Setting up a company in Cyprus in 2026: a guide to the process, costs and substance for Vietnamese entrepreneurs

Setting up a company in Cyprus is becoming an increasingly popular choice for Vietnamese entrepreneurs who want to build a holding-operating structure in the EU, with 15% corporate tax and a network of double taxation agreements with more than 65 countries. Incorporating a Cyprus Private Limited company takes 8–15 business days and costs 1,200–3,000 EUR in the first year, with no legal minimum capital requirement. This article analyses in full the types of legal entity, the step-by-step process, substance requirements and key points for Vietnamese HNWIs taking their businesses abroad.

Why set up a company in Cyprus

Cyprus is one of the most attractive corporate destinations in the EU for international entrepreneurs. After the tax reform of 01/01/2026, although corporate tax rose from 12.5% to 15%, its core incentives keep it among the most competitive in the European Union.

Cyprus has been an EU member since 2004, uses the euro, has an English-derived Common Law legal system, and English is widely used in international business. The island has 65+ Double Taxation Agreements (DTAs) covering most major markets — including Vietnam, China, India, the US, the UK, Germany, France, Russia and the UAE.

According to data published by theDepartment of Registrar of Companies and Intellectual Property, the total number of legal entities registered inCyprushad exceeded 230,000 by the end of 2025, more than 60% of which are international companies serving holdings, IP licensing, e-commerce, fintech and shipping.

Core tax advantages

Besides 15% corporate tax, Cyprus has many special incentives that make the actual effective tax rate much lower. The full picture of the changes after the 01/01/2026 reform — including corporate tax, SDC, CGT and non-dom — is analysed in detail in the articlethe Cyprus tax systemfor Vietnamese investors.

Participation exemption: dividends received from foreign subsidiaries are almost entirely tax-exempt in Cyprus. A Cyprus holding company receiving dividends from a Vietnamese operating company (taxed at 20% in Vietnam) will not be taxed again in Cyprus.

The IP Box cuts tax by up to 80% on qualifying IP income. The effective tax rate on IP can be as low as 2.5%. This is the most competitive incentive in the EU for tech start-ups and creative businesses.

The Notional Interest Deduction (NID) allows a deduction for “notional interest” of up to 80% of taxable profit when raising equity instead of borrowing. The 120% R&D super-deduction applies until 2030. Stamp duty was abolished completely from 01/01/2026.

When Vietnamese entrepreneurs should set up a Cyprus company

Setting up a company in Cyprus suits three specific groups of Vietnamese entrepreneurs. The first is HNWIs planning non-dom status under the 60-day rule, using a Cyprus Limited company as their operating company to enjoy 0% SDC on dividends for 17 years.

The second is Vietnamese businesses with exports, IP licensing or international e-commerce. A Cyprus holding → Vietnam operating structure takes advantage of the Vietnam–Cyprus DTA and the EU Parent-Subsidiary Directive for the EU market.

The third is tech and crypto start-ups that need a robust EU structure with low taxes. Cyprus has a flat 8% tax on crypto gains from 2026 (excluding mining) and a clear regulatory framework — ahead of most other EU countries.

Types of legal entity in Cyprus

The Cyprus Companies Law Cap. 113 provides for several types of legal entity, each suited to different business purposes. Vietnamese entrepreneurs need to understand them clearly before choosing a structure.

Private Limited Company (Ltd)

This is the most common type, accounting for more than 95% of international companies in Cyprus. Key features: at least 1 shareholder and 1 director, up to 50 shareholders, and no legal minimum capital requirement (in practice usually 1,000 EUR divided into 1,000 shares × 1 EUR).

Shareholders’ liability is limited to the value of their registered shares — an important layer of personal asset protection. The company name must end in “Limited” or “Ltd”. Bearer shares may not be issued — all shares must be registered to named holders, even where nominee arrangements exist.

A Private Ltd suits almost every business purpose: holding, operating, e-commerce, consulting, IP licensing and fund management. It is the recommended structure for 99% of Vietnamese entrepreneurs setting up a company in Cyprus for the first time.

