Create a company in Cyprus — or move your company from China

For a founder in China, the first question about a Cyprus company is not what it costs. It is whether the structure is lawful, how the money is allowed to reach it, and what China keeps taxing afterwards. That question got a new answer on 1 July 2026, and most of what is written online — in Chinese and in English — has not caught up.

Updated for 2026 Cyprus tax law and regulations.

From China to Cyprus, with the company, the books and every filing on one platform

Sumly is the one-stop, fully digitalized way to start a company in Cyprus, move a business there from China and run it from the day it exists. We form the company, open your books from day zero, prepare every Cyprus return box by box, and handle the tax residency and non-dom application as one fixed-price service — one partner, one dashboard, one set of prices told upfront. What we will not do is pretend the Chinese half is simple, because the Chinese half is where this decision is actually decided.

This is Sumly — and what we actually do for you

Sumly is the fully digital provider for founders moving a company to Cyprus. You do not need to learn Cypriot company law, find a local auditor, or work out which form goes where. You get in touch, and we do the rest.

And we stay with you on both sides of the move. The Cyprus side we own outright. For the side you are leaving, we put you straight in front of an adviser or lawyer from our network who works on exactly your problem — company law, exit taxation, inheritance, employment — and we hold the thread between them and us. One point of contact for the whole move, however many specialisms your case turns out to touch. If your case is simple, we do all of it for a fixed price.

Part 1: What leaving actually costs you

Your home country does not let go the moment the plane does. What still runs after you have left, and in which order it has to be handled.

What changed for Chinese founders on 1 July 2026?

The outbound-investment regime acquired its first administrative regulation, and that regulation reaches individuals. Until this year the rules that governed money and structures going offshore were ministry-level measures aimed at enterprises, with individuals sitting either outside them or inside a separate foreign exchange registration. That architecture has changed at the top.

《国务院关于对外投资的规定》, State Council Decree No. 837, was adopted at an executive meeting in April 2026 and took effect on 1 July 2026. Its Article 2 defines investors to include enterprises, other organisations and resident individuals — 「本规定所称投资者，包括中国境内的企业、其他组织和居民个人」. That single clause is the most consequential sentence a China-based founder has read in a decade of offshore structuring, because the previous position was the opposite.

Article 33 then defers the mechanics: the detailed measures for outbound investment by resident individuals are to be made by the investment and commerce departments of the State Council. The three departments published a joint explanation of the decree alongside it, which is the official commentary on how the regulation is meant to sit above the existing approval, filing and registration machinery.

Two further parts of the decree matter to anyone thinking about an eventual exit. Article 15 creates a standalone national-security review of outbound investment that covers not only the investment itself but the later transfer or disposal of the resulting assets and rights. And Article 27 sets the penalties: for a prohibited investment, a fine of five to ten per thousand of the investment amount; for failing to comply with filing requirements, one to five per thousand; RMB 20,000 to RMB 100,000 on the responsible individuals; and a possible three-year bar on further filings.

Is the new filing route for individuals settled yet?

No, and saying otherwise would be the most dangerous thing on this page. The regulation created the obligation and handed the detail to a measure that is still being drafted.

NDRC published 《对外投资管理办法（修订征求意见稿）》 for public comment in August 2026. Read against the current measure, the draft would repeal the 2017 NDRC measure and route a resident individual's filing to the provincial development and reform commission of that individual's household registration place or place of habitual residence. It also treats onward investment by a controlled overseas enterprise as outbound investment in its own right, and it carries the sensitive-country and sensitive-industry lists across unchanged.

Three things must be said plainly about that draft, and we would rather lose a reader than blur them:

• It is a consultation draft, not law. Its own commencement clause is printed with the date left blank. The 2017 measure remains in force today.
• We are not publishing a closing date for comments. We could not confirm one from an official source, and inferring one from ordinary practice is not the same as knowing it.
• We are not publishing a commencement date for the revised measure, because the source does not contain one.

What you can plan around is the direction of travel: individuals are inside the outbound-investment regime, the filing venue for an individual is expected to be provincial rather than central, and onward investment through a company you control is expected to be reportable. What you cannot plan around yet is the form, the timetable and the documentary standard. If you are moving in the next two quarters, that argues for building the Cyprus side properly and taking Chinese advice on the filing leg at the point of contribution rather than assuming a settled procedure exists.

Two related questions have no confirmed answer either, and we flag both rather than guessing. The 2014 MOFCOM measure applies by its own Article 2 only to enterprises lawfully established within China, so it never reached individuals — but whether it survives Decree 837 in its current form was not something we could establish from a MOFCOM source. Nor could we find any circular in which SAFE aligns its own registration regime with the new decree.

What does SAFE Circular 37 require before you fund a Cyprus company?

Registration before contribution — and the word "before" is doing all the work. 汇发〔2014〕37号 is the foreign exchange registration that decides, in practice, whether a Chinese resident's offshore company can ever move money in either direction. It remains in force in 2026 and is reproduced as current on SAFE's own site.

Its Article 1 defines a special purpose vehicle broadly: an overseas enterprise directly established or indirectly controlled by a domestic resident, for investment or financing purposes, using assets or rights held lawfully inside or outside China. There is no exemption for ordinary trading companies and no requirement that a listing be contemplated. A Cyprus limited company set up by a founder in Shenzhen to sell into Europe is a 特殊目的公司.

The definition of who is caught is wider than founders expect. A 境内居民个人 means a Chinese citizen holding a domestic identity document, and also a foreign individual with no Chinese identity document who habitually resides in China because of economic-interest relationships. An expatriate founder living and earning in Shanghai is inside Circular 37 even without a Chinese passport.

The obligation itself is in Article 3: a domestic resident must apply to the foreign exchange bureau for overseas investment foreign exchange registration before contributing domestic or overseas lawful assets or rights to the special purpose vehicle. Note what this does and does not say. The Cyprus company may lawfully be incorporated first. The moment cash, intellectual property, equity or any other asset goes in, the registration must already be done. For contributions made with offshore assets, the filing venue is the foreign exchange bureau where the vehicle is registered or where the individual's household registration sits.

Then it keeps going. Article 5 requires change registration on shareholder, name and term changes and on capital increases or decreases, equity transfers, mergers and divisions — and makes completed registration the gate for everything afterwards: 「境内居民境外投资外汇变更登记完成后，方可办理后续业务（含利润、红利汇回）」. Article 8 routes profits and dividends coming home through the current-account rules. Both only work if the registration chain is complete and current.

