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

Estonia charges you nothing on profit you leave in the company — no rate, no cap, no clock. That is the fact any honest page about moving an Estonian business has to open with, because if you are still reinvesting, Cyprus is a worse deal and no amount of sunshine changes the arithmetic. The rest of this guide is about the point where that stops being true.

Updated for 2026 Cyprus tax law and regulations.

Sumly runs the whole Cyprus half while you close the Estonian one

Creating a company in Cyprus and relocating an Estonian business onto it is two projects that have to hand over to each other cleanly, and Sumly owns the entire Cyprus side of that handover from the first day. We incorporate, open your books the day you order, prepare every Cyprus return box by box, and file the Yellow Slip and the tax residency and non-dom registration as fixed-price services. One dashboard, one provider, four published prices — instead of an õigusbüroo for the incorporation, a raamatupidamisbüroo for the books, and nobody at all for the seam where two tax systems meet.

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.

Is a Cyprus company cheaper than an Estonian OÜ?

Not while you are still building it. Estonia's corporate income tax falls on profit only when the profit leaves the company, and Maksu- ja Tolliamet puts it about as plainly as a tax authority ever does: if the company does not distribute profit but invests it in the company, there is no tax liability. There is no ceiling on that, no number of years after which the shelter closes, and no deemed-distribution rule at the end of it.

Cyprus does the opposite. The company pays 15% from tax year 2026 on profit as it is earned, whether the money sits in the account or not. Over a five-year build that is five annual haircuts on working capital you were never going to spend, and an Estonian founder compounding retained earnings is measurably better off staying exactly where they are.

We would rather write that in the second paragraph than bury it in the ninth. The Cyprus argument for an Estonian founder does not run through the corporate rate. It runs through what happens when you finally want the money — and through a set of structural questions that have nothing to do with rates at all.

What does 22/78 actually cost when you take the money out?

Twenty-two euros of every hundred you earned, which is not the number most people read the fraction as. The rate has been 22/78 since 1 January 2025, and 22/78 is applied to the net sum leaving the company rather than to the profit behind it.

Work it through once and it stops being confusing. You want to put €78 in your own hands. Grossed up, that is €78 ÷ 0.78 = €100 of profit. The income tax is €22. So the company needs €100 of pre-tax profit to deliver €78 — an effective 22% of what the business earned, not 22% of 78. Anyone who tells you Estonian distributions cost about 17% has divided the wrong way round.

The tax is declared and paid monthly rather than annually: form TSD is filed and the tax paid by the 10th of the following month. That is a genuinely light administrative rhythm and worth conceding as such.

One qualification decides whether the retention strategy is real or theoretical. Estonian income tax at 22/78 also falls on fringe benefits, gifts and donations, costs of entertaining guests, expenses not related to business, and hidden profit distributions. The company may hold profit tax-free for as long as it likes; the founder may not quietly use it. Running a car, a flat or a lifestyle out of an untaxed retained balance is a varjatud kasumieraldis, and it is charged at the same 22/78. Retention is a corporate strategy, not a personal one.

Is the 14/86 reduced rate still there, and what about the 7% withholding?

It is gone, and the withholding went with it in every practical sense. This is the single most common stale figure in Estonian tax writing, so it is worth stating without hedging.

The reduced rate for regularly paid dividends was abolished with effect from 1 January 2025. MTA's own wording is that starting from 2025, dividends are only taxed at the company level in Estonia with income tax at the rate of 22/78. What survives is transitional only: dividends paid up to 31 December 2024 under redistribution scenarios can still carry the old treatment.

The 7% personal withholding was never a free-standing charge. It was the companion to 14/86 — the state took less at the company, so it took something at the shareholder. With the reduced rate abolished, the 7% now reaches only those transitional, previously-lower-rate dividends. An Estonian founder taking an ordinary dividend in 2026 pays 22/78 at the company and nothing further personally.

That has a consequence for how you read every competitor page you have open in another tab. If it quotes 14/86 as a live option, or adds 7% to a 2026 distribution, its arithmetic is a year and a half out of date and its conclusions are unreliable in whichever direction the error runs.

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

Estonia has an exit tax, and it is very probably not about you. That is the useful answer, and it takes two paragraphs to earn rather than one line to assert.

The charge lives in § 54⁵ of the Income Tax Act, headed exit income tax, and it binds a resident company in two situations: where the company takes assets out to a permanent establishment in another EU Member State or a third country, and where the company itself becomes resident of another contracting state. The base is the difference between the market value and carrying amount of the assets to be taken out at the time of exit — the unrealised gain, market value less book value. It is reported on form TSD Annex 7, code 7014, with payment due by the 10th of the following month.

