Self-Employed vs Limited Company in Cyprus (2025)
Read also the follow up article discussing the tax reform implications
1 Why compare right now?
Whether you sell mobile apps to international audience, build a SaaS for Limassol cafés, or bill a local agency by the hour, the Cyprus tax rules you face are identical. Your only structural choice is:
| Legal path | Best for … |
|---|---|
| Self-employed | Side-gig or client list with profit under ± €45 k |
| Cyprus Ltd | Remote dev / solo SaaS who needs liability shield, dividends, or bigger-company optics |
When I moved back to Cyprus after many years I was facing the question of self-employment vs Ltd for being able to clear the money I was paid for working remotely at Bold.org. Hopefully this article clears the question for you!
As of May 2025 the law still says 12.5 % corporate tax and 17 % dividend Special Defence Contribution (SDC). A draft bill to move those to 15 % and 5 % in 2026 is not enacted yet, so every number below is the current reality. I am writing a follow-up article to see if those changes affect current math.
2 TL;DR — who keeps more cash?
| Annual gross revenue | Net self-employed | Effective tax | Net Ltd (salary €19 500 + dividends) |
Effective tax | Winner |
|---|---|---|---|---|---|
| €30 000 | €21 620 | 27.9 % | €21 393 | 28.7 % | Self-employed |
| €60 000 | €36 755 | 38.7 % | €42 485 | 29.2 % | Ltd |
| €100 000 | €60 057 | 40.0 % | €70 608 | 29.4 % | Ltd |
| €150 000 | €90 557 | 39.6 % | €105 761 | 29.5 % | Ltd |
Assumptions
- Self-employed: no deductible expenses; Social Insurance (SI) on the 2025 cap (€66 612); GHS 4 %.
- Ltd: one employee (you) on €19 500 salary → 0 % personal-income tax; employer SI + GHS 11.7 %, employee SI + GHS 11.45 %; audit €1 200, bookkeeping €800, Registrar levy €350.
- All figures rounded; your mileage will vary with real expenses.
- You want to run tests yourself? Calculator
3 Quick definitions
- Self-employed – you register on SISnet, pay SI directly, and file a personal T.D1 return.
- Private Ltd – a company limited by shares where you are sole director-shareholder; must file audited accounts every year.
4 Direct taxes in 2025
| Tax | Self-employed | Ltd route |
|---|---|---|
| Personal-income tax | 0 % up to €19 500 → up to 35 % above €60 000 | 0 % on the €19 500 salary |
| Corporate income tax (CIT) | – | 12.5 % on profit |
| Dividend SDC | – | 17 % if Cyprus-domiciled |
| GHS on dividends | – | 2.65 % |
5 Social Insurance & GHS
| Contribution | Self-employed | Employee side | Employer side |
|---|---|---|---|
| Social Insurance | 16.6 % of insurable earnings | 8.8 % | 8.8 % |
| GHS | 4 % of income | 2.65 % | 2.90 % |
| Annual cap (2025) | €66 612 | same | same |
6 Hidden operating costs
| Cost | Sole trader | Ltd |
|---|---|---|
| Book-keeping SaaS / accountant | €0 – €300 (DIY possible) | €800 – €1 200 |
| Statutory audit | – | €1 000 – €1 800 |
| Registrar annual levy | – | €350 |
| VAT compliance | Must register > €15 600 turnover | same |
7 Scenario walk-throughs
A — €30 000
| Self-employed | Ltd | |
|---|---|---|
| Income tax | € 2 200 | 0 |
| Social Insurance | € 4 980 | € 2 282 (employer) + € 1 716 (employee) |
| GHS | € 1 200 | € 585 (salary + dividend) |
| Corporate tax | – | € 734 |
| Dividend SDC | – | € 873 |
| Running costs | – | € 2 350 |
| Net take-home | €21 620 | € 21 393 |
Result: at this income level the sole-trader wins by a hair and saves the admin hassle.
B — €60 000 full-time contractor
Self-employed: net €36 755 (38.7 % effective)
Ltd: net €42 485 (29.2 % effective) ➜ Ltd ahead × €5.7 k
C — €100 000 senior remote dev
Self-employed: net €60 057 (40.0 %)
Ltd: net €70 608 (29.4 %) ➜ Ltd ahead × €10.5 k
D — €150 000 solo SaaS
Self-employed: net €90 557 (39.6 %)
Ltd: net €105 761 (29.5 %) ➜ Ltd ahead × €15.2 k
8 Decision flow-chart (text)
-
Will your 2025 profit exceed ± €45 k?
No → self-employed keeps about the same at 45k but avoids admin hassle Yes → go to 2. -
Do you need liability protection or “corporate” optics for clients / app stores?
Yes → incorporate now.
No → if profit sits between €40 k–€80 k, run both scenarios with your real expenses; above €80 k a Ltd almost always wins.
9 DIY vs pay-for-help
| Task | DIY? | Typical fee |
|---|---|---|
| Register as self-employed | ✅ | €0 |
| Quarterly provisional-tax payments | ✅ | €150 / yr |
| Keep double-entry books for Ltd | ⚠️ time-sink | €50–€100 / mo |
| Prepare audited accounts | ❌ | €1 000–€1 800 / yr |
| File VAT returns | ✅ (few invoices) | €300–€600 / yr |
Rule of thumb: a one-person Ltd’s compliance stack costs €2.5 k–€3 k a year; a sole trader can stay under €500 if they do the paperwork themselves.
10 Checklists
Registering as self-employed
- Fill Form YKA 01-008 at the District SI Office.
- Activate SISnet → pick a notional-income band.
- Get TIN at the Tax Department.
- Register for GHS in Taxisnet.
- Add VAT once turnover > €15 600.
Incorporating a Ltd
- Hire a lawyer for drafting the necessary papers and reserve name. Cost me 800€.
- Open a business bank account (expect deep KYC).
- Obtain TIN + Taxisnet logins.
- Register as employer on ERGANI; run payroll.
- Book an auditor for year-end. Hook up bookkeeping service or pay the auditor to also do bookkeping
- Create a company stamp. Yes this is still used in 2025 regardless of the absurdity of how you create those.
11 FAQ
“Can I pay only dividends and skip salary?”
No. The Tax Department expects a market-value salary; keeping one at €19 500 keeps personal tax at 0 % but proves substance.
“Do non-dom rules kill the 17 % SDC?”
Yes, but only if you are not Cyprus-domiciled. This guide assumes you are.
“Is the 15 % CIT / 5 % SDC reform certain?”
Not yet. The bill is still in committee. I’ll publish a follow-up discussing it.
Bottom line for 2025
- Profit < €45 k → stay self-employed.
- Profit €45 k – €80 k → run your own spreadsheet; savings may not justify admin.
- Profit > €80 k → a one-person Ltd saves five-figure sums net, even before any 2026 reform.
Last verified 20 May 2025. Use this guide for orientation only — crunch your own numbers or talk to a licensed adviser.