What actually happens if you skip it

Being precise here matters, because this is where guides overreach in both directions. Circular 37 contains no sentence declaring an unregistered vehicle void. What it creates is a sequential compliance requirement, and the bank is the enforcement point: without the business registration certificate the bank will not process the capital-account transaction or the repatriation. Meanwhile Article 15 routes breaches into the penalty provisions of the Foreign Exchange Regulations, where evasion of foreign exchange control attracts a fine of up to 30% of the amount, rising to between 30% and the full amount in serious cases, and registration breaches attract up to RMB 300,000 for an entity and up to RMB 50,000 for an individual.

The remedial route is real and it is a published administrative licence rather than a favour. SAFE operates 境内居民个人特殊目的公司外汇补登记 — retroactive registration — for individuals who have already contributed assets or rights to a vehicle where an actual or potential round-trip structure exists. The published specification confirms it is handled at provincial branch level, is free of charge, cannot currently be filed online, and carries a statutory decision period of 20 working days, extendable once by 10. The same specification confirms the obligation does not end at registration: annual stock-equity reporting continues for as long as the structure exists.

Can the USD 50,000 personal quota pay for a Cyprus company?

No — and this is the single most misunderstood point in the whole subject, repeated confidently on formation-agent pages that describe only the Cyprus half of the transaction.

The quota exists and it is real. The implementing rules for individual foreign exchange administration set an annual aggregate of the equivalent of USD 50,000 per person per year for settlement into renminbi and for purchase of foreign currency, each direction separately. Within that aggregate, a bank transacts on valid identification alone.

But the rules are structured in two chapters — current account and capital account — and the annual aggregate lives in the current-account chapter, covering travel, study, medical treatment, family remittances and similar personal transactions. Article 16 puts outbound direct investment somewhere else entirely: a domestic individual's outbound direct investment must be handled under the relevant national rules, and the foreign exchange required may be purchased or remitted from own funds only after approval by the local foreign exchange bureau.

So there is no lawful route by which a founder converts USD 50,000 a year under the personal quota and uses it to subscribe for Cyprus shares. Nor is there one by which five relatives each convert USD 50,000 and wire it to the same Cyprus bank account — that pattern, 蚂蚁搬家, is exactly what the evasion provision above is written for, and the fine is a percentage of the amount moved rather than a fixed sum.

The practical consequence for planning is worth stating without drama: the capital route and the corporate structure are two separate projects, and the capital route is the one with the longer lead time. Founders who reverse that order are the ones who end up with a European company they cannot fund.

Do Chinese CFC rules catch a Cyprus company?

On the enterprise rule the answer is a fairly clear no, and the reason is arithmetic. On the individual rule the honest answer is that the statute is live but undefined.

The enterprise rule sits in Article 45 of the Enterprise Income Tax Law: profits of a foreign enterprise controlled by a resident enterprise, or jointly by a resident enterprise and Chinese resident individuals, established where the actual tax burden is manifestly lower than the domestic rate, and not distributed or under-distributed without reasonable operational need, may be attributed to the resident shareholder. Control is met either by shareholding — a Chinese resident shareholder holding 10% or more of voting shares, with such shareholders together holding more than 50% of the foreign enterprise — or by substantive control over shares, funds, operations or purchasing and sales.

The gateway percentage is fixed and checkable. The implementing regulations define a manifestly lower burden as below 50% of the rate in Article 4(1) of the Enterprise Income Tax Law. Half of the 25% standard enterprise income tax rate is 12.5%.

Now place Cyprus against it. A Cyprus company pays 15% from tax year 2026 on taxable profit. Fifteen is above twelve and a half, so the low-tax gateway is not met on the headline rate — and even under Cyprus's historical 12.5% the rate would have sat exactly on the line rather than below it, since the test is worded as "below". That is a comfortable position, and it is more comfortable than most of the jurisdictions a Chinese founder gets pitched.

Two qualifications keep it honest. First, the statutory test is 实际税负 — actual burden, not headline rate. A Cyprus company whose effective burden in a given year is driven down by the notional interest deduction, by IP Box treatment, by the participation exemption or by carried-forward losses is measured on that year's facts, not on the number in the tax code. A product company running qualifying income at an effective 3% from tax year 2026 under the IP Box is plainly below 12.5% on that income, and should be looked at with an adviser rather than waved through.

Second, Cyprus is not on the white list. The State Taxation Administration designated twelve non-low-tax countries — the United States, the United Kingdom, France, Germany, Japan, Italy, Canada, Australia, India, South Africa, New Zealand and Norway — and Cyprus is absent. So the country-based exemption is unavailable, and a Cyprus company relies instead on the other two exemptions in the special tax adjustment measures: that it mainly derives income from active business operations, or that its annual profit is below RMB 5 million. For a genuine operating business run from Limassol with real people and real substance, the active-business argument is the natural one — and Article 45 does not engage at all unless the failure to distribute lacks reasonable operational need.

The individual rule — live, and deliberately left without a number here

The 2018 amendment to the Individual Income Tax Law introduced an individual analogue in Article 8: where an enterprise established in a country or region with a manifestly low actual tax burden is controlled by a resident individual, or jointly by a resident individual and a resident enterprise, and profits attributable to the individual are not distributed or are under-distributed without reasonable operational need, the tax authority may make an adjustment on a reasonable basis.

Here is the part other pages get wrong. The wording is 明显偏低 and no percentage attaches to it. We could not locate any implementing regulation or tax authority announcement defining that threshold for individuals. Practitioners routinely borrow the enterprise rule's 12.5%, but that figure has no statutory basis for individuals and the drafting is not even the same — the enterprise regulation says 低于, "below", while the individual statute says 偏低, "on the low side". We are not going to print a number that the law does not contain. Treat the individual rule as a real provision with an undefined boundary, and treat that uncertainty as one more reason the Cyprus company should be able to show genuine operations rather than a letterhead.

Can China treat your Cyprus company as a Chinese resident enterprise?

Yes, and this is a bigger exposure than CFC, because it taxes the company rather than deeming a distribution. A foreign-incorporated enterprise whose place of effective management is in China is a Chinese resident enterprise, taxed at 25% on worldwide income.