Two features soften it. Assets taken out in connection with securities financing, collateral arrangements, or to meet prudential capital requirements or liquidity management are outside the charge provided they return to Estonia within 12 months. And where the company transfers assets to a permanent establishment in a contracting state, or becomes resident elsewhere, payment may be spread over up to five years. We are not printing a percentage for § 54⁵: MTA's page sets out the base and not the rate, and inventing one would be exactly the kind of plausible-sounding error this page exists to avoid.

On individuals there is simply nothing. Estonia does not deem a disposal of your shares when you cease to be resident. MTA's guidance says the provision applies to a resident company and not to individuals, and no parallel section exists for natural persons. You can leave with an unrealised gain of any size and Estonia will not ask for a euro of it on the way out.

And the reason § 54⁵ almost never bites in a real relocation is structural rather than lucky, which the next section explains.

Does your OÜ become Cypriot — or does a Cyprus company become Estonian?

Neither, from the Estonian side, and this is the cleanest thing about the whole corridor. Estonia decides corporate residence one way and one way only: a legal person is a resident if the person is established under Estonian law. There is no place-of-effective-management limb anywhere in the Estonian test.

Read what that removes. In most European corridors the founder's biggest structural risk is that the company follows them across the border — decisions taken in the new country drag the company's residence with them, and the old state either bills an exit charge or claims the profits. That failure mode does not exist here in either direction:

• Your OÜ stays Estonian. Move to Limassol and the company is still established under Estonian law, still Estonian tax resident, and still inside the distribution-only system. Nothing about your emigration is a § 54⁵ trigger, because limb (b) is a formal change of the company's own residence — a seat transfer or cross-border conversion — not a change in where its owner sleeps.
• A Cyprus Ltd stays Cypriot. Managing it from Tallinn during a transitional year does not make it an Estonian resident company, because Estonian law has no test that could catch it. Estonia's reach over it is limited to Estonian-source income, since a non-resident pays income tax only on income received from Estonian sources.

The risk runs from the other side, and MTA names it. Estonian tax residency does not automatically exempt companies from taxation elsewhere in the world where business is carried on, and where the management of Estonian companies occurs outside of Estonia the income is taxed in that foreign jurisdiction. Cyprus, like most states, does look at management and control. So an OÜ genuinely directed from Cyprus can become Cyprus-resident as well, producing dual residence to be resolved by the treaty tie-breaker, and can create a Cypriot permanent establishment on top.

That is the actual decision point, and it is a structural one rather than a tax-rate one. Trying to live in Cyprus while running the Estonian company from there gives you two filing regimes, two authorities and an argument to have. Either move properly and put the trading company in Cyprus, or stay Estonian and keep the retention advantage. Our guide to nominee directors in Cyprus sets out where a nominee helps with the Cypriot management question and, more importantly, where it does not.

What does e-Residency actually do for your tax position?

Nothing at all, and it is worth being blunt because e-Residency is the most over-marketed thing in this corridor. It is a state-issued digital identity that lets a non-resident authenticate, sign and administer an Estonian company online. It is not a residence permit, not a visa and not a tax status.

MTA states the point directly: e-residency in Estonia does not give an automatic exemption from foreign tax liabilities. Two words separate e-residentsus from residentsus, and a decade of marketing has blurred them for a lot of otherwise well-informed founders.

The honest summary for an e-resident looking at Cyprus is that e-Residency solved the administration problem and never touched the tax one. If the plan is to move yourself, put the operating company where you are going to be.

How does Estonian tax residency end, and what is vorm R?

Mechanically, which is the nicest thing you can say about a departure regime. There is no ties test, no citizen-specific tail rule and no multi-year presumption that you are still resident because you once were.

Under § 6(1) a natural person is an Estonian resident if their permanent or primary place of residence is in Estonia, or they stay in Estonia for at least 183 days during 12 consecutive calendar months, or they serve as an Estonian diplomat abroad. Any one limb is enough on its own, so both of the first two have to be cleared.

On the place of residence. The term takes its ordinary civil-law meaning — where the person permanently or primarily lives — and MTA is explicit that mere ownership of property does not establish a place of residence. Keeping the Tallinn flat is not, by itself, the problem it would be in several neighbouring systems. What matters is whether the residence is permanent and lasting, in the sense of having been made permanently available to you.

