In short
- Estonia: 0% on profit kept and 22% of each payout, written by the tax board as 22/78 of the net dividend.
- Cyprus: 15% on profit every year from 1 January 2026, and no tax withheld on most dividends.
- Estonia costs less in a year when the company pays out under 68% of its profit.
- In Estonia 3.23% of companies had their 2024 report audited or reviewed. In Cyprus every company does.
In this guide
Cyprus and Estonia side by side
Both countries joined the EU in 2004 and use the euro, and both register a company for an owner who lives elsewhere. They tax it at opposite moments: Cyprus every year, Estonia at the payout. The prices below are ours for Cyprus. For Estonia our fee is fixed in your quote: company formation in Estonia and accounting in Estonia. Company formation in Cyprus starts at €1,699 before VAT.
| Point | Cyprus | Estonia |
|---|---|---|
| Corporate tax | 15% of each year's profit | 0% until a payout, then 22% of the gross amount |
| Tax on dividends | No withholding in most cases; 2.65% health contribution for a non-dom owner in Cyprus | None after the company's 22% |
| VAT | 19%; registration above €15,600 in 12 months | 24%; registration above €40,000 in a calendar year |
| Registration with us | €1,699 to €4,999 before VAT; 8 to 12 working days | Our fee in your quote; the registrar reviews an online application by the next working day |
| Accounting with us | from €290 a month | In your quote |
| Bank account | 4 to 12 weeks; a payment account in 1 to 5 working days | After the bank's own review of the owners and the business |
| Residence for the founder | Non-dom status for up to 17 years; tax residence from 60 days | Tax residence takes a home in Estonia or 183 days there |
| Audit | Every company; a review for a small one | Above size limits only |
| Who it suits | Owners who take the profit out; software and holding companies | Companies that reinvest for years |
Cyprus or Estonia: which to choose, four founders
The share of the profit that the owner takes out decides the choice:
- A founder who will reinvest every euro for five years or more and can manage the company from Estonia: Estonia, at 0% in each of those years.
- A founder who lives on the company's profit: Cyprus. On €120,000 paid out the owner receives €102,000 before the health contribution, against €93,600 from an Estonian company.
- A software company that owns its code: Cyprus, at about 3% on the qualifying profit whether it is kept or paid.
- A holding company: Cyprus. A gain on shares is exempt there, and in Estonia it falls under the 22% when the money moves on to the owner.
Kept or paid out: the 68% line on a profit of €120,000
A company earns €120,000 in a year. The table shows the tax of that year in each country, by the share of the profit the company pays out.
| Share of the profit paid out | Tax in Estonia | Tax in Cyprus |
|---|---|---|
| None | €0 | €18,000 |
| A quarter | €6,600 | €18,000 |
| Half | €13,200 | €18,000 |
| 15/22, about 68% | €18,000 | €18,000 |
| All | €26,400 | €18,000 |
Estonia takes 22% of the share that leaves the company and Cyprus 15% of the whole, so the two bills are equal when the payout is 15/22 of the profit. An owner who takes everything receives €93,600 from the Estonian company and €102,000 from the Cyprus one. With non-dom status in Cyprus the health contribution brings that to €99,297.
The Estonian tax is postponed, and the years in between are the gain. A company that earns €120,000 a year and keeps it for five years has €600,000 at work in Estonia and €510,000 in Cyprus, where €90,000 went in tax. When the owner takes the money out, Estonia charges €132,000 and Cyprus nothing more. Over the whole cycle the Estonian profit has paid 22% and the Cyprus profit 15%.
What a Cyprus company costs in the first year: €5,179
Our Starter package costs €1,699 before VAT and includes the state fees, a registered office and a company secretary for a year. Accounting from €290 a month adds €3,480, so the first year comes to €5,179. A VAT number costs €350 and the VIES registration €149. The auditors we work with charge €700 to €1,500 for the yearly audit.
Set these fees against the tax. On €120,000 of profit kept in the company the Cyprus company pays €18,000 in the year and the Estonian one nothing. That difference is more than three times the first-year cost above. On the same profit paid out in full Cyprus saves €8,400. The fees by item are in Cyprus company formation cost. For what an Estonian company costs to run for a year, line by line, see the Estonia services page.