The implementing regulations define 实际管理机构 as the body exercising substantive and comprehensive management and control over an enterprise's production and operations, personnel, accounts and property. The tax authority's guidance for overseas Chinese-controlled enterprises sets out four conditions, all of which must be met, and applies substance over form throughout: senior management and the departments where they discharge their duties are mainly in China; financial and personnel decisions are made or must be approved by persons or institutions in China; the main property, accounting books, seals and board and shareholder minutes are kept in China; and half or more of the voting directors or senior management habitually reside in China.

One scope point, stated honestly rather than glossed. That guidance defines its subject as an enterprise incorporated abroad whose principal controlling investor is a Chinese enterprise or group. On its own terms it does not address a company owned by an individual. The general test in the implementing regulations still applies to any foreign-incorporated enterprise — so do not read "I only meet two of the four conditions" as a safe harbour. The statutory test is the general one; the four conditions are guidance about how it is applied to one category of taxpayer.

The realistic failure mode is not aggressive planning. It is a founder who incorporates in Limassol, appoints himself sole director, keeps the seal in a drawer in Hangzhou, has the bookkeeping done by the same team that does the Chinese company's, and signs everything from there. What protects you is ordinary and unglamorous: decisions taken and minuted in Cyprus, a board that genuinely decides, records that match the story, and a bookkeeping trail kept in Cyprus in the first place. Our guide to nominee directors in Cyprus sets out where a nominee genuinely helps and where it changes nothing.

When does Chinese individual tax residency actually end?

This is the section where the standard relocation narrative — leave, count days, become non-resident — does not transfer, and a guide that pretends otherwise is doing a Chinese reader real harm.

Article 1 of the Individual Income Tax Law gives two independent limbs: an individual who has a domicile in China, or who has no domicile but resides in China for a cumulative 183 days in a tax year, is a resident individual. Either limb is enough on its own. The day count is something you can control. The first limb is not.

住所 is not an address. The implementing regulations define having a domicile in China as habitual residence in China by reason of household registration, family or economic-interest relationships. It is a facts-and-circumstances status, not a property question. Owning no home in China and spending under 183 days there does not by itself defeat it, if hukou, family and economic interests still anchor you.

The six-year rule is genuinely useful — and it is only for people without a domicile. A non-domiciled individual whose consecutive years of 183-day residence number fewer than six is, on filing a record with the competent tax authority, exempt from individual income tax on foreign-source income paid by foreign payers, and a single absence of more than 30 days in any qualifying year restarts the clock. Note the filing: the relief is not automatic.

The asymmetry nobody wants to write down

A Chinese national with a hukou and a foreigner leaving China are in fundamentally different positions, and the difference is structural rather than a matter of degree.

• The six-year rule is unavailable to anyone with a domicile. A founder whose household registration, family and economic interests remain in China is a resident individual under the first limb regardless of day count.
• For that person, residence does not end by leaving. It ends when the underlying facts stop making China their habitual residence — a substantive, evidence-based change for which the statute provides no bright line and no day count.
• The legislature clearly contemplated cancellation of household registration as the clean break: cancelling Chinese household registration because of emigration is one of the listed filing triggers, and a tax settlement attaches to it. But that is a civil-registration and immigration act with consequences far beyond tax, and in practice it usually accompanies acquiring another nationality.
• A foreigner leaving simply falls below 183 days and, having no domicile, ceases to be a resident individual for that year.

What follows for planning is unglamorous but important. A Chinese-national founder should build the structure on the assumption that they remain a Chinese tax resident for some period after the move. That is exactly why the individual CFC provision and the place-of-effective-management test above carry so much more weight in a Chinese departure story than in a British or German one, and why Cyprus-side substance is the thing worth spending money on rather than the last thing to arrange.

Does China charge an exit tax when you move to Cyprus?

There is no deemed-disposal exit tax. Nothing in the Individual Income Tax Law or its implementing regulations treats emigration, or ceasing to be a resident individual, as a sale of your assets at market value. The word 弃籍税 circulates in commentary but it is not a term in Chinese tax legislation, and no such tax appears in the tax authority's own index of taxes in force — the same enumeration that establishes there is no net wealth tax and no inheritance or gift tax in China.

What exists instead is a settlement gate. Cancelling Chinese household registration because of emigration is one of the circumstances requiring a return, and Article 13 requires that tax settlement be completed before Chinese household registration is cancelled. That is a clearance of tax already accrued — comprehensive income, business income, interest, dividends and property transfers for the year of cancellation and any unsettled earlier year — rather than a charge on unrealised gains. It is nonetheless a real gate: the registration cannot be cancelled until the tax authority is satisfied.

It is worth knowing what the underlying rates are, because a settlement is priced at them. Dividends and property transfers, including equity transfers, are taxed at a flat 20%, and comprehensive income runs on a seven-band progressive scale:

The bands are those in the official rate table annexed to the comprehensive-income filing forms, applied to taxable income after the basic deduction of RMB 60,000 a year and the statutory special and additional itemised deductions. We have not printed the itemised deduction amounts here because we did not verify them against an official source for this guide, and an unverified number is worse than no number.

One more computation rule is worth knowing before any restructuring. Where declared consideration on an equity transfer is manifestly low without justification, the tax authority may assess the transfer income itself. Those administrative measures govern equity in enterprises established inside China, not shares in a Cyprus company — but a founder reorganising Chinese holdings on the way to a Cyprus structure is squarely inside them.

Could Bulletin 7 tax the sale of your Cyprus holding company?

If the Cyprus company's value is Chinese, yes — and this is the nearest thing China has to an exit charge on a founder's shares. 国家税务总局公告2015年第7号 is the provision most relevant to anyone who plans to sell a structure rather than just run one.

Its Article 1 provides that where a non-resident enterprise indirectly transfers equity or other property in a Chinese resident enterprise through an arrangement without reasonable commercial purpose, in order to avoid enterprise income tax, the transaction is re-characterised as a direct transfer of the Chinese taxable property. In plain terms: selling the offshore holding company does not escape Chinese tax when the offshore holding company's value is Chinese.

Article 3 lists the reasonable-commercial-purpose factors, weighed together: how much of the offshore company's share value derives from Chinese taxable property; whether its assets are mainly Chinese investments or its income mainly Chinese-sourced; whether the functions performed and risks borne evidence real economic substance; how long the shareholding, business model and structure have existed; the offshore tax burden on the transaction; whether a direct transfer was substitutable; and treaty availability.