On the days. The 183 are counted across 12 consecutive calendar months rather than a tax year, and partial days count on both ends — arrival and departure days are each a whole day. MTA's own worked example is the one to internalise: present from 1 January to 2 July is 182 days, and adding 31 December alone makes 183, at which point the person is a resident for the whole year. A single New Year visit home can decide a tax year.

The instrument itself is vorm R, the füüsilise isiku residentsuse määramise avaldus, and its section 4 is the part that covers the end of Estonian residency. A resident who has reason to presume their residency will change on leaving Estonia is required to submit it. It can be filed through the e-MTA portal using an ID-card, Mobile-ID, Smart-ID or an EU eID, by digitally signed email, or in person at a service bureau, and the form itself is published by Maksu- ja Tolliamet as vorm R. That is the whole procedure. No exit return, no deferral balance to maintain, no continuing filing obligation.

What actually changed in Estonian personal tax for 2026?

Less than the last two years of headlines suggested, and the biggest change is a giveaway rather than a grab. Worth reading carefully if you are weighing a move, because two of the things people expect to find here are not there.

The rates come from MTA's own comparison: personal income tax is a flat 22% for both 2025 and 2026, with social tax at 33% and the minimum monthly social tax base rising from €820 to €886, unemployment insurance at 1.6% for the employee and 0.8% for the employer, and the funded pension contribution elective at 2%, 4% or 6%.

The headline is the de-tapering. For years Estonia's basic exemption shrank as income rose, creating an effective marginal spike in the middle of the scale that everyone called the tax hump. From 2026 the allowance no longer depends on a person's income and does not decrease as income increases, and everyone of working age gets €700 a month, €8,400 a year. On the same page, VAT for 2026 is 24% standard, 13% on accommodation and 9% on publications and medicines, with tobacco and alcohol excise up 10% from 1 January 2026.

And the thing that is not there. The 2% julgeolekumaks — the security tax that every 2024 and 2025 article described as arriving — was not imposed. MTA's 2026 changes page carries both negatives in its own words: palgatulule ja pensionile ei kehtestatud 2% julgeolekumaksu, and ettevõtte kasumile ei kehtestatud 2% julgeolekumaksu. The second one matters far more than the first. A 2% levy on company profit would have taxed undistributed profit and broken the defining principle of the whole Estonian system. It did not happen, and Estonia's distribution-only regime is intact for 2026. If you started thinking about Cyprus because of that tax, the reason has evaporated and you should re-run the decision without it.

Do Estonia's CFC rules catch a Cyprus company?

Only if it is not really a company. Estonia's controlled-foreign-company rule is the mildest of any departure country we have written about, and the reason is that it has no rate test at all — so Cyprus's 15%, and the IP Box rate underneath it, are not what the rule looks at.

The provision is § 54³ of the Income Tax Act, income tax on profits of foreign controlled companies, listed alongside Estonia's other anti-avoidance measures in MTA's ATAD handbook chapter, together with §§ 5¹, 54¹, 54² and 54⁵. Note the numbering — it is 54³, and several secondary sources print 54⁴.

What it attributes is narrow. Not all foreign profit, but the portion arising from the use of assets and the assumption of risks associated with key employees of the controlling company, and attributable to ostensible transactions the main purpose of which was to obtain a tax advantage. A transaction or chain is ostensible where the entity or permanent establishment did not have the assets from which it receives all or part of its income, and what gets attributed is computed on the arm's-length principle. It is declared once a year on the basis of the financial statements, in TSD Annex 7, Part I, code 7016.

On top of that sits a de minimis that lifts most founder-scale structures out before the test is even reached. The charge does not apply to an Estonian resident company whose previous financial year's profit does not exceed €750,000, and whose other business income, profits from subsidiaries and associates, financial investments, interest income and other financial income together do not exceed €75,000 in the same period.

So a Cyprus company with real substance — its own people, its own premises, earning income from assets it actually holds — is outside § 54³, and the Cyprus IP Box does not change that answer, because there is no rate to fail against. That is a materially better position than the Danish, Finnish or Bulgarian equivalents, where the rate or the income mix can catch a perfectly genuine company.

