How is a company's tax residence decided in Cyprus?

By where it is managed and controlled. A company whose management and control is exercised in Cyprus is Cyprus tax resident, wherever it was incorporated.

Is my UK company still UK tax resident if I move abroad?

Yes. A UK-incorporated company is UK resident under CTA 2009 s14. If it is also resident in Cyprus, the UK–Cyprus treaty's Article 4(4) asks the two tax authorities to agree which country it belongs to.

Do I need to register my foreign company for VAT in Cyprus?

Only if it makes taxable supplies in Cyprus, and then there is no threshold for a non-established business. A Cyprus company registers once its taxable supplies pass €15,600 in 12 months.

Do I pay social insurance in Cyprus if I work for my UK company?

If you work in Cyprus on a permanent basis, you normally pay into the Cyprus system. A temporary posting of up to 24 months can stay in UK National Insurance with a certificate of coverage.

What visa do I need to run a business from Cyprus?

It depends on the structure. Keeping a foreign company with clients abroad often fits the digital nomad visa (net income of at least €3,500 a month). Running a Cyprus company usually means a work permit through a company of foreign interests or the start-up visa. See the entrepreneurs hub.

Are UK director's fees taxed in the UK if I live in Cyprus?

Yes, they can be. Article 15 of the UK–Cyprus treaty lets the UK tax fees a UK company pays to its directors, wherever they live. Cyprus taxes them as well and gives credit for the UK tax, so most founders switch to dividends or a Cyprus salary after moving.

How does UK tax work if I work remotely from Cyprus for a UK company?

Once you're non-UK resident under the Statutory Residence Test, salary for work physically done in Cyprus is normally taxable in Cyprus, not the UK. Days you work in the UK stay taxable in the UK, and you use form P85 or Self Assessment to stop UK tax being deducted.

Do I need to tell Companies House that I've moved to Cyprus?

Yes. Update your residential address and country of residence within 14 days. The company must keep a registered office in the UK, and since 18 November 2025 every director must have verified their identity with Companies House.

Is it possible to keep running a UK company from Cyprus for a short time?

Short trips are rarely a problem. What matters is where the company's key decisions are made over time and how much of your working time you spend in Cyprus. Under the OECD's 2025 guidance, working from a home office abroad for less than 50% of your time over 12 months generally doesn't create a permanent establishment.

Running a UK Business from Abroad: The Cyprus Guide (2026)

Running a UK Business from Abroad: How It Works When You Live in Cyprus

You can run a UK or other foreign business while living in Paphos, but where the company is managed decides where it pays tax. Pick one of four structures before you move: keep it UK-managed, move to a Cyprus company, run both for a transition, or sell.

JJason 15 min read Last verified 27 September 2026

Get my structure checked Set up a Cyprus company

The short version

A company is taxed where it is managed and controlled. Cyprus uses this test for every company; the UK uses it for non-UK companies and taxes UK-incorporated ones regardless.

A UK Ltd run from Paphos can become dual resident. The UK–Cyprus treaty (Article 4(4)) then needs the two tax authorities to agree, and most treaty relief is lost until they do.

Working from a Cyprus home office more than 50% of the time can create a Cyprus permanent establishment of your foreign company (OECD guidance, November 2025).

A Cyprus company run from Cyprus pays 15% corporate tax; a non-dom owner pays 2.65% GeSY on dividends and no SDC.

Cyprus VAT registration starts at €15,600 of sales in 12 months, and a non-established business making taxable supplies here has no threshold at all.

Running a UK business from abroad: the one rule that decides your tax

Your company pays tax where its central management and control sits — where the big decisions are really made, by whoever really makes them.

Cyprus applies this test to every company: a company is Cyprus tax resident if it is managed and controlled in Cyprus, wherever it was registered. The UK applies it to foreign companies. HMRC's International Manual (INTM120060) describes it as "the highest level of control of the business", and says it can sit with a single controlling shareholder rather than the board.

The UK adds one more rule: a company incorporated in the UK is always UK resident (CTA 2009 s14). So the UK never lets go of a UK Ltd, while Cyprus can also claim it once you run it from here.