Public Limited Company (PLC)

A PLC is for large businesses that may list on a stock exchange or issue shares publicly. It requires at least 7 shareholders, at least 2 directors and a minimum share capital of 25,629 EUR.

A PLC carries heavier transparency and compliance obligations — public financial statements, a board with binding duties and broader shareholder access rights. Most Vietnamese entrepreneurs do not need a PLC unless they have specific plans to list on the Cyprus Stock Exchange or European exchanges.

Branch Office

A branch is an office in Cyprus of a foreign (parent) company, not a separate legal entity. A branch is recognised to operate in Cyprus by registering with the Registrar of Companies and appointing a local authorised representative.

Advantages: no separate legal entity needs to be set up, and initial compliance is simpler. Disadvantages: the parent company has unlimited liability for the branch’s activities in Cyprus, without the protection of limited liability. Branches are rarely used because of their high risk and complex taxation.

Partnerships and the Societas Europaea

Partnerships (general or limited) suit 2–20 partners under the Partnership and Business Names Law Cap. 116. A general partnership has unlimited liability for all partners, while a limited partnership allows some partners’ liability to be limited to their contributions.

The Societas Europaea (SE) is a special type of Public Limited Company under EU regulation that can move its registered office between EU countries without dissolving and re-registering. An SE requires a minimum capital of 120,000 EUR. It is a structure for large EU multinational groups — not suitable for Vietnamese entrepreneurs just starting out.

The 7-step process for setting up a company in Cyprus

The process of setting up a company in Cyprus is standardised and can be completed 100% remotely through a Power of Attorney. The total time is 8–15 business days, depending on how well the documents are prepared and the Registrar’s workload.

Step 1: KYC and due diligence

This is the first and most important step. Under Cyprus anti-money laundering (AML) law, every licensed service provider must complete full KYC before starting the formation procedure.

The KYC file for each shareholder and director includes: a certified copy of a valid passport, proof of residential address within the last 3 months (utility bill, bank statement), a reference letter from a bank or professional lawyer, and a declaration of source of funds and source of wealth.

For Vietnamese entrepreneurs, the file also needs: certified English translations and consular legalisation (until 11/09/2026) or an Apostille (after 11/09/2026). The total timeline for KYC is about 2–5 business days.

Step 2: Reserving and approving the company name

The company name is submitted to the Registrar to check for duplicates. The rules: it must not be too similar to or the same as a registered name, must not imply regulated activities (Bank, Insurance, Trust) without a licence, and must end in “Limited” or “Ltd”.

Entrepreneurs should propose 3–5 alternative names in order of preference. The check fee is about 20 EUR per name. Standard approval takes 1–3 business days, or 1 day express for a higher fee. An approved name is reserved for 6 months.

Step 3: Drafting the Memorandum and Articles of Association

The M&A is the company’s “constitution”, drafted in both Greek and English. The Memorandum sets out the company’s objects, share capital and liability principles. The Articles govern internal operations — directors’ powers, shareholder meetings and share transfers.

According to the Cyprus Bar Association, the M&A must be drafted and signed by a lawyer licensed in Cyprus. Entrepreneurs cannot draft it themselves — this is a strict legal requirement. Legal fees for a standard M&A are 500–1,500 EUR depending on complexity.

Step 4: Filing HE1, HE2 and HE3 with the Registrar

Once the M&A is complete, the official forms are filed with the Department of Registrar of Companies. HE1 is the lawyer’s declaration confirming compliance with the law and must bear the Cyprus Bar Association stamp — the only remaining fee after stamp duty was abolished from 01/01/2026.

HE2 notifies the registered office address in Cyprus. HE3 notifies the appointment of the directors and secretary. The total government fee to the Registrar is about 165 EUR (standard) or 235 EUR (express). Processing takes 5–7 business days, or can be cut to 1 day express.

Step 5: Receiving the Certificate of Incorporation

Once the Registrar approves, the Certificate of Incorporation is issued — the company’s “birth certificate”. Along with it, the company also receives: the Certificate of Directors and Secretary, the Certificate of Shareholders and Registered Office, and a certified copy of the M&A.