Article 4 then deems the absence of commercial purpose where four conditions are all met: 75% or more of the offshore company's share value derives directly or indirectly from Chinese taxable property; at some point in the year before the transfer, 90% or more of total assets were Chinese investment or 90% or more of income was Chinese-sourced; the offshore company performs limited functions and bears limited risk despite being registered abroad; and the offshore tax burden is lower than the Chinese tax on a direct transfer. Article 6 provides a reorganisation safe harbour where the shareholding relationship reaches 80% — 100% where more than half the value derives from Chinese immovable property — the transfer does not reduce Chinese tax, and consideration is paid in the transferor's own equity.

Read the four conditions the other way round and they describe the structure that is not caught: a Cyprus company whose value comes from a European trading business, with real functions and real risk, held for years, is a different object entirely from a Cyprus company interposed above a Chinese subsidiary shortly before a sale.

The treaty carve-out in Article 5 helps less than founders hope, and the reason is in the next section.

What does the China–Cyprus tax treaty actually do for you?

Less on Chinese dividends than the marketing implies, and something genuinely useful on the Cyprus side. The instrument is the 1990 agreement between the two governments, signed on 25 October 1990, in force from 5 October 1991 and effective from 1 January 1992. Its English text prevails in case of divergence.

Two consequences fall out of that table, and both cut against the standard sales pitch.

First, on profits leaving China the treaty gives you nothing. The domestic withholding rate on a non-resident enterprise's dividend from a Chinese company is already 10%, and the treaty caps it at the same 10%. Anyone selling a Cyprus holding company as a way to reduce Chinese dividend withholding is selling you a rate you already had.

Second, the indirect-transfer carve-out mostly does not apply. Bulletin 7 switches off re-characterisation where a direct transfer would itself be treaty-exempt — but Article 13(5) lets China tax a Cyprus resident's gain on shares amounting to 25% or more of a Chinese resident company. A Cyprus holdco over a wholly-owned Chinese subsidiary is therefore unprotected. A sub-25% stake falls into Article 13(6) residence-only taxation, but Article 13(4) still gives China taxing rights over property-rich companies regardless of percentage.

One honest limit on all of this: the tax authority publishes a synthesised text reflecting the multilateral instrument alongside the original treaty. We read the original in full; we did not open the synthesised text, so we make no statement here about how the principal purpose test or any other multilateral modification applies to this treaty. Ask an adviser who has read it.

How does retained profit actually get out of a Chinese company?

Through three gates, none of which a European founder would recognise, and all of which are worth pricing into the plan before the Cyprus company exists.

The withholding gate. A dividend from a Chinese company to a foreign shareholder bears 10% enterprise income tax withholding under the implementing regulations, with no treaty improvement as set out above.

The filing gate. Any single outbound payment exceeding the equivalent of USD 50,000 in the listed categories requires a tax filing with the competent tax authority before the bank will execute it. The categories include service trade income, and expressly dividends, bonuses, profits, interest on direct debt, guarantee fees, and equity transfer proceeds. The filing form is submitted in triplicate with stamped contracts and evidence, stamped and numbered by the tax authority, then presented to the designated foreign exchange bank. A supplementary announcement confirms that where one contract generates multiple payments, the filing is required only before the first.

The personal gate. Your own money is capped at the annual aggregate above, and that aggregate cannot be used for investment.

Put the three together and the shape of the problem is clear: retained profit inside a Chinese company is not liquid at the shareholder level in the way retained profit inside an EU company is. That is not a criticism of anything — it is a documented feature of the exchange-administration regime, and it is the most concrete reason a founder selling into Europe eventually wants an entity that earns euros, holds euros, and distributes under company law rather than under a remittance procedure.

What happens to your Chinese social insurance and pension?

Moving does not let you cash it out, and the distinction that decides the answer is nationality rather than location. The relevant instrument is the ministry's provisions implementing the Social Insurance Law, and we are citing the document rather than an article number because the numbering we saw could not be reconciled across sources — the content below is verified from the text itself.

A participant who goes abroad to settle before reaching statutory retirement age has their individual account preserved, with benefits drawn when the statutory conditions are met. A participant who loses Chinese nationality may apply in writing, at departure or afterwards, to terminate the employee basic pension insurance relationship; the agency must give written notice of the right to retain the account and of the consequences of termination, and on written confirmation the accumulated individual-account balance is paid to the person as a lump sum. On death, the individual-account balance is inheritable.

So: emigrating freezes the account; only loss of nationality unlocks it. And note how that interlocks with the previous sections — renouncing nationality is also what triggers household-registration cancellation, which is what triggers the tax settlement. These are not three separate decisions. They are one decision with three consequences, and it is worth taking Chinese advice on all three at once rather than discovering the sequence halfway through.

What happens to your existing Chinese company?

Keep it or close it, but do not assume you can switch it off once Cyprus is running. Deregistration in China is genuinely slow, and the reason is almost never the company registry.

The published sequence runs: form a liquidation group within 15 days of the dissolution event and publish it on the national enterprise credit information system, with creditor notices inside 60 days; obtain tax clearance; deregister social insurance within 30 days of the registration being cancelled, after clearing unpaid contributions; deregister with customs; close out the foreign exchange registrations; and only then cancel the business licence. Simplified deregistration compresses the publicity period from 45 days to 20 days, but it is available only to entities that never commenced business or have no outstanding creditor claims, and it excludes companies with real debts, companies under tax audit and entities with tax violations.

Tax clearance is where files stall. A trading company with historical invoice issues, unreconciled inventory, related-party pricing or unpaid social insurance does not get clearance quickly, and until it does the licence cannot be cancelled while filing obligations keep accruing and the legal representative carries the credit consequences of an abnormal status.

There is a structural point underneath the administrative one. If the Chinese company is kept and the Cyprus company sits above it, the whole thing becomes 返程投资 — round-trip investment as defined in Circular 37 Article 1 — and the registration chain in the section above has to be complete and current for the structure to function at all. That is a legitimate structure. It is not a shortcut, and it should be designed deliberately rather than arrived at by accident.

What does a Chinese founder pay at home today?

Enough that the comparison is worth doing properly, but not so much that we are going to pretend China is an expensive place to be incorporated. It is not, and a guide that says otherwise is not worth reading.

