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

Germany is one of the few countries that charges you for leaving. Not a fee, not a formality: a deemed sale of your shareholding at market value on the day your unlimited tax liability ends, taxed in a year when nothing was sold and no money came in. That is the first number in any Germany-to-Cyprus decision, and almost every page selling the move mentions it in a sentence and then moves on.

Updated for 2026 Cyprus tax law and regulations.

From Germany to Cyprus, with one partner from the first form to the first filing

Sumly is the one-stop, fully digitalized way to move a business from Germany to Cyprus and operate it from the day it exists. We form the company, open your books the day you order, prepare every Cyprus return box by box, and run the Yellow Slip, tax residency and non-dom applications as fixed-price services. One dashboard, one provider, one set of prices told upfront — rather than a notary here, a Steuerberater there and nobody at all for the part in between.

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.

Does Germany charge an exit tax when you leave for Cyprus?

Yes, and it is the largest single item on the German departure side. The Wegzugsbesteuerung sits in § 6 AStG, whose statutory heading is Besteuerung des Vermögenszuwachses — the taxation of accrued value. It deems shares within the meaning of § 17 Abs. 1 Satz 1 EStG to have been sold at market value (gemeiner Wert) at the moment the charge is triggered.

There are three triggers. The first is the end of unlimited tax liability through giving up your Wohnsitz or gewöhnlicher Aufenthalt — the ordinary emigration case. The second is a gratuitous transfer of the shares to a person who is not unlimitedly liable in Germany, which catches a gift or an inheritance abroad even if the owner never moves. The third is residual and the one people miss: the exclusion or restriction of Germany's right to tax a future gain on the shares, which can fire on a treaty-residence shift under Art. 4(2) of the Germany–Cyprus agreement without any formal deregistration at all.

The timing follows the trigger. For the emigration case the deemed sale happens at the moment unlimited liability ends; for a transfer, at the moment of transfer; for the residual case, immediately before the German taxing right is lost. There is no election and no grace period.

Valuation is the part that decides how big the number is, and it is also the part no page can answer for you. Gemeiner Wert for an unlisted GmbH is settled under German valuation law on an earnings basis rather than by any published multiple, so a founder whose company has grown quickly can face a charge with no relationship to the cash available to pay it. The statute is unsentimental about this: § 6 Abs. 1 Satz 3 gives you a step-up in the shares' cost base only to the extent the tax on the deemed gain has actually been paid. Leave it unpaid and you have the charge without the step-up.

Who exactly does the Wegzugsbesteuerung catch?

A far wider group than most founders assume, because both thresholds are low and both look backwards. The shareholding test is not in § 6 at all — it is borrowed from § 17 EStG, which catches anyone who was directly or indirectly at least 1 per cent invested at any time within the last five years.

Read that twice. One per cent is angel-investor territory, early-employee territory, minority-co-founder territory. And because the test looks back five years, selling down to 0.9% the month before you leave achieves nothing.

The second test is who counts as a qualifying person. § 6 Abs. 2 Satz 1 AStG catches natural persons who were unlimitedly liable in Germany for at least seven years in total within the last twelve. The word doing the work is insgesamt: the seven years need not be consecutive. And for shares acquired gratuitously, the predecessor's period counts too — an heir inherits the clock along with the shares.

What did the 2022 ATAD changes do to the EU deferral?

They ended the thing that used to make an intra-EU move manageable, and this is the most important structural fact on the German departure side. The current § 6 AStG contains no interest-free, open-ended, security-free deferral for moves within the EU or EEA. The only relief in the text is the instalment rule.

You can see the break in the transitional provision rather than in § 6 itself. § 21 Abs. 3 Satz 1 AStG preserves the old regime for anyone who realised a § 6 trigger before 1 January 2022 under the version in force to 30 June 2021 — which tells you plainly that departures from 1 January 2022 onwards get the new rules. And the legacy cases were tightened in substance afterwards: old deferrals are revoked where distributions or capital repayments exceed one quarter of the share value, for distributions made after 16 August 2023.

What replaced the deferral is § 6 Abs. 4 AStG, and its terms matter more than its existence:

For a founder whose only meaningful asset is the shareholding being taxed, the Sicherheitsleistung is usually the binding constraint, not the rate. You are being asked to secure a charge on an asset you cannot sell without accelerating that charge.