That is why the question is not "can I run my business from Cyprus?" (you can) but "which company, managed by whom, from where?" The four answers below cover almost every founder. Last checked against HMRC manuals, the UK–Cyprus treaty and Cyprus Tax Department sources in September 2026.

Four structures for running a business from Cyprus

Keep UK company, UK-managed

You step back

Wins 4 of 6

Move to a Cyprus company

You run it here

Wins 5 of 6

Run both

Transition

Wins 1 of 6

Keep UK company, run it yourself from Cyprus

The default most people fall into

Where the company is resident

UK only

Cyprus only

One each

UK and Cyprus (dual)

Corporate tax

19–25% (UK)

15% (Cyprus)

Split by what each does

Disputed until authorities agree

Tax on your dividends as a non-dom

2.65% GeSY in Cyprus

2.65% GeSY, but company-level risk

Needs real people in the UK

Yes — UK directors who decide

Yes, for the UK side

No, but that's the problem

Set-up and running cost

Low

€1,900–€2,300 + audit each year

Highest: two sets of accounts

Low now, high if challenged

Risk level

Low if genuine

Low with substance

Medium: transfer pricing

High

The verdict

For most founders who genuinely move, a Cyprus company run from Cyprus is the cleanest option. Keeping the UK company only works if someone in the UK really runs it. The fourth column — carrying on as before from a laptop in Paphos — is what most people drift into, and it is the one that causes trouble. Read the seven risks of running a UK company from Cyprus.

Option 1: keep the UK company and keep it UK-managed

This works when the business can run without you making the decisions. You appoint UK-based directors who genuinely manage it, you hold board meetings in the UK where the real decisions are taken, and you become a shareholder who takes dividends.

A balcony desk above Coral Bay at golden hour — Coral Bay, a short drive north of Paphos

HMRC's manual is blunt about paper arrangements: board meetings only matter if the board really exercises control at them (INTM120180). If your UK "directors" simply sign what you email from Paphos, control is with you, in Cyprus.

UK corporation tax stays at 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between. Dividends you receive as a Cyprus-resident non-dom carry the 2.65% GeSY contribution and no Cyprus SDC. Remember the UK's five-year rule on dividends if you might go back.

The Companies House side

Nothing in UK company law stops a director living in Cyprus, but the paperwork follows you:

Registered office: the company must keep a physical registered office address in the UK, in the same part of the UK it was registered in. Your Paphos flat can't be it; an accountant's or formation agent's address can.
Your details: tell Companies House within 14 days that your residential address and country of residence have changed.
Identity verification: since 18 November 2025 every director must verify their identity with Companies House. You can do it from Cyprus through GOV.UK One Login or through an authorised agent, and the company can't file its confirmation statement until all its directors are verified.

Option 2: move the business into a Cyprus company

If you're going to live in Paphos and run the business yourself, a Cyprus company that you manage from Cyprus lines everything up. The company is Cyprus resident, pays 15%, and you're its resident director — which also satisfies the business condition of the 60-day rule.

A laptop by the window of a stone village house with green winter hills outside — Winter turns the hills behind Paphos green

What you need:

A Cyprus Ltd — about €1,900–€2,300 to form, 6–10 working days. See our company formation guide.
A Cyprus bank account the company actually uses.
A Cyprus accountant and auditor. Every Cyprus company needs audited (or, if small, reviewed) accounts.
Real substance: decisions, records and contracts made here.
Clients who will contract with the new company. New contracts are easy; moving existing contracts may need client consent.

If you're a UK-only passport holder, the Cyprus company is also usually your route to a work and residence permit. Our entrepreneurs hub explains the €200,000 company-of-foreign-interests route and the alternatives.

Option 3: run both companies for a transition

Many founders keep the UK company for existing UK contracts and start new work in the Cyprus company. It works, but it has rules:

Each company must be managed where it is resident. If you run both from Cyprus, the UK one is dual resident again.
Intercompany deals must be at arm's length. If the UK company subcontracts to the Cyprus one, the price must be what unrelated parties would agree. That's transfer pricing, and both tax authorities can challenge it.
Two sets of compliance. UK accounts and Companies House filings, plus the Cyprus audit, tax return and possibly VAT.