At this point, the company legally exists. However, it cannot start trading yet — it still needs to register for tax and open a bank account.

Step 6: Tax (TIC) and VAT registration

Every Cypriot company must register with the Tax Department within 60 days of incorporation to obtain a Tax Identification Code (TIC). This is a mandatory condition for filing tax returns and issuing invoices.

VAT registration is mandatory if annual taxable turnover exceeds the 15,600 EUR threshold, or immediately for intra-EU trade in goods and certain services. The standard VAT rate is 19%, with reduced rates of 9% and 5% for some items. VAT registration takes 5–10 days.

UBO Registry: since 2021, every Cypriot company must register its Ultimate Beneficial Owner with the UBO Registry. This is information about the individual who ultimately controls the company; it is not public but is shared with EU authorities.

Step 7: Opening a bank account

This is usually the most time-consuming step, taking from 2 weeks to 3 months depending on the bank and the client’s profile. Cypriot banks apply very strict KYC/AML — especially for non-EU clients.

Traditional banks (Bank of Cyprus, Hellenic Bank, Eurobank Cyprus) take longer but allow full international transactions. An EMI (Electronic Money Institution) such as Revolut Business opens within a few days but has limits on some cross-border transactions.

The entrepreneur must be physically present in Cyprus to sign the account opening — this part cannot be delegated through a POA. This is an inconvenience for Vietnamese entrepreneurs, who must fly over at least once.

Set-up and annual maintenance costs

The cost of setting up a company in Cyprus has two parts: one-off (formation) costs and annual maintenance costs. Understanding both helps Vietnamese entrepreneurs budget accurately.

First-year formation costs

The total first-year cost of a standard Cyprus Private Limited company ranges from 1,200–3,000 EUR + 19% VAT depending on the service package. The breakdown:

• Registrar government fee: 165 EUR (standard) or 235 EUR (express)
• Stamp on HE1 (Cyprus Bar Association): about 100 EUR (only the HE1 stamp, not government stamp duty — government stamp duty was abolished from 01/01/2026)
• Lawyer’s fees for drafting the M&A and filing: 800–1,500 EUR + VAT
• First-year registered office address fee: 500–1,000 EUR + VAT
• First-year company secretary fee: 300–600 EUR + VAT
• Tax/VAT registration: 100–200 EURO + VAT

An express package with same-day incorporation can cost 3,000–5,000 EUR + VAT. For complex structures (a trust layer, multiple shareholders, a special purpose vehicle), costs can rise by 50–100%.

Annual maintenance costs

After the first year, the annual maintenance cost of a Cyprus Limited company is about 2,500–3,500 EUR + VAT, including:

• Annual audit (mandatory for every Cypriot company regardless of size): 900–2,500 EUR depending on turnover and complexity
• Bookkeeping and quarterly VAT returns: 1,000–2,000 EUR
• Corporate tax return: 300–600 EURO
• Registered office and company secretary: 800–1,500 EUR
• Annual return HE32 filing: 100 EURO
• UBO Registry annual confirmation: 50–100 EURO

The 350 EUR annual levy was abolished completely in 2024 under the Companies (Amendment) Law N.25(I)/2024 — a previously annoying annual cost that no longer exists.

Comparison with other jurisdictions

Compared with other EU jurisdictions, Cyprus is among the cheapest for formation costs:

• Cyprus: 1,200–3,000 EUR set-up, 2,500–3,500 EUR a year
• Estonia: 800–1,500 EUR set-up, 1,000–2,000 EUR a year (e-residency allows online set-up)
• Ireland: 2,500–4,500 EUR set-up, 3,500–5,500 EUR a year
• Malta: 2,000–3,500 EUR set-up, 3,000–4,500 EUR a year
• Luxembourg: 5,000–10,000 EUR set-up, 8,000–15,000 EUR a year
• Singapore: 800–1,500 SGD set-up (equivalent to 550–1,000 EUR), 1,500–3,000 EUR a year

Cyprus is significantly cheaper than Ireland and Luxembourg and on a par with Malta and Estonia. Singapore is cheaper but offers no EU access — a big trade-off for Vietnamese businesses that want to enter the EU market.