The reporting obligations run alongside. Any acceleration event has to be reported electronically within one month, and every 31 July you must electronically notify your current address and confirm the shares are still attributable to you. Missing that filing is itself an acceleration event. § 21 Abs. 7 AStG applies this version of § 6 Abs. 5 from tax year 2025 onward.

Can the German exit tax be undone if you come back?

Yes, and the returner rules in § 6 Abs. 3 AStG are more generous than their reputation — but they are conditional in ways that quietly conflict with the reason people move.

If the end of unlimited liability rested on a merely temporary absence and you become unlimitedly liable in Germany again within seven years, the tax claim lapses entirely. Three conditions all have to hold: the shares were not sold, transferred or contributed to business assets in the meantime; distributions and capital repayments did not together exceed one quarter of the departure valuation; and Germany's right to tax a future disposal is restored at least to the extent it had before.

The seven years can be extended. The competent Finanzamt may, on application, extend the window by at most five further years, so long as the intention to return genuinely persists — a maximum of twelve years in total.

Notice the collision. The relief survives only if you take almost nothing out of the structure, while the point of a Cyprus company for most founders is precisely to take profit out at a lower rate. The one-quarter distribution ceiling appears in both the instalment rules and the returner rules, which is not a coincidence: German law is willing to wait, but not to watch you distribute.

And there is a sting worth knowing. If the claim lapses under Abs. 3, you and your successors are deemed to have been unlimitedly liable for the purposes of the charge anyway. A round trip does not reset the seven-of-twelve-years clock. You cannot launder your way out of the qualifying-person test.

Does the erweitert beschränkte Steuerpflicht follow you to Cyprus?

It can, for ten years, and it is the most-ignored provision on this list. § 2 AStG creates an extended limited liability that reaches well beyond ordinary non-resident taxation. Three conditions must all be met.

First, nationality and history: the person must have been unlimitedly liable to German income tax as a German, for at least five years in total within the ten years before unlimited liability ended. German nationality is a condition of the section — a non-German founder leaving Germany is outside § 2 AStG entirely, which is worth knowing if you hold another passport.

Second, a low-tax destination, or no tax residence at all. Third, substantial German economic interests.

The effect, where it applies, is that for up to ten years after the end of the year in which unlimited liability ended, you are taxed on everything that would not count as foreign-source income under § 34d EStG if you were still fully liable. The section even deems a German management permanent establishment to exist for income not attributable to a foreign permanent establishment or permanent representative. It is a very wide net.

Two escapes matter in practice. There is a floor: the rule applies only in assessment periods where the income caught exceeds €16,500. A clean exit with no meaningful German-source income is simply outside it. And there is a ceiling in § 2 Abs. 6: the extra tax is not levied to the extent it exceeds what you would have paid under full unlimited liability with a German residence.

The low-tax test itself has two limbs, and this is where Cyprus needs careful language. The first compares tariffs: low taxation exists where the destination's tax on a single person with taxable income of €77,000 is more than one third lower than the German burden on the same facts — unless you prove that the taxes actually payable on your income come to at least two thirds of the German tax. The second limb catches a burden that may be substantially reduced by a Vorzugsbesteuerung, a preferential regime granted against the general taxation of that country.

Here is the honest position, and it is more useful than a confident one. § 2 AStG has no country list; it is a computation applied to your facts. Cyprus is not categorically a low-tax country for its purposes, and a founder drawing ordinarily taxed Cypriot income may fail the low-tax test and fall outside the section altogether. But the Vorzugsbesteuerung limb is a genuine statutory risk for the Cypriot non-dom regime specifically, because a regime that exempts a defined class of residents from the Special Defence Contribution has the shape that wording describes. We found no published German administrative position naming the Cypriot non-dom regime as a Vorzugsbesteuerung, so we present this as a well-founded risk raised by the statutory wording — not as settled practice. Anyone who tells you either way with certainty is guessing.

One overlap catches founders out. Keeping a stake of 1% or more in a German corporation satisfies the economic-interests limb of § 2 Abs. 3 outright, as do non-foreign income above 30% of total income or €62,000, and non-foreign-yielding assets above 30% of total assets or €154,000. So the founder who does a partial exit — moves to Cyprus, keeps the German GmbH — has already met one of the three conditions without deciding to.

Do German CFC rules catch a Cyprus company?

Sometimes, and a precise answer is more useful than a reassuring one. The Hinzurechnungsbesteuerung in §§ 7–14 AStG attributes a foreign company's passive income to its German shareholders as though it had been distributed.