Two boundaries we will mark rather than paper over. The control percentage in § 54³'s definition of a foreign controlled company, and whether the section reaches natural persons holding shares personally as well as resident companies, were not established from an official page during this research — treat both as questions for an Estonian adviser rather than as settled. And separately, MTA's income-tax overview records that income from legal entities in non-cooperative or low-tax territories controlled by an Estonian resident natural person is taxed as that individual's income regardless of distribution. Cyprus is an EU Member State and is not on the EU list of non-cooperative jurisdictions, so that rule does not reach a Cyprus company — but it is worth knowing the rule exists so nobody confuses the two categories.

Does Estonia tax wealth or inheritance on the way out?

No on both, with one clarification an Estonian reader will catch if you get it wrong.

Net wealth tax: none. We are stating that as a complete enumeration rather than pointing at a page that announces the negative, because no such page exists. MTA's rate schedule lists the taxes an Estonian resident faces — income tax, social tax, unemployment insurance, funded pension — and there is no wealth line in it, nor in the 2026 changes page. What Estonia does levy is maamaks, a land tax on the value of land, which is a different instrument and should never be described as a wealth tax. Cyprus likewise levies no net wealth tax.

Inheritance tax: none, and here the negative is sourced. MTA states that property received as estate, such as real estate or money inherited in Estonia, is not subject to taxation upon receipt thereof, and exchanging inherited foreign currency into euros creates no liability either. The tail is a deferral rather than an exemption: on a later transfer of inherited real estate or precious metals, income tax is due on the gain, and heirs also inherit the deceased's tax arrears, interest, damages and civil claims owed to the authority.

Cyprus has no inheritance tax either, so this is a draw and not a reason to move. Anyone selling you Cyprus on estate grounds against Estonia is selling you a difference that is not there.

What does the Estonia–Cyprus treaty give you?

Less than a page like this would like to promise, and we are going to be precise about which parts we verified. The convention was signed on 15 October 2011, entered into force on 8 October 2013 and took effect from 1 January 2014, with the multilateral instrument effective for it from 1 January 2022.

We are not printing the treaty's withholding rates, its capital-gains article or its tie-breaker wording. The Ministry of Finance overview carries the dates but no rate table, and Estonia's official statute portal is JavaScript-rendered and would not serve the text to us in either language. A withholding rate borrowed from a neighbouring treaty and printed here as fact is precisely the kind of error that ruins a page like this one, so it stays out.

Here is what you can rely on without the treaty text. Estonia levies no withholding tax on ordinary dividends — the 22/78 charge is a corporate-level tax on the distributing company, not a deduction from the shareholder. So in the outbound Estonia-to-Cyprus direction the dividend article has very little work to do; the money has already been taxed at the company and nothing is being withheld for the treaty to reduce. The treaty matters in the other direction, for interest and royalties, and for the individual tie-breaker in a dual-resident year — and for those, get the text read by someone who can open it.

The relief mechanics on Estonia's own side are verified, and they matter if you keep the OÜ. Estonian companies get an exemption for foreign dividends where the holding is at least 10%, and for permanent-establishment profits properly taxed abroad, with a credit for other foreign-source income — interest, royalties, gains — set against the Estonian tax arising on distribution, declared in TSD Annex 7. An OÜ holding a Cyprus subsidiary above the 10% line therefore receives the Cyprus dividend into Estonia without a second corporate charge, and pays only when it distributes onward.

What happens to your existing OÜ?

Three routes, and Estonia's incorporation-only residence rule makes all three cleaner than they would be almost anywhere else.

Keep it, and move only yourself. Nothing is triggered. No § 54⁵ charge, because the company has not moved; no change to its residence, because residence follows incorporation; no acceleration of anything. The OÜ keeps running under the distribution-only system, and you become a non-resident shareholder of it. What you must actually manage is where the company is now being directed from, since Cyprus can claim it on management and control even though Estonia never lets it go.

Keep it as a subsidiary under a Cyprus parent. Distributions upward carry no Estonian withholding, because Estonia does not withhold on ordinary dividends. The charge that arises is the OÜ's own 22/78 when it distributes, which is the same charge it always faced. This route is common where the Estonian entity still has staff, contracts or a customer base worth preserving, and where the Cyprus company is being added for EU-wide positioning rather than to replace anything.

Incorporate fresh in Cyprus and wind the OÜ down. The point people miss is that a liquidation distribution is still a distribution: the retained profit that has been sitting untaxed for years meets 22/78 on the way out. Years of sheltered reinvestment are not forgiven by closing the company — they are settled by it. On the Estonian liquidation procedure itself, the Commercial Code steps, the registry sequence and the MTA deregistration, we researched nothing against official sources and so describe nothing here. Get that from an Estonian adviser before you commit to a timetable.