Set an end date. Most founders find that running two companies costs more than it saves after a year or two.

Option 4: sell or close the UK business

If you're selling, timing matters more than structure. Cyprus doesn't tax gains on shares (unless the company holds Cyprus property). The UK doesn't normally tax a non-resident's gain on shares in a UK trading company. But if you were UK resident for 4 of the 7 tax years before leaving and you return within 5 years, the gain is taxed in the year you come back.

If you're closing the UK company to carry on the same work through a Cyprus company, beware ITTOIA 2005 s396B: a winding-up distribution can be taxed as income if you carry on a similar trade within 2 years and avoiding tax was a main purpose. See our entrepreneurs hub for exit timing.

Paying yourself from abroad: salary, director's fees and dividends

How you take money out matters as much as which company you use. The UK–Cyprus treaty treats each type of payment differently.

Payment from a UK company	Who can tax it once you live in Cyprus	What it means
Dividends	Cyprus (the UK charges no tax on a non-resident's UK dividends in practice)	A non-dom pays 0% SDC and the 2.65% GeSY contribution. Watch the UK five-year rule.
Director's fees	The UK and Cyprus (Article 15)	The UK keeps the right to tax fees paid by a UK company to its directors, wherever they live. Cyprus taxes them too and gives credit for the UK tax.
Salary for work done in Cyprus	Mainly Cyprus (Article 14)	Employment income is taxed where the work is physically done. Stop UK PAYE with form P85 and an NT code, or through your Self Assessment return.
Salary for days worked in the UK	The UK	Keep a work-day diary. Days you work in the UK stay taxable there.

A person on a video call from a shaded balcony in Paphos, seen from behind — Morning calls with the UK, two hours behind

What this means for you: a founder who keeps a UK company usually stops paying themselves UK director's fees once they've moved, and takes dividends instead. If the UK company is genuinely run by a UK board, that is simple. If it isn't, fix the residence problem first, because the payment type doesn't cure a company run from the wrong country.

If you move the business into a Cyprus company, you'll normally pay yourself a Cyprus salary (at least €2,500 a month if you need a director work permit) and take the rest as dividends. New Cyprus residents can exempt 20% of a salary (up to €8,550 a year) for 7 years, or 50% of a salary over €55,000 for up to 17 years, if they meet the conditions.

Free introduction

Not sure which structure fits?

We introduce you to a vetted adviser who works on both UK and Cyprus tax for owner-managed businesses. Bring your accounts and your plans; they'll tell you which of the four options fits and what it costs.

Company residence and PE risk reviewed
Keep, move, run both or sell — with the numbers
Cyprus company set-up co-ordinated if you need one

Founder-led. Replies within one working day.

Permanent establishment: the home office problem

A permanent establishment (PE) is a taxable presence of a foreign company in another country. Under Article 5 of the UK–Cyprus treaty, it's "a fixed place of business through which the business of an enterprise is wholly or partly carried on", and it expressly includes a place of management and an office. A person who habitually concludes contracts for the company can also create one.

A closed laptop, sunglasses and coffee on a desk by a window framed with bougainvillea — A home office in Paphos

So even a UK-resident company can owe Cyprus tax on the profits linked to your work here. The OECD's November 2025 update to its treaty commentary gives a rule of thumb for home offices: working from home in the other country for less than 50% of your working time over 12 months generally doesn't create a PE. Above that, it depends on whether the company has a genuine commercial reason for you being there. Moving for the lifestyle isn't one.

The reverse also applies. A Cyprus company whose director spends months working from a UK home or office can create a UK PE — and the UK has widened its own PE definition for periods from 1 January 2026.

Watch out

The same rules apply to US and other foreign companies

Nothing here is UK-specific on the Cyprus side. A US LLC, an Irish Ltd or a Dubai free-zone company run day to day from Paphos can be Cyprus resident or have a Cyprus PE. The treaty that applies (if any) decides how the double tax is resolved, so get advice from someone who knows that country as well as Cyprus.

VAT when you run a business from Cyprus

A Cyprus company must register for VAT once its taxable supplies pass €15,600 in the previous 12 months, or will pass it in the next 30 days. The standard rate is 19%, and returns are quarterly, due by the 10th day of the second month after each quarter.