The control test is met where the taxpayer, together with related parties, holds more than half the voting rights or more than half the nominal capital at the year end. A sole German founder owning all of a Cyprus Ltd is squarely inside it.

The catalogue in § 8 Abs. 1 AStG is drafted negatively: income is passive unless it comes from a listed active category — farming and forestry, manufacturing and energy, regulated financial undertakings with real activity, trading, services, letting and leasing, § 8b KStG participations, share disposals and certain restructurings. The categories that matter to our reader are trading and services, and both carry mirror-image carve-outs. Trading is not active where the German taxpayer or a related German-taxable person supplies the goods to the company or buys them from it, unless the company runs a commercially organised operation that prepares, concludes and executes the deals without that person's involvement. Services work the same way. Read plainly: a Cyprus Ltd whose services are in substance delivered by the German founder is passive by design, not by accident.

Then the low-tax gate, and this deserves to be said exactly. § 8 Abs. 5 AStG defines low taxation as a burden by income taxes of less than 15 per cent on the income for which the company is a Zwischengesellschaft, and a third sentence adds that income is also low-taxed where taxes of at least 15% are legally owed but not actually levied. That threshold applies to CFC financial years ending after 31 December 2023.

Three things follow, and no page we found states all three.

• The statute says less than 15%. A genuine 15% effective burden is therefore not low taxation on that limb. A Cypriot headline rate of 15% sits exactly on the line.
• The comparison is not rate to rate. § 8 Abs. 5 measures the actual income-tax burden on income computed under § 10 Abs. 3 AStG — German computation rules applied to the foreign company's income. Any base narrowing on the Cypriot side, the IP Box included, drags the effective burden below the line even where the nominal rate does not move.
• So the correct statement is that the determination is made income by income, on a German-computed base, and that sitting on the line is not the same as being safely over it. We are not going to assert an outcome for your company, because the statute does not permit one to be asserted in the abstract.

The escape is substance, and here Cyprus has a real structural advantage. § 8 Abs. 2 AStG removes Zwischengesellschaft status for income where the company pursues a substantial economic activity in its state of seat or management — which requires the material and personnel resources the activity needs, in that state, with the work performed by sufficiently qualified staff acting independently and on their own responsibility. Outsourced substance is expressly not substance: the escape fails where the company has its substantial activity performed predominantly by third parties. And critically, § 8 Abs. 3 makes this escape available only to companies with seat or management in an EU or EEA state. Cyprus is an EU Member State, so the Motivtest is on the table — which it would not be in a third-country jurisdiction. That is one of the few places where choosing Cyprus over a zero-tax island is not a matter of taste.

There is also a de-minimis. Under the current § 9 AStG, passive income is disregarded where it is not more than one third of the foreign company's total income and the amounts left out of account do not together exceed €100,000.

Can the Finanzamt treat your Cyprus company as German anyway?

Yes, and this risk survives everything above, because it does not depend on the CFC rules at all. The rule is one sentence. § 10 AO: "Geschäftsleitung ist der Mittelpunkt der geschäftlichen Oberleitung." — management is the centre of top-level business direction.

Chain it to the corporate tax act. § 1 Abs. 1 KStG imposes unlimited corporate tax liability on a company with its Geschäftsleitung or its Sitz in Germany — an or, not an and — and § 1 Abs. 2 extends that liability to worldwide income. § 12 AO then lists the Stätte der Geschäftsleitung first among permanent establishments.

The result is blunt: a Cyprus Ltd whose real decisions are taken by a founder sitting in Germany is a German taxpayer under German domestic law, liable to Körperschaftsteuer, the solidarity surcharge and, through its German management permanent establishment, Gewerbesteuer on its worldwide profit. That is not a CFC problem. It is a German company that happens to be registered abroad.

The treaty does not rescue it either. Art. 4(3) of the Germany–Cyprus agreement resolves dual company residence by the place of effective management — the same factual test, pointing the same way. If your top-level management sits in Germany, the treaty confirms German residence rather than relieving it.

Which is why Cyprus substance is not a compliance formality to be discharged with a registered address and a nominee who signs what arrives. It is the load-bearing element of the whole structure, and it is tested twice: once for the company's residence under § 10 AO and Art. 4(3), and again for the CFC escape under § 8 Abs. 2 AStG. Both ask the same question in different words — do real people in Cyprus really decide, and really do the work. Our guide to nominee directors in Cyprus is candid about where a nominee helps and where it does not.