Whichever route, the sequencing rule is the same: your own Estonian residence has to end before any of it produces a different personal result, and Cyprus non-dom status does nothing for you while you are still resident in Estonia.

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 an Estonian founder?

Flat, front-loaded, and nearly empty at the shareholder level — which is the exact mirror image of the system you are leaving.

The company pays 15% on taxable profit from tax year 2026, on profit as it accrues, with no bands and no election to make. Qualifying intellectual property is taxed at an effective 3% from tax year 2026 under the IP Box — a relief with no Estonian analogue whatsoever, since Estonia's answer to IP-heavy businesses is deferral rather than a preferential rate. Then the distribution layer: a Cyprus tax resident who is not Cyprus-domiciled pays no Special Defence Contribution on dividends for 17 years, and dividends sit outside Cypriot personal income tax entirely. What is left is GeSY at 2.65% on income up to €180,000 a year — a hard ceiling of €4,770 no matter how much you take. A domiciled shareholder would instead pay 5% on dividends from 2026 profits, which is why the non-dom registration carries the whole position.

Salary is the one place Cyprus is worse than Estonia's flat rate: the scale runs 0% to €22,000 rising to 35% above €72,000, against 22% flat in Estonia. That is why relocating founders generally take a modest Cyprus salary and take the rest as dividend. VAT registration becomes compulsory at €15,600 of taxable turnover, at a standard rate of 19% — five points below Estonia's 24%, which quietly matters for anyone selling to Cypriot consumers. Cyprus levies no net wealth tax and no inheritance tax.

If what you want is the two company types set against each other line by line rather than the relocation process, that is a different page: Cyprus versus an Estonian company. The shareholder position is covered in Cyprus non-dom status, and the wider picture in Cyprus tax benefits for foreigners.

How does an Estonian founder become Cyprus tax resident?

Through the 60-day rule in most cases, and yes — the Yellow Slip is open to you, because an Estonian citizen is an EU citizen.

The straightforward route is more than 183 days of physical presence in Cyprus in the calendar year. The other asks for far fewer days and rather more commitment, and it got easier in 2026: the old condition about not being tax resident anywhere else was removed from the 60-day rule, leaving four. At least 60 days in Cyprus. No more than 183 days in any other single state. A business, an employment or an office in a Cyprus tax-resident person held throughout the year. And a permanent home in Cyprus, owned or rented.

For an Estonian founder those conditions interlock unusually well with the departure side. The second condition — no more than 183 days in any other single state — is the same number § 6(1) uses, counted differently, so a plan built to satisfy Cyprus tends to break Estonian residence at the same time. Directing your own Cyprus company supplies the office the third condition wants, and the Cypriot lease that satisfies the fourth is also the evidence that your permanent place of residence is no longer Estonian. What the 2026 relaxation does not do is end your Estonian residence for you: acquiring Cypriot residence and ending Estonian residence are separate projects, and only the second one is finished by vorm R.

The Yellow Slip is the registration certificate that puts your Cypriot residence on the record under free-movement rules. It says where you live; it says nothing at all about how you are taxed, and our guide draws that line properly while Sumly files the application for you. Tax residency and non-dom is a separate step at €750 a person, with the day counting explained in the 60-day rule guide.

Why do people choose Cyprus over other tax havens?

Because it is somewhere people actually want to live, which most of the low-tax alternatives are not — and for an Estonian founder, who is not being driven out by a punitive system, that half of the argument does more work than the tax half.

Violent crime is among the lowest in the European Union. The island runs in English in practice: business, banking, contracts, professional dealings. The island has drawn people from everywhere, which means a newcomer is never the odd one out in a meeting. Business and real estate are both booming, and officialdom is open to people who want to trade rather than treating trade as something to be licensed first. Groceries — meat, fruit, vegetables — are genuinely affordable. And then the coast: a Cyprus winter still leaves you an afternoon on the beach, and the summers are what other people fly across a continent to book. For anyone coming from a Baltic winter that is not a footnote, it is most of the reason people stay after the first year.

