of each case.
— References linked in this article
Read each reference alongside the claim it accompanies and check current amendments before relying on it. General information — seek advice for your circumstances.
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