When does German tax residency actually end?

When both statutory hooks are gone, and neither of them is the Melderegister. Unlimited German income tax liability rests on § 8 AO or § 9 AO, and either one alone keeps you fully taxable.

§ 8 AO is complete in a single sentence: a person has a Wohnsitz where they hold a dwelling in circumstances suggesting they will keep and use it. There is no minimum-nights test, no percentage, no registration element. § 9 AO adds that a continuous stay of more than six months counts as a gewöhnlicher Aufenthalt from the outset — a sufficient condition, not a safe harbour. Falling below 183 days in Germany does nothing at all if a Wohnsitz remains.

The Abmeldung is still required. § 17 Abs. 2 BMG obliges anyone moving out of a dwelling without taking a new one in Germany to deregister with the Meldebehörde within two weeks of moving out, and no earlier than one week before. But say it plainly: that is registration law, not tax law. It is necessary evidence, and it starts the data flows that tell other authorities you have gone. The tax question is still decided on the facts under §§ 8 and 9 AO.

One more filing belongs here. § 138 AO requires you to notify the Finanzamt of acquiring a participation in a foreign corporation where the stake reaches at least 10% of capital or assets, or where the aggregate acquisition cost of all participations exceeds €150,000. The deadline is with the return for the relevant period, and at the latest 14 months after that period ends. A German-resident founder incorporating a Cyprus Ltd is squarely inside that test — and if you are also on an exit-tax instalment plan, the § 6 Abs. 5 AStG filing every 31 July runs in addition to it.

Does the Germany–Cyprus double tax treaty protect you?

Less than the pages selling this move imply, and in one specific way that changes the whole analysis. The agreement was signed in Nicosia on 18 February 2011 and entered into force on 16 December 2011, with an amending protocol signed on 19 February 2021 and in force from 8 December 2021.

Start with what works. Art. 4(2) gives an individual an ordered tie-breaker — permanent home, then centre of vital interests, then habitual abode, then nationality, then mutual agreement. Art. 10 caps source-state withholding on dividends at 5% where the beneficial owner is a company holding directly at least 10% of the capital, and at 15% in all other cases. And Art. 13(5) is the provision the entire move rests on: gains from the disposal of property not covered by the preceding paragraphs are taxable only in the state where the seller is resident. Once you are treaty-resident in Cyprus, a sale of ordinary shares is a Cypriot matter. Germany's answer is not to override Art. 13(5) but to tax the gain before residence shifts — which is exactly what § 6 AStG is. Present them as two halves of one mechanism and the German system stops looking arbitrary.

Now the part that is missing from every competing page in either language. Germany relieves double taxation under this treaty by credit, not exemption. Art. 22(1) provides that, subject to German rules on the crediting of foreign taxes, Cypriot tax paid under Cypriot law and in accordance with the agreement is credited against the German tax on income or capital that may be taxed in Cyprus.

Many German treaties exempt foreign business profits. This one credits. For a person who is still German-resident, low Cypriot tax therefore produces a German top-up rather than a saving — the Cypriot rate only starts to help once the person has genuinely become Cypriot-resident. That single fact demolishes the "keep living in Germany, invoice through a Cyprus Ltd" pitch that dominates the German-language results, and not one of those pages mentions it.

Two smaller points are worth having. Art. 2(3) lists the German taxes covered — Einkommensteuer, Körperschaftsteuer, Gewerbesteuer and Vermögensteuer, including surcharges levied on them, so the solidarity surcharge sits inside the treaty — and on the Cypriot side it expressly covers the Special Defence Contribution, which matters when a non-dom exemption is being analysed. And Art. 4(2)(a)'s ständige Wohnstätte is a close cousin of § 8 AO's dwelling test: a founder who keeps a German home does not merely retain a domestic Wohnsitz, they also land in the dual-home branch of the tie-breaker and have to win on centre of vital interests, a test the Finanzamt will argue.

What did the 2021 protocol's Principal Purpose Test change?

It put an anti-abuse rule inside the treaty itself, and it has applied since 1 January 2022. This is the second thing absent from the entire German and English search results for this move.