Now the push list, and we are not going to inflate it. Estonia is a well-run tax jurisdiction that treats founders decently, and the honest set of reasons to leave it is short and specific:

• You have switched from building to harvesting. The retention shelter is worth nothing to someone whose plan is to draw income now, and 22% on distributions is a real gap against 15% plus a capped health levy.
• You are heading for a trade sale. Estonia taxes an individual's gain on a share sale as income at the flat 22%. Cyprus generally exempts gains on qualifying securities. For a founder with an exit in view this is usually the largest single number in the whole comparison.
• The business is IP-heavy. The IP Box has no Estonian counterpart, and deferral is not a substitute for a preferential rate when the company is being groomed for sale rather than compounded quietly.
• Salary, not dividend, is how you actually get paid. Estonia's 22% flat rate plus 33% social tax on wages is an expensive way to pay yourself.
• The ordinary human reasons. Weather, schools, daylight, and being somewhere the rest of the world already comes to.

If none of those describes you, staying in Estonia is the right answer, and we would rather tell you that than sell you a structure that costs 15% a year for a benefit you do not need yet.

Can an Estonian e-commerce brand run through Cyprus?

Yes, though the framing is operational rather than about market access — Estonia and Cyprus are both inside the single market and both use the euro, so nothing is being unlocked that was closed. What changes is the tax treatment of the profit and how much of the compliance runs itself.

What the Cyprus entity brings is an EU VAT number that resolves in VIES, zero-rated intra-EU business supplies on the usual conditions, and consumer sales reported through the one-stop shop for the whole bloc. Your Estonian customers see none of it, and none of it forces a store to stop trading mid-quarter.

One number does change, and it belongs in the calculation. Cyprus charges a 19% standard rate against Estonia's 24% for 2026 — five percentage points, but only on supplies taxed where the supplier sits. Cross-border consumer sales run at the destination rate under the one-stop shop, so a store selling to Germany or Finland gains nothing here at all. A store selling into its own local market gains, and the question then becomes which market your customers are actually in.

Volume is what breaks a store's books, and Estonian brands tend to run high-volume and low-ticket. A few thousand small transactions a month across currencies and payment processors, each with a VAT treatment that depends on who bought and where they were, and then the fees, refunds and payouts that never line up with the orders behind them. Sumly's Shopify and WooCommerce plugins land every one of those in the books with the right Cyprus VAT code attached, so the return is a by-product of trading rather than a reconstruction job in the last week of the quarter. The VAT feature shows it accumulating as the quarter runs, instead of appearing all at once at the end.

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?

Read this as a shape rather than a schedule. The Estonian half has no hard deadline forcing your hand, which is easier in one sense and riskier in another — nothing external makes you finish it.

• Before anything — and we will say this out loud on the call. Are you still reinvesting? If you are, stop here; the move loses money, and we would rather tell you that than sell you a company. If you are not, we model the distribution you actually plan to take and check it against the arithmetic below with you.
• Month 1. We form the Cyprus company, with books open the day you order, and start the Yellow Slip. You sign a Cypriot lease in your own name and begin counting Estonian days properly, both ends of every trip — we set up how to record it.
• Months 1–3. We complete the Cyprus VAT registration and, where they apply, the social insurance, employee and UBO registrations, and get banking and EU payments moving. You take up the Cyprus directorship, and we minute the decisions there — that record is for the Cypriot management-and-control test, which is the one that actually exists in this corridor.
• Months 3–9. You live there, and we build the evidence with you: days, utilities, the Cypriot social insurance registration, the lease. Together with your Estonian adviser we settle the fate of the OÜ — kept, subsidiary, or wound down — remembering that winding down settles the retained profit at 22/78.
• After the first full year. We obtain the Cyprus tax residency certificate and register your non-dom status. Only then does your Estonian adviser file vorm R with section 4 completed, so the Cypriot certificate exists before MTA is asked to apply the treaty.

What mistakes do Estonian founders actually make?

Four common ones, and a fifth that is quieter and more expensive.

Moving while still in the reinvestment phase, and paying Cyprus 15% a year for a shareholder benefit that will not be used for another three. Reading 22/78 as a 17% cost and being surprised by the €100-of-profit arithmetic when the first real distribution lands. Believing e-Residency is a tax status, or that an Estonian filing settles a tax position in the country where the founder actually lives. And running the OÜ from Cyprus indefinitely — Estonia will never release it, Cyprus may well claim it, and you end up with two systems and a tie-break to argue instead of a clean structure.

The quiet one is the day count. Because Estonia's test is mechanical, founders treat it as safe and stop counting — then a fortnight of Christmas, a funeral and two board meetings put them over 183 days across 12 consecutive calendar months, with both travel days counted at each end, and the entire year comes back as Estonian-resident. It is the least dramatic mistake on this list and the one we see most.

