Process of Relocation and Company Formation
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Step 1: The Path to a New Residence in Cyprus
The first and most important step on the path to forming a Cypriot Limited is securing a permanent residence on the island. Without proof of your presence, hardly any further step can be completed smoothly. After all, the Cypriot authorities want to be sure that you actually live permanently in Cyprus and not just on paper.
Since there is no registration system in Cyprus like in Germany, instead of a registration confirmation, you need a utility bill, for example for water or electricity, in your name. Here lies the first pitfall: If you rent a property in Cyprus (or even buy one), it must be ensured that the electricity or water bill can actually be transferred to your name. If this is not possible, the property cannot be used for your residence in Cyprus. This point is essential, as for various applications – including applying for Non-Dom status or a Tax Certificate – it is checked whether you have actually lived in the property. The checks are carried out based on the bills and actual consumption.
An internet contract alone is usually not sufficient to prove your center of life. It can only be useful as a supplement (e.g., for a partner). For yourself, you absolutely need a “real” utility bill, meaning water or electricity.
Already at this point, a clear advantage of Cyprus over Germany becomes apparent: While bureaucracy in Central Europe often requires endless procedures and waiting times, the process on the Mediterranean island is significantly streamlined. However, if you think Cypriots would simply let anyone get away without proof of residence, you are mistaken. The island may seem sunny and cozy, but when it comes to legal certainty and tax matters, the authorities are quite professional and consistent.
Step 2: Company Formation – Planning and Process
Once your residence is unequivocally established – and only then at the earliest – is the time for the formation of your Cypriot Limited. This is because the majority of directors of a Cypriot company must be resident in Cyprus. If you form the company before you yourself (or the majority of directors) are registered in Cyprus, you run the risk of not receiving a tax number for the company. Alternatively, a local director would have to be hired, which entails additional costs and dependencies.
Furthermore, as an emigrant from Germany, you are obliged to register foreign companies in the German Transparency Register within two weeks. Failure to meet this deadline can result in a fine of up to 50,000 Euros. At the same time, the new company formation remains subject to the German exit tax, as long as you are still liable for tax in Germany. This means: As long as you are not deregistered from Germany, you should be cautious with business activities (income, invoices) of the new Cypriot company.
For a seamless transition, it is advisable to relocate from Germany to Cyprus about four to six weeks before your planned deregistration date, rent (or acquire) a property there, and establish your residence. After the successful transfer of electricity or water to your name, you start the formation process. This takes on average around two weeks. Subsequently, you should plan about one to one and a half weeks for applying for your tax numbers, the VAT ID (if you offer VAT-liable services or goods), registration with social security, and setting up online accounts.
Usually, about three to three and a half weeks pass between establishing your residence and the point at which your Limited is fully operational, meaning you can issue invoices and conduct business worldwide. While this may seem unusually fast by German standards, it is a quite realistic timeframe in the relaxed yet professional Cypriot business world.
(Almost) Tax-Free Living in Cyprus
Enhance Quality of Life
- More than 300 Sunny Days a Year in Cyprus
- Summer Temperatures from March to October
- Secluded Coves, but also Party Beaches
- The Food is Excellent and Diverse
- Great and Open Entrepreneur Community
- Minimal Bureaucracy
- It is Very Easy to Live Freely in Cyprus
Step 3: The Yellow Slip (Your Residence Permit)
Parallel to your company formation, we usually book an appointment for the so-called Yellow Slip. This appointment takes place in the responsible district where your property is located. Since you must prove two billed months of social security, we book the appointment for approximately six to twelve weeks after you establish your residence (and possibly company formation). The simplest option to make the procedure as paperless as possible is to register as an EU employee in your own Cypriot company. Then you will not need any additional bank statements or proof of assets for the Yellow Slip appointment.
For the Yellow Slip appointment itself, all documents are perfectly prepared together so that everything can be completed stress-free within a few minutes.
Step 4: Registration with GESY, the State Health Service
As soon as you have received your Yellow Slip, nothing stands in the way of registration with GESY, the state health service. After registering and choosing your family doctor, you can apply for your European Health Insurance Card at the Citizen Service Center, which will be issued directly on site.
Step 5: The Non-Dom Status
The fifth and final step is finally applying for your Non-Dom status, which allows you tax-free dividend distributions from your Cypriot Limited for up to 17 years. This privilege should not be missed, especially since such a generous regulation would be almost unimaginable in Germany. However, patience is required: You can only obtain Non-Dom status after six months of residence, and it applies for the entire calendar year regardless of the issue date, provided you meet all requirements. Presence is verifiable through your utility bills (water or electricity), which should demonstrate continuous use over six months, as well as bank statements showing as many card payments in Cyprus as possible. Short trips to Germany or elsewhere are unproblematic, but longer absences should be avoided, especially in the first half year.
Achieved! With the receipt of Non-Dom status, you have not only gained the sun, the sea, and the relaxed quality of life in Cyprus, but also created an extremely advantageous tax environment for your company. With the knowledge that you can withdraw your dividends tax-free for decades, the chirping of the crickets feels even more idyllic – and the view of the German tax quagmire seems pleasantly distant.
Live Your Dream with Us!
Fulfill your dream and emigrate to Cyprus! Discover breathtaking landscapes, enjoy the Mediterranean climate, and immerse yourself in the vibrant culture. The warm community on the island welcomes you and offers you the perfect opportunity to start a new chapter in your life. Be inspired and live your dream in Cyprus!