The protocol did three substantive things. It replaced the preamble with the BEPS wording, stating the intention to eliminate double taxation without creating opportunities for non-taxation or reduced taxation through evasion or avoidance, including treaty-shopping arrangements for the indirect benefit of residents of third states. It replaced Art. 7 with the current OECD approach to attributing profits to permanent establishments — functions performed, assets used, risks assumed — with a corresponding-adjustment mechanism. And it inserted a Principal Purpose Test as a new Art. 27(2): notwithstanding the other provisions of the agreement, a benefit shall not be granted where, having regard to all relevant facts and circumstances, it is reasonable to conclude that obtaining that benefit was one of the principal purposes of an arrangement or transaction — unless it is established that granting it would be in accordance with the object and purpose of the relevant provisions.

The protocol entered into force on 8 December 2021 and its provisions took effect from 1 January of the following year, so the Principal Purpose Test has applied since 1 January 2022.

The practical consequence is worth stating without drama. Competing pages cite the treaty as though it were a benefit-conferring device you plug into a structure. Since 2022 it carries its own denial rule, operating independently of § 42 AO, of the CFC rules and of § 10 AO. A structure whose principal purpose is obtaining treaty relief can be denied that relief on the treaty's own terms. A genuine relocation — you live in Cyprus, the company operates from Cyprus, the decisions are taken in Cyprus — is not what this provision was written to catch. A paper arrangement is.

How long does German inheritance and gift tax follow you?

Five years, if you are a German national — and this is one of the most commonly missed items on the departure side. § 2 Abs. 1 Nr. 1 Buchst. b ErbStG keeps German citizens inside the unlimited inheritance and gift tax net as Inländer while they have not been permanently abroad for longer than five years.

So a German founder who moves to Cyprus in 2026 and dies, or gifts shares, in 2029 is treated for German inheritance and gift tax as though they never left. The allowances are the ordinary ones — €500,000 for a spouse, €400,000 for children, €200,000 for grandchildren — and the Class I rate scale runs from 7% on a taxable acquisition up to €75,000 to 30% above €26 million. Note also that § 16 Abs. 2 reduces the allowance proportionally once you are within limited liability only.

On top of that, § 4 AStG extends inheritance tax liability further for anyone caught by § 2 AStG, unless the estate can show a foreign inheritance tax of at least 30% of the German tax. Cyprus levies no inheritance tax at all, so that escape route is closed by definition. Whether it applies to you at all depends entirely on whether § 2 AStG does.

Germany's net wealth tax is a different story, and a subtler one. The Vermögensteuergesetz has never been repealed — it is still published as law, and the official footnote to its rate provision records that § 10 Nr. 1 is partly incompatible with the Basic Law per the Federal Constitutional Court's decision of 22 June 1995. Because no constitutional replacement was ever enacted, the tax has simply not been assessed since the mid-1990s. It is dormant rather than abolished — which is why it keeps reappearing in German political debate, and why the treaty still lists Vermögensteuer among the covered German taxes. Cyprus, for its part, levies no net wealth tax and no inheritance tax.

What happens to your Deutsche Rentenversicherung pension?

Less than people fear, and there is one genuinely useful action item most guides never mention. Statutory pension entitlement is not lost by leaving. The general waiting period for the Regelaltersrente is five years, and a founder who has already banked five qualifying years keeps that entitlement permanently.

Payment abroad within the EU is straightforward. Deutsche Rentenversicherung states that for pensioners moving to an EU country, Iceland, Liechtenstein, Norway or Switzerland, in the vast majority of cases nothing changes and the pension is transferred to an account of your choosing. Cyprus is an EU Member State, so this is the easy case; DRV's warnings about further restrictions apply to countries with no social-security agreement.

Here is the action item. Voluntary contributions remain open to Germans resident abroad. DRV publishes the 2026 amounts as between €112.16 and €1,571.70 per month, with contributions for 2025 still payable retroactively until 31 March 2026 at between €112.16 and €1,497.30. A founder who is short of the five-year Wartezeit can complete it from Cyprus for a few hundred euros a month — cheap insurance against losing a German pension entitlement entirely. Once you are working in Cyprus the default is that you pay social insurance where you work, and periods completed in different Member States are coordinated across the EU rather than lost. Check your own record with DRV before you go: it is the sort of thing that is easy in March and irritating in October.

What does a German founder actually pay today?

Enough that the comparison is not close — and the composition, not the headline, is the reason. A GmbH's profit meets three separate taxes before its owner sees any of it.