The standard enterprise income tax rate is 25%, and the statute itself provides a reduced 20% rate for qualifying small and low-profit enterprises and 15% for high and new technology enterprises the state supports. The small-company position is much better than 20% in practice: a joint announcement includes qualifying taxable income at a reduced amount and then taxes it at 20%, giving an effective 5% rate, in force from 1 January 2023 to 31 December 2027, for companies meeting all three tests — annual taxable income up to RMB 3 million, up to 300 employees, and total assets up to RMB 50 million, in a non-restricted industry.

The 15% technology rate is real and verified. What we are not printing is the quantitative qualifying ratios — the research-spend, technology-revenue and technical-staff percentages — because the implementing regulations expressly leave those to separate administrative measures which we did not read. The four criteria are core self-owned intellectual property, a product or service inside the state-supported technology fields, and those three ratios at or above prescribed levels. If your company is near the boundary, that is a question for your Chinese adviser and not for a web page.

Where the arithmetic actually turns is the shareholder layer. €200,000 of profit taxed at 25% leaves €150,000, and a 20% individual income tax on the distribution leaves the founder about €120,000. The same profit through Cyprus is taxed at 15%, leaving €170,000, on which a non-dom shareholder pays only the health contribution.

Part 2: What Cyprus gives you

This is the straightforward half, and the half we build end to end. What you actually get on the other side.

What does the Cyprus side look like for a founder arriving from China?

Flat, and short enough to describe in a paragraph — which is itself the point. A Cyprus limited company pays 15% on taxable profit from tax year 2026. There are no bands, no taper and no separate small-company regime: the same rate applies to €40,000 of profit and to €4 million. Income from qualifying intellectual property is taxed under the IP Box at an effective 3% instead.

Then the owner takes the money out, and the gap opens. A Cyprus tax resident who is not domiciled in Cyprus — the non-dom status nearly every relocating founder qualifies for — pays no Special Defence Contribution on dividends for 17 years of Cyprus residence, and dividends sit outside personal income tax altogether. What remains is the general healthcare contribution at 2.65% on income up to €180,000 a year — a maximum of €4,770 however much you distribute. A shareholder who is Cyprus-domiciled pays 5% on dividends from 2026 profits instead, which is why the non-dom registration is worth doing properly and early.

Salary, where you take one, runs on personal bands starting at 0% to €22,000 rising to 35% above €72,000. On the operating side, VAT registration bites at €15,600 of taxable turnover, and the standard rate is 19%. Cyprus levies no net wealth tax and no inheritance tax. The mechanics are set out in Cyprus non-dom status and the 2026 tax reform, and the arithmetic against your own numbers is in the calculator at the top of this page.

How does a Chinese founder become Cyprus tax resident?

Usually through the 60-day rule, and it became easier in 2026 in a way that matters specifically to someone who may still be a Chinese tax resident under the domicile limb.

The route everyone knows is spending more than 183 days a year on the island. The other one asks for a fraction of those days and rather more commitment on the ground. From tax year 2026 the 60-day rule has four conditions, after a fifth was removed from the 60-day rule: at least 60 days in Cyprus; no more than 183 days in any other single state; a business, employment or office in a Cyprus tax-resident person held through the year; and a permanent home in Cyprus that you own or rent.

The condition that was dropped is the one that used to make this route impossible for a Chinese-national founder: you no longer have to show that you are not tax resident anywhere else. Since the domicile limb of the Chinese test can keep a founder Chinese-resident for a period regardless of day count, the old fifth condition was a hard blocker. Now the two claims can coexist and, where they conflict, they resolve under the treaty's ordered tie-breaker — permanent home, centre of vital interests, habitual abode, nationality, mutual agreement.

The third condition's "office" can be satisfied by a directorship of the company you have just formed, which is why the incorporation and the residency file normally run as a single piece of work. Two honest limits: the Yellow Slip is an EU-citizens-only registration under EU law, so it is not the route for a Chinese national and we promise nothing about it; and the immigration permission to live in Cyprus is a separate question from tax residency, handled through the third-country-national routes, where we do the paperwork we can and bring in immigration specialists where a file needs them.

Can a Chinese e-commerce seller reach EU customers through Cyprus?

Yes, and for a seller shipping into Europe this is the section that changes the most concrete things. It is also the part of this guide with the largest gap between what the rules actually say and what sellers are told, so it is worth going slowly.

A disclosure first, because it affects how you should read what follows. The European Union's legal texts are published on EUR-Lex, and every automated attempt to read the relevant directive text from EUR-Lex during the research for this guide returned an empty response. The EU-side facts below therefore come from the European Commission's own official pages — the VAT One Stop Shop portal and the taxation and customs pages — which we could read in full. That is a substitution from one official EU source to another, and we would rather tell you about it than hide it. One practical consequence: we do not publish directive article numbers on this page. The substance below is verified from Commission pages; the article numbering was not, so it is absent rather than guessed. For the same reason we do not publish a figure for the intra-EU distance-selling turnover threshold — the Commission page confirms that an annual threshold applies to cross-border consumer supplies without stating the number, and the widely-repeated figure is not something we verified.

The 2021 reset — the low-value exemption is gone

The model that a generation of Chinese sellers built on — small parcels shipped direct, no VAT, no declaration — no longer exists. The VAT exemption for imported goods of intrinsic value up to EUR 22 was abolished on 1 July 2021, and from the same date an import declaration is required for all goods entering the EU regardless of value, with a reduced dataset available for duty-free consignments below EUR 150.

The customs-duty relief threshold survives: goods in consignments not exceeding EUR 150 can be released for free circulation on a simplified declaration and are not subject to customs duty — but they are subject to import VAT. Every parcel is declared, and every parcel bears VAT. The only remaining questions are who accounts for it and at what point.

The Import One-Stop Shop, and the intermediary requirement Cyprus removes

The import scheme covers distance sales of goods imported from outside the EU in consignments of an intrinsic value not exceeding EUR 150, excluding excise goods. It lets the seller charge destination-country VAT at the point of sale and remit it through a single monthly return filed in one Member State, with the import itself exempt — so the parcel clears customs without VAT being collected from your customer at the door, which is where a large share of European delivery complaints come from.