Two worked examples

A product studio reinvesting everything. Revenue €900,000, profit €300,000, all of it going into hiring and product. In Estonia the corporate income tax is zero, because nothing is distributed and there is no charge on retained profit. In Cyprus the same €300,000 attracts 15% as it accrues — €45,000 in year one, and again in year two, and again in year three, on money the founder never touches. Estonia wins outright, keeps winning, and the only arguments for moving here are non-tax ones: where the next hundred customers are, where the team wants to live, or an exit that changes the picture entirely.

A consultancy distributing €250,000. Now the systems invert. In Estonia, distributing the whole €250,000 of pre-tax profit means €55,000 of income tax at 22/78 and €195,000 in the founder's hands, with no further personal charge. Through Cyprus, the company pays 15% — €37,500 — leaving €212,500 to distribute, and a Cyprus-resident non-dom shareholder pays GeSY capped at €4,770 and no income tax on the dividend, keeping roughly €207,730. Cyprus is ahead by about €12,730 on identical facts, every year, and the gap widens with the amount because the health contribution stops growing at €180,000 while the Estonian charge never does. Add a trade sale at the end of it — taxed as income at 22% in Estonia, generally exempt on qualifying securities in Cyprus — and this is the profile where the move pays for itself several times over.

Both examples use headline rates and assume full distribution, and neither prices the cost of running genuine substance in Cyprus. Your own timing, reliefs and status change the answer, which is what the meeting is for.

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 are real, and plenty of Estonian founders — used to filing a TSD in ten minutes — take the first one out of habit. What they discover is that Cyprus administration is heavier than Estonian administration, and that is a fair concession to make. Self-service means the Registrar's forms and fees, a registered office you arrange yourself, VAT and VIES registration, provisional tax twice a year, annual statements and books an auditor will sign — layered on top of a cross-border move you are already running. The Sumly route replaces all of it with three prices: formation from €950 one-time, the software from €39 a month, and a Sumly certified bookkeeper at €390 a month, with books that open the day you order and every return prepared box by box.

The software on its own runs the whole company from Cyprus or from Estonia: invoicing, AI double-entry bookkeeping that books documents itself, live open-banking feeds, every VAT, VIES, provisional and corporate return 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.

Everything here is offered to everyone: a virtual address with PO box and digital mail scanning forwarded wherever you are; nominee director and secretary where the structure calls for them; the Yellow Slip, which your EU citizenship makes available; tax residency and non-dom at €750 per person; and every registration — VAT, social insurance, employees, UBO — done properly the first time.

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 that should be examined with you before anyone quotes a number. No hourly billing, no surprises.

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.

For an Estonian founder that division of labour is exactly right, because the open questions on this page — the § 54³ control threshold, whether it reaches individuals, and the § 54⁵ rate — are Estonian questions that need an Estonian answer. The Cypriot half is one provider, one dashboard, and four prices we publish openly. That is what makes Sumly the best choice for Estonian founders creating a company in Cyprus and relocating a business onto it.

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 a claim we are happy to be measured against, so here is what sits underneath it.

The two Cyprus-built alternatives an Estonian 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: the best support, the best bookkeeping software, the best AI for bookkeeping, the best bookkeeper, the best prices, and everything done easily. We publish the comparisons rather than merely asserting them — Sumly vs Cybooks, Sumly vs Balabook, and for the international tools, Xero, QuickBooks and Sage.

On the IP Box, one line is worth repeating for a founder arriving from a country with no equivalent relief at all: 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, which is one more reason the meeting comes before anything else.

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 Estonian founders actually ask

Frequently asked

Is a Cyprus company cheaper than an Estonian OÜ?

It depends entirely on whether you take the money out. Estonia charges nothing at all on profit the company keeps — no rate, no time limit, no deemed distribution waiting at the end of it. Cyprus charges 15% on profit as it accrues, whether you touch it or not. So for a founder who is reinvesting, Estonia wins and it is not close. The inversion happens on distribution: Estonia's 22/78 costs 22% of the pre-tax profit, against 15% in Cyprus with no personal income tax on the dividend for a resident non-dom.

Does Estonia have an exit tax when a founder moves to Cyprus?

Estonia has one, and it is almost certainly not about you. The exit income tax in § 54⁵ of the Income Tax Act binds a resident company that moves assets to a foreign permanent establishment or itself becomes resident of another contracting state. Maksu- ja Tolliamet's guidance is explicit that the provision applies to a resident company and not to individuals, and there is no parallel charge for natural persons. A founder emigrating does not trigger it, because the OÜ has not moved anywhere.