What changes for a foreign business:

Services to business clients abroad are generally taxed where the client is. The client accounts for VAT under the reverse charge, and you show the sale on your Cyprus return (and, for EU clients, on the VIES recapitulative statement).
A foreign company making taxable supplies in Cyprus that isn't established here has no registration threshold — it must register from the first sale.
Getting reverse charge wrong costs €200 per return, up to €4,000.
The UK side: a UK company keeps its UK VAT registration if it's over £90,000 of taxable turnover or registered voluntarily. A non-UK company selling to UK consumers has no UK threshold.

More on the traps in our Cyprus VAT mistakes article.

If your Cyprus company pays you a salary, these apply on top of income tax. Self-employed people pay 16.6% social insurance on their own account.

Contribution	Employee / you	Employer (company)
Social insurance	8.8%	8.8%
GeSY (national health system)	2.65%	2.90%
Social cohesion fund	—	2.0%
Redundancy fund	—	1.2%
Human resource development fund	—	0.5%
Central holiday fund (unless exempt)	—	8.0%
Earnings ceiling for social insurance	€68,904 a year	€68,904 a year

Rates from PwC Worldwide Tax Summaries (last reviewed August 2026) and businessincyprus.gov.cy. GeSY on dividends, rent and interest is 2.65%, capped with other GeSY income at €180,000 a year. If you work in Cyprus for good you normally pay here, not UK National Insurance; a temporary posting of up to 24 months can stay in UK NI with a certificate of coverage.

Banking and payments

Your Cyprus company needs a Cyprus bank account that it actually uses. Money flowing through a UK account to a company claiming to be run from Cyprus weakens the substance argument, and banks here ask hard questions about source of funds.

Limassol skyline in morning haze from the coast road, with palms and a calm sea — The Limassol seafront from the coast road

Practical points:

Opening a corporate account takes 3–6 weeks with a complete file. Bank of Cyprus and Eurobank are the two largest banks.
Payment platforms (Wise, Revolut Business and similar) are useful for multi-currency invoicing but don't replace a Cyprus bank for substance or for most permit applications.
Keep your UK company's UK account if the UK company stays UK-managed.

Our company bank account service covers the introduction and the document pack.

Before you move: a founder's checklist

Tick these off before you hand over the UK office keys.

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1 Structure

Decide: keep, move, run both or sellWrite it down with your adviser, including an end date for any transition.
Check where each company will be managedName who makes the decisions and where they'll be.
Review client contractsCan they be novated to a Cyprus company?

2 Tax

Plan your UK departure date under the SRTSplit-year treatment can apply in the year you leave.
Check the five-year rule on dividends and gainsEspecially after the 2026 changes.
Claim Cyprus non-dom status in your first yearSee the non-dom definition, then check your route with the Cyprus tax route finder.

3 Practical

Choose your residence permit routeDirector permit, start-up visa, digital nomad visa or permanent residence.
Line up a Cyprus accountant and auditor
Open a Cyprus company bank accountStart early; it's the slowest step.

Couples strolling the Kato Paphos promenade at dusk under palm trees — The Kato Paphos promenade after work

Frequently asked questions

Yes, but if you manage a UK company from Cyprus it can become tax resident in Cyprus as well as the UK, and your home office can create a Cyprus permanent establishment. Either keep genuine UK management or move the business into a Cyprus company.

Get the structure right before you move

A short conversation with a UK–Cyprus adviser now is far cheaper than unpicking dual residence later.