How much is corporate tax in Estonia?
Corporate tax in Estonia is 0% on profit that stays in the company and 22% on profit that leaves it. The Tax and Customs Board gives the rate as 22/78, because it is applied to the net amount the shareholder receives. Its own example is a dividend of €1,200, on which the company pays €338.46. No further tax is withheld from the shareholder.
A payout is wider than a dividend. The same rate is charged on fringe benefits, gifts, donations, the cost of entertaining guests and expenses unrelated to the business. So a company can owe tax in a month with no dividend. Each taxable payment goes into form TSD, filed by the 10th of the following month.
The rate has been 22/78 since 1 January 2025, when the lower 14/86 rate for regular dividends and the 7% withheld from individuals ended. The Board's table for 2026 shows the same rate.
We do this for you Company formation in Cyprus from €1,699
How Cyprus taxes the same company
Cyprus charges 15% on the net profit of each year from 1 January 2026, whether the profit is kept or paid out. The company pays provisional tax in two instalments, on 31 July and 31 December, and settles with the yearly return. Profit that has borne the 15% can be paid out in any later year with no further company tax. Cyprus withholds nothing on a dividend sent to an individual abroad or to a company outside the low-tax and blacklisted jurisdictions.
An owner who lives in Cyprus and is domiciled there pays 5% Special Defence Contribution on dividends from profits of 2026 onwards. An owner with Cyprus non-dom status pays none for up to 17 years. Both pay a 2.65% health contribution on up to €180,000 of income a year. Qualifying profit from software and patents is taxed at about 3% under the IP Box, described in the guide to Cyprus corporate tax.
Does Estonia's 0% hold when you run the company from another country?
An Estonian company is an Estonian taxpayer wherever its owner lives, because it was founded under Estonian law. For founders abroad the Tax and Customs Board adds that an Estonian company managed from another country is also taxed there on its income, under that country's rules. Estonia then exempts the dividend paid from profit already taxed abroad through a permanent establishment.
The status of e-resident changes none of this. It lets a founder abroad use Estonian e-services on the same terms as the holder of an Estonian ID card. The Board states that it gives no automatic exemption from foreign tax. A fee paid to a member of the company's board is taxed in Estonia wherever the work is done: 22% income tax is withheld and the company adds 33% social tax.
Cyprus applies the same two tests. From 2026 a company incorporated there is tax resident by default, and a foreign company managed and controlled in Cyprus is resident too. A founder who runs a Cyprus company from another country faces the same question at home.
VAT returns, yearly filings and audit in each country
| Duty | Cyprus | Estonia |
|---|---|---|
| VAT return | By quarter, due on the 10th day of the second month after it | Monthly, due on the 20th of the next month |
| Corporate tax return | Yearly, with provisional tax during the year | Form TSD for each month with a taxable payment |
| Annual accounts | Filed with the annual return to the Registrar of Companies | Annual report filed with the business register |
| Audit | Every company; a review under €300,000 of turnover and €500,000 of assets | 7,837 companies for 2024, or 3.23% of those that filed |
A salary costs more in Estonia. The employer pays 33% social tax on the gross pay and withholds 22% income tax from it. In Cyprus the first €22,000 of a person's income in a year is free of income tax, and employer and employee each pay 8.8% social insurance.
Residence for the founder: non-dom in Cyprus, 183 days in Estonia
A person becomes tax resident in Cyprus after 183 days in the calendar year. The threshold falls to 60 days with a home on the island, work or a directorship in a Cyprus company and no more than 183 days in any other single country. A founder from outside the EU can base a residence and work permit on a company of foreign interests, which needs €200,000 paid into its Cyprus bank account from abroad.
A person is tax resident in Estonia with a permanent home there or a stay of 183 days within 12 consecutive months. Income tax is a flat 22%, with €700 a month exempt in 2026, and a dividend from an Estonian company carries no further Estonian tax in the shareholder's hands.
We register the company in Cyprus in an expected 8 to 12 working days and keep its books in the same account. A founder who also weighs a flat 10% can read Estonia vs Bulgaria vs Cyprus.