Do Estonian CFC rules catch a Cyprus company?

Only a fake one. § 54³ attributes profit that arises from ostensible transactions whose main purpose was to obtain a tax advantage — a transaction is ostensible where the entity did not have the assets from which it receives its income. There is no rate test in the Estonian rule at all, so Cyprus's 15%, and even the IP Box effective rate, are simply beside the point. A de minimis also lifts out a controlling company whose previous year's profit was €750,000 or less and whose financial and participation income was €75,000 or less.

Does my Estonian OÜ become Cypriot if I run it from Limassol?

No. Estonia decides corporate residence by incorporation alone — a legal person is resident if it is established under Estonian law — and Estonian law has no place-of-effective-management test. Your OÜ stays Estonian wherever you sit. The risk runs the other way: Cyprus does look at management and control, so an OÜ directed from Limassol can become Cyprus-resident as well, or create a Cypriot permanent establishment. That is dual residence, resolved by the treaty, and it is the reason most founders end up putting the operating company in Cyprus rather than commuting the old one.

Does e-Residency give me any tax status?

None whatsoever, and Maksu- ja Tolliamet says so in terms: e-residency in Estonia does not give an automatic exemption from foreign tax liabilities. It is a digital identity for authenticating and signing, not a residence permit, not a visa and not a tax residence. The company an e-resident forms is Estonian tax resident because it was established under Estonian law — but MTA is equally clear that if the management of an Estonian company occurs outside Estonia, that income is taxed in the foreign jurisdiction.

Is the 14/86 reduced rate still available in 2026?

No. The reduced rate for regularly paid dividends was abolished with effect from 1 January 2025, and MTA states that from 2025 dividends are taxed in Estonia at the company level at 22/78 only. It survives in transitional form for dividends paid up to 31 December 2024 in redistribution scenarios, and the 7% personal withholding — which was always the companion to 14/86 — now reaches only those transitional dividends. A normal 2026 distribution carries 22/78 at the company and nothing at the shareholder.

How do I actually stop being an Estonian tax resident?

Two limbs to clear, then one form. Under § 6(1) you are resident if your permanent or primary place of residence is in Estonia, or if you stay in Estonia at least 183 days over 12 consecutive calendar months — arrival and departure days both count. Then you file vorm R, the application for determination of residency, whose section 4 covers the end of Estonian residency, through e-MTA, digitally signed email, or in person. If you need the treaty, MTA wants a residency certificate confirmed by the Cypriot tax authority first.

Was the 2% security tax introduced on company profit?

It was not, and this is where a lot of published content is now out of date. Maksu- ja Tolliamet's own 2026 tax-changes page states that no 2% security tax was imposed on wage income or pensions, and no 2% security tax was imposed on company profit. That matters more than it sounds, because a levy on profit would have broken the defining feature of the Estonian system — that undistributed profit is not taxed. The distribution-only system is intact for 2026.

Does Sumly handle the Estonian side of the move?

No. Sumly builds and runs the Cyprus side: formation, books from the day you order, Cyprus VAT, VIES, provisional and corporate returns, the Yellow Slip, and the tax residency and non-dom application. This page quotes Maksu- ja Tolliamet's own published material so the Estonian half is visible to you, but how § 54³ or § 54⁵ apply to your structure is a question for an Estonian adviser. Where a case needs one, we connect you with expert lawyers from our network.

Keep reading

• Every country's route to Cyprus — the departure guide for wherever you are now
• Cyprus versus an Estonian company — the two company types side by side
• Cyprus non-dom status — the 17-year exemption in detail
• The Cyprus 60-day rule — day counting and the residency certificate
• The Yellow Slip explained — the EU registration certificate, step by step
• What changed in the 2026 Cyprus tax reform
• How to register a company in Cyprus and what it costs

The calculator on this page uses headline rates, an assumed annual return and full distribution of profit, so it shows the shape of the difference rather than your own result — and for an Estonian founder who distributes nothing, the honest figure on the Estonian side is zero. Estonian figures are stated for 2026 and cited to Maksu- ja Tolliamet and Rahandusministeerium; statutory section numbers are quoted as Maksu- ja Tolliamet publishes them, because Estonia's statute portal is JavaScript-rendered and would not serve the underlying text. No Estonia–Cyprus treaty withholding rates are printed here, and no percentage is given for § 54⁵, because neither was verified. 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.