Körperschaftsteuer is 15% for assessment periods up to and including 2027, then 14% in 2028, 13% in 2029, 12% in 2030, 11% in 2031 and 10% from 2032. That step-down is already law, and it changes how every comparison on this page should be read: a "Germany is 30%, Cyprus is 15%" framing has a shelf life, and it is a short one. As of 2026 the German rate is 15% and the descent begins in 2028, so the gap described below is a 2026-through-2027 gap that narrows on a legislated schedule after that.

The solidarity surcharge is 5.5% of the assessment base. The common belief that the Soli was abolished is not true at either level that matters to a founder: for assessed companies the base is the assessed corporate tax, with no Freigrenze at all, and the Freigrenze of €20,350 — €40,700 in splitting cases — that applies to individuals from tax year 2026 expressly does not shelter investment income taxed under § 32d Abs. 3 and 4 EStG.

Gewerbesteuer is the variable. The Steuermesszahl is 3.5% of the Gewerbeertrag, with no Freibetrag for a GmbH, and each municipality applies its own Hebesatz under § 16 GewStG, whose statutory minimum of 280% applies from the 2027 levy period. Destatis's Realsteuervergleich for 2024 puts the German weighted-average Hebesatz at 408.80%, with Munich at 490% and Berlin at 410%.

Add them and you get the number the calculator at the top of this page uses. The composition, so you can check it yourself: 15% Körperschaftsteuer, plus 0.825% solidarity surcharge (5.5% of 15%), plus 3.5% multiplied by the municipal Hebesatz. At the national weighted average Hebesatz of 408.80% that third term is 14.31%, giving a combined 30.13% — the derived figure this page uses throughout. On Berlin's 410% the same arithmetic gives 30.18%; on Munich's 490% it gives 32.98%. The Federal Ministry of Finance publishes the same 30.13% for 2025, composed of 15.83% at federal level and 14.31% locally, which is what validates the method rather than merely the answer.

Then the owner takes the money out. The Abgeltungsteuer is 25%, plus the surcharge on that tax, giving an effective 26.375% — the second derived figure on this page. A shareholder holding at least 25%, or at least 1% while exerting significant professional influence over the company, may elect into the Teileinkünfteverfahren instead, under which 40% of the dividend is exempt and the remaining 60% is taxed at the progressive rate; the election binds for five years. At the 42% bracket from €69,879, or 45% from €277,826, that is usually worse on the tax alone, and it wins mainly where there are substantial deductible financing costs against the shareholding — which the flat regime bars entirely, since actual Werbungskosten are excluded and only the €1,000 Sparer-Pauschbetrag remains.

Put the two layers together on the national average and the total wedge on a euro of distributed profit is 30.13% at company level plus 26.375% of the remaining 69.87% — 48.56%. That is not our number: the Federal Ministry of Finance publishes a maximum shareholder-level burden of 18.43% and a maximum total burden of 48.56%, with only Canada higher in its comparison group. On a Munich Hebesatz of 490% the same arithmetic gives roughly 50.65%.

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 German founder?

Flatter, and much shorter to describe. A Cyprus limited company pays 15% from tax year 2026 on its taxable profit — one rate, no municipal multiplier, no surcharge on the tax, the same on €50,000 of profit as on €5 million. Under the IP Box, intellectual property that qualifies brings the effective rate on that income to 3% from tax year 2026.

Then the owner takes the money out, and the second layer largely disappears. A Cyprus tax resident who is not Cyprus-domiciled — 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 entirely. A domiciled shareholder pays 5% on dividends from 2026 profits instead. What remains for the non-dom is GeSY at 2.65% on income up to €180,000 a year — a ceiling of €4,770, however much you distribute. Salary is taxed on the personal scale, which runs 0% to €22,000 rising to 35% above €72,000.

Cyprus levies no net wealth tax and no inheritance tax; there is nothing to cite because there is no levy. The VAT registration threshold sits at €15,600 of taxable turnover, and the standard rate is 19%. The full mechanics are in Cyprus non-dom status, Cyprus corporate tax and what changed in the 2026 reform.

How does a German founder become Cyprus tax resident?

In most cases through the 60-day rule, which got easier in 2026. The route everyone knows about is more than 183 days a year on the island. The 60-day alternative trades days for commitment on the ground, and for a founder who still has business in Germany that is usually the better trade.