Then comes the rule that decides the shape of your business. A taxable person not established in the EU must appoint an intermediary established in the EU in order to use the import scheme, and that intermediary registers in its own Member State and receives a separate identification number for each seller it represents. A taxable person established in the EU may register for the import scheme directly.

This is precisely what a Cyprus company changes, and it is worth being exact about why. A China-established seller must find an EU intermediary, pass its onboarding, pay it, and live with the fact that the intermediary carries joint liability and therefore prices and gates access accordingly — and can terminate the arrangement. A Cyprus-established company is an EU taxable person and registers in its own name, in Cyprus, directly. The identification number belongs to you. That is a dependency removed, a cost removed, and a piece of operational control returned.

The same portal describes the Union scheme, used by EU-established suppliers for intra-EU distance sales of goods and for consumer services, and the non-Union scheme for non-EU suppliers of consumer services. A Cyprus company holding stock in a European warehouse and selling across Member States files its intra-EU distance sales through the Union scheme — again in its own name, again from a single registration.

Marketplace deemed-supplier rules, and what Cyprus does and does not do about them

Where an electronic interface facilitates a supply of goods, the interface can be treated as the deemed supplier — legally treated as having received and supplied the goods itself, and liable for the VAT. The two headline cases are distance sales of imported goods in consignments not exceeding EUR 150, and supplies within the EU by a supplier not established in the EU to a non-taxable person.

Read those two limbs against a Cyprus company and the answer splits.

• Stock already inside the EU, sold to consumers. The second limb turns on the supplier not being EU-established. A Cyprus company is EU-established, so the limb does not apply and the seller accounts for its own VAT rather than having the marketplace do it. Control of the VAT position returns to you.
• Sub-EUR 150 consignments imported and sold through a marketplace. This limb is triggered by the consignment value and the facilitation, not by where the seller is established. A Cyprus company does not escape it.

What a Cyprus company does not do

Stated plainly, because the formation-agent pages a Chinese founder will find do not state it at all.

It does not make Chinese-origin goods EU-origin: customs origin, duty rates, trade-defence measures and product-compliance obligations follow the goods, not the invoicing entity. It does not avoid import VAT or customs duty — it changes who accounts for them and when. It does not escape deemed-supplier treatment on low-value imported consignments sold through a marketplace. And it does not solve any of the Chinese-side questions in the first half of this guide: an EU company owned and managed from China is still exposed to the place-of-effective-management test, still inside the individual CFC provision, and still needs the foreign exchange registration chain. The EU benefits are real. They sit downstream of getting the China side right.

And the books, which is where this usually falls over

A store throws off thousands of small transactions in several currencies, with a VAT treatment that changes by customer type, by destination country and by whether the goods were already in the EU. Nobody reconstructs that from a marketplace export at quarter end. Sumly's Shopify and WooCommerce plugins take orders, refunds, marketplace fees and payouts into the ledgers already carrying the right VAT code, so each return is assembled out of the sales rather than rebuilt from a spreadsheet. That is the store's books on autopilot — and, for a seller established outside the EU, the store back inside the single market.

Why do people choose Cyprus over other tax havens?

Because it is a place a family can live in, which is not true of most of the alternatives a Chinese founder gets shown. The rate is what makes someone open a spreadsheet. It is almost never what makes them stay.

Cyprus works in English in every way a business touches it — banking, contracts, professional services, the courts — which removes the single largest adjustment cost of moving anywhere else in the European Union. It records among the lowest violent crime rates in the EU. Enough of the island came from somewhere else that no arrival is ever the only foreigner in the room. Business and real estate are both running hot, and the state stays friendly and open to people who want to trade without wrapping it in regulation. Groceries — meat, fruit, vegetables — are noticeably affordable. And the beaches earn their line in this list: in a Cyprus winter you can still go to the beach, while the summers are the ones people fly across the world for.

The Chinese-side case for a European entity is narrower and more specific than the marketing version, and every part of it is documented above rather than asserted.

A euro balance sheet with no conversion step. Euro receipts, euro costs, euro retained earnings, and distributions governed by Cyprus company law rather than by an annual aggregate and a pre-payment tax filing. An EU VAT identity you own. The import scheme in your own name, the Union scheme in your own name, and no intermediary between you and your own registration. A counterparty European customers transact with easily — an EU-established supplier, an EU VAT number a buyer can check in VIES, an EU bank account, EU invoicing and EU contract law. That removes friction in B2B procurement and in marketplace and payment onboarding which has nothing to do with tax rates at all.

And the market is where the numbers point. On China's own official statistics for 2025, total goods exports were RMB 26.99 trillion, up 6.1%, with exports to the European Union at RMB 4.0 trillion, up 9.0% — the EU growing faster than the export book as a whole. For a business already selling into Europe, an entity inside the customs union and the VAT system is an operational decision before it is a tax one.

What we are not going to tell you is that China is a bad place to be incorporated. It is not. The small-company effective rate is 5% through to the end of 2027, the technology rate is 15%, there is no net wealth tax and no inheritance tax. If your customers are Chinese and your capital is going back into China, stay. Cyprus earns its place when your customers are European, your revenue is in euros, and the friction you are paying is denominated in registrations and remittance filings rather than in tax.

Two worked examples

Both are stated in euro at the company level so the two systems compare like for like, and both assume full distribution at headline rates. Your own renminbi figures depend on the rate on the day, and neither example models the foreign exchange leg, which is a separate project with its own timetable.

A trading company at €200,000 of profit. In China the company pays enterprise income tax at 25% — €50,000 — leaving €150,000 to distribute, and the shareholder pays 20% individual income tax on the distribution, about €30,000. The founder keeps roughly €120,000 of the original €200,000. Through Cyprus the company pays 15%, or €30,000, and a non-dom shareholder distributing the remaining €170,000 pays only the health contribution at 2.65%, about €4,505 — keeping roughly €165,500. The gap on a single year is about €45,000, and the calculator at the top of this page compounds it, because each year's difference is also invested and Cyprus does not tax the growth on it.

A software company at €500,000 of profit with qualifying IP. In Cyprus, income qualifying under the IP Box is taxed at an effective 3% — €15,000 — and the distribution still meets only the capped health contribution, so the founder keeps roughly €480,000. In China the same company pays 25%, or 15% if it qualifies as a high and new technology enterprise, and then 20% at the shareholder layer either way: about €300,000 kept at the standard rate, about €340,000 if the technology rate applies. At that shape of business the gap is no longer a saving; it is a different capital structure.