Substance requirements — the deciding factor for tax residence

Substance is the most important technical requirement when setting up a company in Cyprus for tax planning. Without sufficient substance, a Cypriot company may not be recognised as tax resident — losing all its tax benefits and facing challenges from the Vietnamese or other tax authorities.

The “management and control” test

Under the 2026 reform, Cyprus applies two tax residence tests to companies in parallel:

Test 1 — the incorporation test (new): a company incorporated under Cypriot law is automatically treated as tax resident, unless a DTA provides otherwise.

Test 2 — the management and control test (traditional): a company whose “effective management and control” is in Cyprus is tax resident.

To be defensible in an audit and avoid challenges from other countries’ tax authorities, Vietnamese entrepreneurs should meet both tests. Test 2 is especially important because DTA tie-breakers are usually based on it.

Specific substance criteria

Full substance in Cyprus includes:

A majority of directors who are Cyprus tax residents. Board of Directors meetings held in Cyprus with formal minutes. Important business decisions made in Cyprus. A real office in Cyprus (not just a registered office address, but actual staff and activity).

The company’s main bank account in Cyprus. Accounting records kept in Cyprus. Important contracts signed in Cyprus. Local or cross-border staff working for the company with Cypriot social insurance.

The level of substance depends on the scale and nature of the activities. A holding company receiving passive dividend income needs less substance (1 Cypriot director + an office + accounts). An operating company with real activities needs more substance (several Cypriot directors, staff, a significant office and specific activities).

The risk of a “shell company” without substance

A shell company without real substance is the biggest risk Vietnamese entrepreneurs must avoid. The Vietnamese tax authorities are increasingly strict with foreign holding structures that lack substance — they may treat them as “tax avoidance” and reclaim the tax.

The EU also has the DAC6 directive requiring the reporting of cross-border structures with hallmarks of tax avoidance. Cyprus has implemented DAC6 since 2021 — nominee directors without real substance may trigger reporting.

To avoid these risks, Vietnamese entrepreneurs should invest properly in substance from the first year — this is not the place to cut costs. An investment of 500–1,500 EUR a month in professional substance can save 50,000–500,000 EUR in tax if challenged.

Special notes for Vietnamese entrepreneurs

Setting up a company in Cyprus is not a generic process — Vietnamese entrepreneurs face some specific requirements and risks that other jurisdictions do not have.

Legalising Vietnamese documents

All Vietnamese documents (passports, Vietnamese business registrations, Vietnamese tax returns, criminal record certificates, marriage certificates) must be legalised and translated into English or Greek.

Until 11/09/2026, the process is three-step consular legalisation through the Consular Department of Vietnam’s Ministry of Foreign Affairs and the Cyprus Embassy in Bangkok. It takes 4–6 weeks and costs 1,500–3,000 USD.

From 11/09/2026, the Apostille takes effect for Vietnam — the process is reduced to 1 step, taking 1–2 weeks and costing 500–1,000 USD. Entrepreneurs should consider the timing of their formation application to take advantage of the new process.

Vietnam’s CFC (Controlled Foreign Company) rules

Vietnamese tax law has CFC rules under Circular 41/2025/TT-BTC: if a Vietnamese individual or organisation controls a foreign company (more than 50% of capital) in a low-tax jurisdiction (<10% effective rate), the foreign company’s income may be attributed to Vietnam and taxed there.

Cyprus, with 15% corporate tax, generally does not fall under Vietnam’s CFC rules. However, special structures (IP Box reducing tax to 2.5%, NID significantly reducing tax) may be claimed by Vietnam to have a low effective rate. Entrepreneurs should get advice from a cross-border tax specialist before setting up.