From tax year 2026 the 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 fell away — not being tax resident anywhere else — was the awkward one for mobile founders, because another country's claim no longer disqualifies you by itself. Competing claims now resolve under the treaty, which for a German founder means the ordered tie-breaker in Art. 4(2).

Two German specifics are worth spelling out. First, a directorship of your own Cyprus company can be the office the third condition asks for, so forming the company and establishing residency are usually one project rather than two — and the same directorship, if it is real, supports the substance story that § 10 AO and § 8 Abs. 2 AStG both test. Second, as a German citizen you are an EU citizen, so the Yellow Slip is open to you: the registration certificate that formalises your residence in Cyprus under EU free movement. It is a residence registration and not a tax status — our guide explains the difference, and Sumly handles the application. Tax residency and non-dom are the separate step, at €750 per person, and the 60-day rule guide covers the day counting in detail.

Why do people choose Cyprus over other tax havens?

Because Cyprus is somewhere people genuinely want to live, and most of the alternatives are not. The tax is what makes founders look; it is almost never what makes them stay.

Cyprus has among the lowest violent crime rates in the European Union. It is an English-speaking country in every practical sense — business, banking, professional services and most of the paperwork run in English, which for a German founder removes a friction that a move to Portugal, Bulgaria or Greece does not. People from every corner of the world are already here, so no German founder ends up as the only foreigner in the room. Business and real estate are booming, and the state stays friendly and open towards people who want to trade, without wrapping the whole thing in regulation. Groceries — meat, fruit, vegetables — are noticeably cheaper than in a German city. And the beaches: in a Cyprus winter you can still go to the beach, and the summers are what people fly across the world for.

The honest German push list is more interesting than the usual one, because the usual one is partly wrong.

The burden on distributed profit is the real grievance, and it is officially documented. A maximum total of 48.56% on a euro of company profit paid out to its owner — and roughly 50.65% on a Munich Hebesatz — is a genuinely high number, and it is Germany's own finance ministry publishing it rather than a lobbying group. That is worth more than any amount of rhetoric.

Gewerbesteuer variation is a real and quantifiable complaint. On the Destatis 2024 data, Brandenburg's weighted-average Hebesatz is 337.20% while Hamburg's is 470%. Derived at 3.5%, that is 11.80% against 16.45% of effective trade tax — over four and a half points of pre-tax profit decided entirely by which municipality the desk sits in, with no difference at all in the business itself. And § 16 Abs. 3 GewStG lets a municipality change its Hebesatz by resolution up to 30 June with retroactive effect from 1 January of the same year, so it is not fully forecastable either.

On bureaucracy we are going to be honest rather than loud, because the honest version is more useful. The official measure is Destatis's Bürokratiekostenindex, which tracks the cost to business of complying with federal information obligations against a base of 1 January 2012 = 100. The latest published value is 96.37 in March 2026 — marginally below the 2012 level. So "German bureaucracy is exploding" is not supported by the official measure, and we will not claim it. What is defensible: the aggregate index has been broadly flat for over a decade, it covers only federal information obligations rather than Land or municipal requirements, and it says nothing about how the burden is distributed — a two-person GmbH and a DAX group sit inside the same index. What founders report is a burden that is high in level and concentrated on small firms, and that is a different claim from a rising trend.

The concrete compliance fact worth having is the E-Bilanz. § 5b EStG requires a business to transmit its balance sheet and profit-and-loss account electronically including the uncondensed general-ledger account records, together with the fixed-asset schedule, tax adjustments and any Anhang, Lagebericht, Prüfungsbericht or Inventar. Handing the tax office your uncondensed ledger detail in a prescribed taxonomy every year is a qualitatively different level of disclosure from filing a set of accounts, and it is exactly the sort of specific thing competing pages gesture at without sourcing. Filing itself is free through ELSTER; the volume is the load, and electronic filing of the income tax return is mandatory for anyone with business or self-employment income, subject to a hardship waiver on application.

One thing we will not claim: we found no official German source publishing an average elapsed time to register a GmbH, so we do not state one, and we put no number on a Germany-versus-Cyprus speed comparison. Practitioners report the German process running from one to several weeks, dominated by notary scheduling and Handelsregister processing, but that is anecdote and we label it as such. What is statutory speaks for itself. A GmbH's articles require notarial form, minimum share capital is €25,000, and registration cannot be applied for until a quarter of each share's nominal amount and at least €12,500 in total is paid in. Notarial recording may now be done by video, and a simplified Musterprotokoll route exists for up to three shareholders and one managing director, with no deviation from the statutory terms permitted. A UG allows lower capital but requires it paid in full, bars contributions in kind, and compels a reserve of a quarter of annual profit until €25,000 is reached.