It is also the profile where the Chinese sections above matter most, for two reasons that pull in opposite directions. An effective 3% is plainly below the 12.5% enterprise CFC gateway, so the low-tax limb is in play and the active-business and profit-level exemptions have to carry the argument. And a software company whose engineering and decision-making both stay in China has moved nothing except its letterhead, which is the place-of-effective-management problem in its purest form. Neither is a reason not to do it. Both are reasons to do it deliberately.

Part 3: How the move runs

From the decision to the first invoice out of the Cyprus company: the order, the mistakes people make before you, and two calculations worked through in full.

What does the move look like, month by month?

Timelines depend on your facts, your bank and the Registrar's queue, so read this as shape rather than schedule.

• Before anything moves — and this is where we start. We bring in a Chinese adviser across your residency position under the domicile limb and your foreign exchange route, and we get your bank into the conversation early — the capital leg has the longest lead time and the least flexibility. Together we settle whether the Chinese company is kept, sold or wound down, and whether a round-trip structure is intended.
• Month 1. We order the Cyprus company and the books go live the same day. Your Chinese adviser starts the registration leg, and nothing is contributed to the Cyprus company until that position is settled — we hold it there deliberately.
• Months 1–3. We register for Cyprus VAT, and for social insurance, employees and UBO where those apply, and get banking and EU payments moving. You take up the directorship that anchors the 60-day rule.
• Months 3–6. You rent or buy the permanent home the 60-day rule requires, and we tell you what qualifies. You move real decision-making to Cyprus and we minute it there, keeping the books in Cyprus rather than with the team that keeps the Chinese company's. If you are selling into the EU, we put the import scheme registration in place before peak season rather than during it.
• Month 12 onward. We apply for the Cyprus tax residency certificate and the non-dom registration, and we keep the day counts and the board records clean. Your Chinese adviser keeps the registration chain current — change registration is required on material changes, and it is the precondition for bringing profits home.

What mistakes do Chinese founders actually make?

The expensive ones are rarely exotic, and almost all of them are one mistake wearing different clothes: treating a foreign exchange transaction as if it were a tax transaction.

Funding the Cyprus company out of the personal annual aggregate, or out of several relatives' aggregates, and meeting the evasion provision later. Incorporating first and registering never, then discovering at the point of the first dividend that the bank will not process a repatriation without the registration certificate. Believing a page written in 2023 that says individuals sit outside the outbound-investment regime. Treating the draft NDRC measure as if it were already law, which is the opposite error and just as costly. Assuming that moving to Limassol ends Chinese tax residence when the household registration, the family and the economic centre have not moved. Running the Cyprus company from a laptop in Shenzhen with the seal in a drawer at home, and handing the tax authority the place-of-effective-management case on a plate. Interposing a Cyprus holding company above a wholly-owned Chinese subsidiary shortly before a sale, and meeting the indirect-transfer bulletin. And treating the Chinese company as something to switch off afterwards, rather than a wind-down with its own timetable and its own clearance gate.

Part 4: Who does the work

You can do all of this yourself. Below is what that costs in time and in money, against what it costs to let us do it.

Do it yourself — or have Sumly do it

Both routes work, and a good number of founders begin on one and switch to the other once the trading picks up. Doing it yourself means the Registrar's forms and fees, a registered office you arrange, VAT and VIES registration, provisional tax twice a year, annual statements and books that will survive your auditor — on top of a two-country move, a foreign exchange file and a six-hour time difference. The Sumly route has three published prices and no fourth: formation from €950 one-time, the bookkeeping software from €39 a month, and a Sumly certified bookkeeper of your own at €390 a month — books open from day zero, every return prepared box by box.

The software alone runs the whole company, from Cyprus or from China: invoicing, AI double-entry bookkeeping, live open-banking feeds, all VAT, VIES, provisional and corporate returns prepared box by box, live reports, a document inbox with its own email address, mobile receipt capture that books itself, multi-currency invoicing, team roles and the AI assistant — plus payroll at €15 per employee per month, IP Box tracking at €50 a month, Projects at €10 a month, and the e-commerce plugins.

Sumly, a law firm, and a traditional bookkeeping firm

Law firm vs Sumly — and what happens when it gets complicated

Sumly is cheaper and faster, and we work WITH lawyers, not against them. When a case gets too complicated for what Sumly handles directly, we simply connect you with the right expert in exactly the legal field you need help in, and everything gets done according to best practice, always. Either way, it starts the same place: contact us.

Sumly offers all of this to everyone who asks: a virtual address with PO box, with digital scanning of your post delivered into the dashboard wherever you are that week; nominee director and secretary where a structure genuinely needs them; every registration handled — VAT, social insurance, employees and UBO; audit through Partner Auditors; and banking and EU payments sorted, though no provider can promise you a particular bank's decision. The Yellow Slip is an EU-citizens-only registration under EU law and is therefore not the route for a Chinese national, and we would rather say that once, clearly, than let it sit in a feature list.

Each of those is an extra, scoped to your case. Tell us what you need in the meeting and you get one clear package-deal offer covering all of it, the IP Box application included where it fits, since that is complex expert work and exactly the kind of thing that should be looked at with you before anyone puts a number on it. No hourly billing and no surprises. A fixed Cyprus price, one dashboard, and honesty about where the Chinese side needs a Chinese professional — that is what makes Sumly the best choice for Chinese founders creating a company and relocating to Cyprus.

Why is Sumly the best bookkeeping system for a Cyprus company?

Sumly is the best accounting software for a Cyprus limited company — because it is built for exactly one thing, Cyprus tax law: all 16 Cyprus VAT codes mapped to the official VAT return boxes, VIES and provisional tax native, not a localization. That is the claim, and every row under it is checkable rather than a matter of opinion.

The two Cyprus-built alternatives a Chinese founder will be shown are Cybooks and Balabook. We meet their former customers every week, and what they tell us, again and again: workflows that made simple bookkeeping overly complicated, rough edges and glitches, support that left them waiting — a messy experience they were relieved to leave behind.

On every one of these checkable dimensions, Sumly leads. That is a factual comparison — not a matter of taste.

Said plainly, and we will defend each one: the best support, the best bookkeeping software, the best AI for bookkeeping, the best bookkeeper, the best prices — everything done easily. We publish the detail rather than asking you to take it on trust: Sumly vs Cybooks, Sumly vs Balabook, and against the international tools a Chinese exporter is most likely already running, Xero, QuickBooks and Sage.

