In short
- Profit kept in the company is taxed at 0% in Estonia, 10% in Bulgaria and 15% in Cyprus.
- Profit paid in full to an individual: 14.5% in Bulgaria, 15% in Cyprus, 22% in Estonia, before tax at home.
- Estonia costs less than Bulgaria while the payout stays under 57% of profit, and less than Cyprus under 68%.
- With us a Bulgarian company costs €280 to register and a Cyprus one from €1,699, before VAT.
In this guide
Estonia, Bulgaria and Cyprus at a glance
The three are EU member states that use the euro. Each taxes a company at a different moment: Estonia when profit leaves it, Bulgaria and Cyprus every year. The prices in the table are ours for Bulgaria and Cyprus. For Estonia our fee is fixed in your quote: company formation in Estonia and accounting in Estonia. Company formation in Bulgaria costs €280 and takes 5 to 10 working days.
| Point | Estonia | Bulgaria | Cyprus |
|---|---|---|---|
| Corporate tax | 0% on profit kept; 22% of the amount paid out | 10% every year | 15% every year |
| Tax on dividends | None on top of the 22% | 5% withheld, except for a parent company in the EU or EEA | None withheld in most cases |
| VAT | 24%, threshold €40,000 a calendar year | 20%, threshold €51,130 a calendar year | 19%, threshold €15,600 in 12 months |
| Registration with us | Our fee in your quote; the registrar reviews an online application by the next working day | €280 before VAT, 5 to 10 working days | from €1,699 before VAT, 8 to 12 working days |
| Accounting with us | In your quote | from €150 a month | from €290 a month |
| Bank account | After the bank's questions on the business and its owners | 1 week to 2 months for the current account | 4 to 12 weeks at a Cyprus bank |
| Residence for the founder | Tax residence takes a home there or 183 days | The company brings no residence permit | A company of foreign interests, with €200,000 invested |
| Audit | Only above size limits | Above two of three size limits | Every company, or a review for a small one |
| Who it suits | Companies that reinvest their profit | Companies that pay profit to the owner | Software and patents, holding companies |
Best EU country to start a business: Estonia, Bulgaria or Cyprus, case by case
What happens to the profit decides the country:
- A product company that puts every euro back into growth: Estonia, at 0% for as long as nothing is paid out.
- An agency, a consultancy or an online shop whose owner lives on the profit: Bulgaria, at 14.5% in all.
- A subsidiary of a group in the EU: Bulgaria, at 10% with no tax withheld on the dividend to the parent.
- A company that earns from its own software or patents: Cyprus, at about 3% on the qualifying profit.
- A holding company or a founder who moves with the family: Cyprus, for the exemptions on dividends and shares and for non-dom status.
One profit, three outcomes: €150,000 kept, half paid, all paid
Take one company with a profit of €150,000 and one individual owner, and change a single thing: how much of the profit is paid out. The figures are the tax of the company plus the tax withheld from the owner.
| What happens to the profit | Estonia | Bulgaria | Cyprus |
|---|---|---|---|
| All of it stays in the company | €0 | €15,000 | €22,500 |
| Half is paid out | €16,500 | €18,375 | €22,500 |
| All of it is paid out | €33,000, or 22% | €21,750, or 14.5% | €22,500, or 15% |
| Owner receives when all is paid | €117,000 | €128,250 | €127,500 |
Estonia takes 22% of each payout, so half of the profit, €75,000, costs €16,500. Bulgaria charges €15,000 for the year and withholds 5% of each dividend, which is €3,375 on half of the €135,000 left. Cyprus takes €22,500 for the year and nothing from the dividend. An owner who lives in Cyprus then pays 2.65% of the dividend to the health system, and 5% more without non-dom status.
Two thresholds follow from the rates. In a year when the company pays out less than 57% of its profit, Estonia costs less than Bulgaria. Below 68% it costs less than Cyprus. Estonian tax is postponed and falls due at 22% in the year the kept profit is paid out.
The owner's own country taxes the dividend as well. Where it has a tax treaty with Bulgaria, the treaty sets how the 5% withheld there is credited.