Talk to a UK–Cyprus tax adviser Start my relocation plan

Sources checked for this page

1.OECD — Cyprus tax residency rules (individuals and entities)Government
2.legislation.gov.uk — CTA 2009 s14 (UK-incorporated companies are UK resident)Government
3.legislation.gov.uk — CTA 2009 s18 (treaty non-residence)Government
4.HMRC International Manual INTM120060 — central management and controlGovernment
5.HMRC International Manual INTM120180 — board meetings and controlGovernment
6.HMRC International Manual INTM120085 — dual resident companiesGovernment
7.gov.uk — 2018 UK–Cyprus Double Taxation Convention (as amended)Government
8.legislation.gov.uk — CTA 2010 s1141 (permanent establishment)Government
9.OECD — 2025 update to the Model Tax Convention (home offices)Government
10.gov.uk — Corporation Tax rates and allowancesGovernment
11.legislation.gov.uk — ITA 2007 s812A (close company dividends, temporary non-residence)Government
12.legislation.gov.uk — TCGA 1992 s1M (gains during temporary non-residence)Government
13.legislation.gov.uk — ITTOIA 2005 s396B (winding-up anti-avoidance)Government
14.gov.uk — VAT registration thresholdGovernment
15.gov.uk — National Insurance for workers from the UK working in the EEAGovernment
16.PwC Worldwide Tax Summaries — Cyprus, taxes on corporate incomeProfessional
17.PwC Worldwide Tax Summaries — Cyprus, other taxes (VAT, social insurance)Professional
18.businessincyprus.gov.cy — Registering for income tax and VATGovernment
19.KPMG — Cyprus tax reform enacted, effective 1 January 2026Professional
20.Migration Department — Digital nomads and family membersGovernment
21.gov.uk — Verifying your identity for Companies HouseGovernment
22.gov.uk — Make changes to your limited company (14-day rule)Government
23.gov.uk — Registered office address rulesGovernment
24.gov.uk — Tax if you leave the UK (P85)Government
25.PwC Worldwide Tax Summaries — Cyprus, income determination (employment income exemptions)Professional
26.PwC Worldwide Tax Summaries — Cyprus, corporate residenceProfessional

Written by

Jason

Founder, Paphos Advisor

British founder who moved his family from the UK to Paphos in 2025. I write down what I learned doing it properly — the tax, the residency and the living-here detail — and introduce people to the specialists I’d use myself.

How I research and fact-check

Running a UK Business from Abroad: How It Works When You Live in Cyprus

Running a UK business from abroad: the one rule that decides your tax

Four structures for running a business from Cyprus

Option 1: keep the UK company and keep it UK-managed

The Companies House side

Option 2: move the business into a Cyprus company

Option 3: run both companies for a transition

Option 4: sell or close the UK business

Paying yourself from abroad: salary, director's fees and dividends

Not sure which structure fits?

Permanent establishment: the home office problem

VAT when you run a business from Cyprus

Social insurance and health contributions in Cyprus (2026)

Banking and payments

Before you move: a founder's checklist

Frequently asked questions

Can I run my UK business from Cyprus?

How is a company's tax residence decided in Cyprus?

Is my UK company still UK tax resident if I move abroad?

Do I need to register my foreign company for VAT in Cyprus?

Do I pay social insurance in Cyprus if I work for my UK company?

What visa do I need to run a business from Cyprus?

Are UK director's fees taxed in the UK if I live in Cyprus?

How does UK tax work if I work remotely from Cyprus for a UK company?

Do I need to tell Companies House that I've moved to Cyprus?

Is it possible to keep running a UK company from Cyprus for a short time?

Sources checked for this page

Keep reading

Running a UK business from abroad: the one rule that decides your tax

Four structures for running a business from Cyprus

Option 1: keep the UK company and keep it UK-managed

The Companies House side

Option 2: move the business into a Cyprus company

Option 3: run both companies for a transition

Option 4: sell or close the UK business

Paying yourself from abroad: salary, director's fees and dividends

Not sure which structure fits?

Permanent establishment: the home office problem

VAT when you run a business from Cyprus

Social insurance and health contributions in Cyprus (2026)

Before you move: a founder's checklist

Frequently asked questions

Can I run my UK business from Cyprus?

How is a company's tax residence decided in Cyprus?

Is my UK company still UK tax resident if I move abroad?

Do I need to register my foreign company for VAT in Cyprus?

Do I pay social insurance in Cyprus if I work for my UK company?

What visa do I need to run a business from Cyprus?

Are UK director's fees taxed in the UK if I live in Cyprus?

How does UK tax work if I work remotely from Cyprus for a UK company?

Do I need to tell Companies House that I've moved to Cyprus?

Is it possible to keep running a UK company from Cyprus for a short time?