On the IP Box specifically, one line bears repeating: the IP Box is the largest single line in a Cyprus product company's tax position — and the easiest one to forfeit through bookkeeping that was never set up for it. The application starts as a conversation rather than a form, which is another reason the meeting comes ahead of any number. What qualifying income has to be able to evidence is set out on the IP Box service page.

What happens when you get in touch

You do not need to have decided anything before you speak to us, and you do not need your paperwork in order.

1. The meeting. Fifteen minutes. You tell us what you own and when you want to move. We tell you which rules at home catch you, and what the Cyprus side costs.
2. We tell you what kind of case you have. If it is simple, we do all of it — company, books, residency, non-dom — at a fixed price. If it is not, we say so immediately and bring in the specialist it needs.
3. We start. The company is registered, your books open the same day, and you have one point of contact for the whole thing.

Questions Chinese founders actually ask

Frequently asked

Is it legal for a Chinese individual to own a Cyprus company?

Yes, and it always has been — but it is a registration question before it is a tax question. A Chinese resident who establishes or controls an offshore company for investment or financing purposes must complete SAFE special purpose vehicle registration before contributing any assets to it. And since 1 July 2026 the State Council's outbound-investment regulation names resident individuals as investors for the first time, so the NDRC filing side now reaches individuals too. The implementing measure for individuals is still in draft, which is precisely why this needs planning rather than a template.

Can I fund a Cyprus company with my USD 50,000 annual quota?

No. The annual aggregate is a current-account facility for personal transactions such as travel, study, medical treatment and family remittances. Outbound direct investment by a domestic individual sits outside it entirely and needs prior approval from the local foreign exchange bureau before currency may be purchased or own funds remitted. Splitting an investment across several relatives' quotas is the structuring the evasion provisions of the Foreign Exchange Regulations are aimed at, and the fines are set as a percentage of the amount moved.

Do Chinese CFC rules catch a Cyprus company at 15%?

On the enterprise rule, the low-tax gateway is a burden below half the 25% rate, so below 12.5% — and Cyprus at 15% sits clearly above that line. But the statutory test measures actual burden rather than the headline rate, so reliefs that push an effective rate down have to be looked at year by year. Cyprus is not on the State Taxation Administration's designated non-low-tax list, so the country-based exemption is unavailable and relief runs through the active-business or small-profit exemptions instead. The individual rule is worded differently and is not defined by any percentage.

Am I still a Chinese tax resident after I move to Cyprus?

Very possibly, and this is where generic relocation advice fails Chinese readers. Residence has two independent limbs: having a domicile in China, or 183 days in a tax year. Domicile is defined as habitual residence in China by reason of household registration, family or economic-interest relationships — a facts test, not a day count. A Chinese national who keeps their hukou, family and economic centre in China can remain a resident individual however few days they spend there. The six-year rule that helps foreigners is only available to people without a domicile.

Does China charge an exit tax when you emigrate?

There is no deemed-disposal exit tax. Nothing in the Individual Income Tax Law or its implementing regulations treats emigration or the end of residence as a sale of your assets, and no such tax appears in the tax authority's own list of taxes in force. What does exist is a settlement obligation: cancelling Chinese household registration because of emigration is a filing trigger, and the law requires tax settlement to be completed before the household registration is cancelled. That is a clearance of tax already accrued, not a charge on unrealised gains.

Will selling my Cyprus holding company be taxed in China?

It can be, if the Cyprus company's value is Chinese. The indirect transfer bulletin re-characterises the sale of an offshore holding company as a direct transfer of the underlying Chinese taxable property where the arrangement lacks reasonable commercial purpose, and it sets out four cumulative conditions under which that absence is deemed. A Cyprus company holding a real European trading business is a very different animal from a Cyprus company whose only asset is a Chinese subsidiary — and the treaty carve-out does not rescue a stake of 25% or more.

Can I close my Chinese company once the Cyprus one is running?

Plan it as a parallel workstream rather than a switch you flip afterwards. The sequence runs liquidation group, creditor notices, tax clearance, social insurance, customs, foreign exchange and finally the business licence. Tax clearance is where files stall: historical invoice issues, unreconciled inventory, related-party pricing or unpaid contributions all hold it up, and until clearance issues the licence cannot be cancelled while filing obligations keep accruing. Simplified deregistration exists but excludes companies with real debts or tax problems.

Does a Cyprus company help a Chinese seller reach EU customers?

Materially, yes. A Cyprus company is an EU-established taxable person, so it registers for the Import One-Stop Shop in its own name without appointing an EU intermediary, and it uses the Union scheme for cross-border consumer sales from stock already inside the EU. It does not change the customs origin of the goods and it does not avoid import VAT or duty — it changes who accounts for them and when, and it puts the VAT identity under your own control rather than a third party's.

Does Sumly advise on Chinese law?

No. Sumly builds and runs the Cyprus side — company formation, books from day zero, Cyprus VAT, VIES, provisional and corporate returns, and the tax residency and non-dom application. This guide sets out China's own published rules so you can see the shape of the decision, but how they apply to your facts is a question for a Chinese-qualified adviser and, on the foreign exchange leg, for your bank. Where a case needs specialist help we connect you with expert lawyers from our network, and either way the first step is a meeting.

Keep reading

• Every country's route to Cyprus — the departure guide for wherever you are now
• Cyprus company formation for non-residents — the route that applies to Chinese founders
• How to register a company in Cyprus and what it costs
• Cyprus non-dom status and the 60-day rule
• What changed in the 2026 Cyprus tax reform
• Cyprus tax benefits for foreigners — the whole picture in one place

The calculator on this page uses headline rates, an assumed annual return and full distribution of profit, so it shows the shape of a Cyprus position rather than your own outcome, and it does not model the foreign exchange leg that sits underneath a Chinese founder's structure. Chinese figures are stated for 2026 from the laws, regulations and announcements cited inline; where a point could not be verified against an official Chinese source it is stated qualitatively and said to be so, and where an EU point could not be read from EUR-Lex it is sourced from European Commission pages and said to be so. Cyprus figures apply from tax year 2026. All Sumly prices exclude VAT, and government expenses on a formation are invoiced separately once your application is approved.