VND–EUR transfers and CRS reporting

Transferring money from Vietnam to Cyprus to contribute capital must comply with Vietnam’s Foreign Exchange Ordinance. Amounts of 1 million USD or more must be declared to the State Bank of Vietnam. The purpose must be clear (direct outward investment).

Cyprus applies the CRS (Common Reporting Standard) in full — the Cypriot bank accounts of Vietnamese UBOs are automatically reported to Vietnam through Vietnam’s General Department of Taxation every year. Assets in Cyprus cannot be “hidden” from Vietnam.

This is a mandatory global rule — not something specific to Cyprus. Entrepreneurs must declare their income from Cyprus honestly in Vietnam and claim tax credits under the Vietnam–Cyprus DTA.

Visas and residence rights when setting up a company

Vietnamese entrepreneurs who set up a Cypriot company do not automatically gain residence rights. There are three ways to combine a company with residency:

Option 1: Cyprus PR Category 6.2 (300,000 EUR in real estate + 50,000 EUR of passive income). Owning a Cypriot company can help meet the passive income requirement.

Option 2: A Cyprus High-Skilled Employment Permit orEU Blue Card Cyprusthrough your own Cypriot company (requiring a salary of more than 2,500 EUR a month and a degree/2 years of experience). This is the fastest path to citizenship (4–5 years). You can also start withPink Slip Cyprusfor temporary residence (TRC) while setting up the company.

Option 3: The Cyprus Startup Visa (10,000 EUR of capital, 25%+ equity, an innovative business). Suited to tech entrepreneurs and early-stage start-ups.

Comparing Cyprus with other jurisdictions for holding companies

Before deciding to set up a company in Cyprus, Vietnamese entrepreneurs should understand Cyprus’s competitive position compared with other popular jurisdictions in the EU and Asia. A side-by-side comparison helps determine whether Cyprus really is the optimal choice for their specific situation.

Cyprus vs Estonia

Estonia is famous for its e-Residency programme, which allows a company to be set up entirely online within a few hours. Estonian corporate tax is 0% on retained profits (levied only on distribution) — suited to businesses that reinvest heavily.

However, Estonia has only 60+ DTAs compared with Cyprus’s 65+, and crucially, Estonia has no DTA with Vietnam. This means dividends from Vietnam to Estonia do not benefit from treaty tax credits — resulting in double taxation.

Cyprus has a full DTA with Vietnam from 2010, with dividend withholding tax of at most 5%. This is a decisive advantage for Vietnamese businesses with operations in Vietnam. Cyprus also has a professionally run Tax Department with clear advisory channels.

Cyprus vs Ireland

Ireland previously had 12.5% corporate tax — the lowest among the large EU economies. After OECD Pillar Two, Ireland raised it to 15% for large groups but kept 12.5% for SMEs. This is a small advantage over Cyprus’s standard 15%.

However, Ireland is significantly more expensive than Cyprus: set-up costs 2,500–4,500 EUR and maintenance 3,500–5,500 EUR a year. Ireland also has labour costs 60–80% higher and offices 2–3 times more expensive. The total cost of doing business in Ireland is 50–70% higher than in Cyprus for the same scale.

Ireland has had a DTA with Vietnam since 2009. However, Ireland’s substance requirements are harder to meet than Cyprus’s — taking 6–12 months to establish full substance compared with 3 months in Cyprus.

Cyprus vs Singapore

Singapore is Cyprus’s main Asian rival for Vietnamese entrepreneurs. Singapore’s corporate tax of 17% is higher than Cyprus’s, but SMEs enjoy many exemptions (75% exemption on the first 10,000 SGD, 50% on the next 190,000 SGD).

Singapore’s main advantages: proximity to Vietnam (a 5–6 hour flight vs 13–16 hours to Cyprus), a similar time zone (1 hour difference vs 5 hours with Cyprus), a very large Vietnamese community and easier banking. Singapore also has a good DTA with Vietnam.

However, Singapore offers no EU access. Vietnamese entrepreneurs who want to enter the EU market must go through an EU jurisdiction — Cyprus is the best choice thanks to its low costs and DTA with Vietnam.