What a Bulgarian and a Cyprus company cost in the first year
| Cost | Bulgaria | Cyprus |
|---|---|---|
| Registration with us, before VAT | €280 | €1,699 |
| Accounting with us, 12 months | €1,800 | €3,480 |
| First year, the two lines | €2,080 | €5,179 |
| Audit | None below the size limits | €700 to €1,500 a year |
The Bulgarian price includes the state fee, the notary in Bulgaria and the capital deposit account. Accounting there is €180 a month with a VAT number. The Cyprus price is the Starter package with state fees, a registered office and a company secretary for a year, and the audit range is what the auditors we work with charge. In Estonia 7,837 companies, 3.23% of those that filed a report for 2024, had it audited or reviewed. For the first year of an Estonian company in order, with what each line costs, see the Estonia services page.
Estonia: 0% on profit kept, 22% on profit paid out
An Estonian company pays no income tax on a profit while it stays in the company. The tax arrives with the payout: 22% of the gross amount, which the Tax and Customs Board writes as 22/78 of the net dividend. A dividend of €10,000 in the owner's hand costs the company €2,820.51. Nothing more is withheld from the shareholder. The lower 14/86 rate for regular dividends ended on 1 January 2025.
The same 22/78 falls on fringe benefits, gifts, donations, entertainment and costs unrelated to the business, so a company that pays no dividend can still owe tax. Each taxable payment is declared in form TSD by the 10th of the next month. A company that holds 10% or more of a subsidiary passes its dividends on without a second charge.
We do this for you Company formation in Bulgaria €280
Bulgaria: 10% a year and 5% on dividends, in euros
A Bulgarian company pays 10% on the taxable profit of the calendar year and files its return between 1 March and 30 June of the next. Capital, books and taxes have been in euros since 1 January 2026, at 1.95583 leva to the euro. Losses are carried forward for five years.
When profit is paid out the company withholds 5% from an individual, resident or foreign, and from a company outside the EU and the European Economic Area. Registration takes two papers signed before a notary and share capital from €1. Bulgaria and Cyprus are compared line by line in Cyprus 15% vs Bulgaria 10%, and the Bulgarian rules are in corporate tax in Bulgaria.
Cyprus: 15% a year and about 3% on IP income
A Cyprus company pays 15% on net profit from 1 January 2026. The rate was 12.5% before. The same reform cut the Special Defence Contribution on dividends from 17% to 5% for owners who are resident and domiciled on the island. It also ended the charge on profit that a company had not paid out.
Cyprus adds two regimes to the flat rate. The IP Box deducts 80% of the qualifying profit from patents and copyrighted software, which leaves about 3%. Non-dom status frees a founder who moves to Cyprus from the defence contribution on dividends for up to 17 years. A holding company pays no tax on most dividends it receives and none on gains from shares. Company formation in Cyprus starts at €1,699.
Which EU country has the lowest corporate tax?
Hungary, at 9%: the lowest corporation tax in the European Union. Of these three, Bulgaria at 10%. Estonia charges 0% while the profit stays in the company and is one of two member states that tax profit only at payout. The 15% of Cyprus is the fourth lowest headline rate in the union.
The founder's own pay is taxed differently again. Estonia takes a flat 22% of a salary and the employer adds 33% social tax. In Bulgaria the flat rate is 10%, with 32.7% of contributions on up to €2,300 a month: tax rates in Bulgaria. Cyprus leaves the first €22,000 a year untaxed, and its rate rises to 35% above €72,000, with 8.8% social insurance each from employer and employee.
Where the company is managed and where the owner lives
Each country treats a company registered there as its taxpayer: Estonia and Bulgaria by the law it was founded under, Cyprus by incorporation since 2026. None asks the owner to live there. The owner's country can still tax the company. The Estonian Tax and Customs Board states it plainly: the income of an Estonian company is also taxed abroad when the company is managed outside Estonia. E-Residency, the Board adds, gives no automatic exemption from foreign tax.
A person is tax resident in Estonia with a permanent home there or 183 days in 12 consecutive months. In Bulgaria the test is a permanent address or more than 183 days in any 12 months. Cyprus counts 183 days in the year, or 60 days with a home on the island and a role in a Cyprus company.
We register companies in all three countries and keep their books on one platform: we open a Bulgarian company for €280 before VAT, with accounting from €150 a month. The choice between a yearly 15% and a deferred 22% is worked through in Cyprus vs Estonia: 15% a year or 22% on payout.