The optimal strategy for many established Vietnamese entrepreneurs is to combine the two: Singapore for Asian operations (close to Vietnam, convenient to run) and Cyprus for EU operations (EU market access, holding European IP). The two jurisdictions complement each other rather than being mutually exclusive.

Running a Cyprus company after incorporation

Setting up a company in Cyprus is only the starting point. Running the company properly in the first 12 months determines whether the structure is defensible before the tax authorities and achieves its business goals. Vietnamese entrepreneurs often make a few common mistakes at this stage.

The first-year compliance calendar

Immediately after incorporation, the company must complete several tasks within 60 days: TIC registration with the Tax Department, VAT registration if applicable, UBO registration, opening a bank account, and signing contracts for the registered office and company secretary for the following year.

During the first year, recurring obligations include: filing 4 quarterly VAT returns (if VAT-registered), paying provisional corporate tax twice (usually in July and December), filing the HE32 annual return (within 28 days of the AGM) and confirming the UBO Registry entry each year.

At the end of the first year (after 31/12), the company must prepare financial statements and submit them for audit. The audit must be completed by 31/12 of the following year (for example, the 2026 accounts must be audited by 31/12/2027). According tothe Tax Department of the Cyprus Ministry of Finance, accounting records must be kept for at least 6 years.

Common mistakes to avoid

The first mistake: cutting audit costs in the first year. Some entrepreneurs choose the cheapest audit firm or delay the audit. Consequences: late penalties, professional audit firms refusing to take on the company later, and most importantly — without audited accounts, the company cannot be restructured, involved in M&A or wound up cleanly later.

The second mistake: not investing properly in substance. Some entrepreneurs hire a “nominee director” for 200 EUR a month instead of having a real Cypriot director. When the Vietnamese or UK tax authorities challenge the structure, the lack of evidence of substance leads to the loss of Cyprus tax residence and large tax exposure.

The third mistake: ignoring VAT compliance. Cyprus VAT has many complex rules on intra-EU trade, place of supply and reverse charge. Violations incur a penalty of 100 EUR per incorrect return plus interest of 3.5% a year. Accumulated over several years, this can reach tens of thousands of EUR.

The fourth mistake: mixing personal and company finances. Cypriot banks and the Tax Department closely monitor director loans and shareholder loans. Withdrawing company money for personal purposes other than through dividends or salary may be taxed as a distribution, with penalties.

Upgrading the structure as the business grows

After 12–24 months of stable operation, entrepreneurs often need to upgrade their structure to optimise taxes and protect assets. Common upgrades:

Adding a Cyprus Trust (or International Trust) for asset protection and estate planning. The trust can hold the shares of the Cyprus Limited company, creating a layer of protection against personal legal risks.

A multi-tier holding structure: separating the operating entity from the holding entity. The Cypriot operating company carries out business activities, while the Cypriot holding company holds the shares. This structure allows more flexible dividend distribution and better risk management.

Registering for the IP Box regime: if the company has significant IP income (royalties, licensing fees), registering for the IP Box reduces the effective tax rate to 2.5%. A consultant specialising in the IP Box is needed because the requirements are complex.

Summary and next steps

Setting up a company in Cyprus is a strategic decision for Vietnamese entrepreneurs who want to build an EU presence at an affordable cost with competitive tax incentives. A process of 8–15 days, first-year costs of 1,200–3,000 EUR and no minimum capital — the barriers to entry are much lower than 5–10 years ago.

However, successfully setting up a company is only the beginning. Running a Cypriot company sustainably over the long term requires serious investment in substance, compliance in both Cyprus and Vietnam, and professional tax structuring. Entrepreneurs who cut the wrong corners early on often pay a heavy price when challenged 3–5 years later.

The next step for Vietnamese entrepreneurs considering Cyprus is to work with a cross-border adviser to shape a structure that fits their specific business model — pure holding, operating, IP licensing, fund management or e-commerce all have different requirements. See our other analyses ofCyprus residency by investmentto make a comprehensive decision combining business with residency and tax planning.