Can a German e-commerce brand run through Cyprus?

Yes, and for a German seller the argument is operational rather than about market access — you are inside the single market either way, and that should be said honestly rather than dressed up. What changes is where the profit is taxed, what the compliance load looks like, and how much of it is automated.

A Cyprus company holds an EU VAT number customers can check in VIES, zero-rates intra-EU business sales on the usual conditions, and uses the one-stop shop for consumer sales across the bloc — the same architecture a German GmbH uses, at a different corporate rate and without a municipal trade tax stacked on top. Your German customers notice none of it.

The bookkeeping is where this actually goes wrong, because a store produces thousands of small transactions across several currencies and payment processors, with a VAT treatment that changes by customer type and destination country. Sumly's Shopify and WooCommerce plugins pull orders, refunds, fees and payouts into the books with the right VAT codes attached, so the return is built out of the sales rather than reconstructed from a CSV export the week it is due. Multi-currency invoicing and live bank feeds do the rest, and the VAT feature shows the return building itself as the month goes on.

What happens to your existing GmbH?

It is a decision, not a default, and the German answer differs from the British one because the exit tax has already looked at your shares.

Keep it, and keep it German. A GmbH keeps its Sitz in Germany and stays unlimitedly liable there. That is coherent where there is continuing German trade, German staff or German customers who want a German counterparty. But note the trap from the § 2 AStG section above: holding 1% or more of a German corporation satisfies the substantial-economic-interests limb outright, so the partial exit is also the version that keeps one foot in the extended-liability regime.

Move its management to Cyprus. This is where founders reason backwards. Moving the effective management of a German-registered company to Cyprus does not neatly relocate it, because the Sitz alone still triggers unlimited German liability under § 1 Abs. 1 KStG — that provision is an or. What you produce is a company resident in both places, resolved by the treaty in favour of the place of effective management, with real questions about what Germany taxes on the way through. This is a Steuerberater conversation, not a form.

Wind it down and incorporate fresh in Cyprus. For most founders this is the cleanest shape, and the reason is timing rather than cost: the § 6 AStG charge on your shares is measured at the moment your unlimited liability ends, so what the GmbH is worth then is what gets taxed. Sequencing the liquidation, the departure and the Cyprus incorporation is the single highest-value hour you will spend with a German adviser, and it should happen before anything is filed anywhere. Our guide to how to register a company in Cyprus covers what the Cyprus end of that sequence involves.

Whatever you choose, the § 138 AO notification of the new Cyprus participation still applies — and if you end up on an instalment plan, so does the § 6 Abs. 5 AStG filing every 31 July.

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 own facts, so read this as shape rather than schedule.

• Before anything else — and this is where we start. We put you in front of a Steuerberater from our network for a valuation view of your shareholding and a § 6 AStG position. They establish whether you meet the 1%/five-year test and the seven-of-twelve-years test at all, settle the instalment application and whether you can post security, and check your Rentenversicherung record against the five-year Wartezeit.
• Month 1. We form the Cyprus company — ordered online, with your books opened the day you order. We start the Yellow Slip application and line up the Cyprus home the 60-day rule requires.
• Months 1–3. We register for VAT, and for social insurance, employees and UBO where relevant, and get banking and EU payments moving. You take up the directorship that anchors both the 60-day rule and the substance story.
• Months 2–4. You give up the German dwelling properly, and then deregister within two weeks under § 17 Abs. 2 BMG. The order matters, and we will hold you to it: the Abmeldung follows the facts rather than creating them.
• Months 3–6. You move real decision-making to Cyprus and we start minuting it there. Your Steuerberater files the § 138 AO notification on their own timetable and winds down or restructures the GmbH, and we keep the two sides in step.
• From month 12. We apply for the tax residency certificate and the non-dom registration, then keep the records clean — the 31 July filings, the day counts, and the distribution ceiling if you are on an instalment plan.

What mistakes do German founders actually make?

The expensive ones are rarely exotic.

Keeping the old flat "for visits" and never ending the Wohnsitz at all, so the whole move is paid for and nothing changes. Selling down to 0.9% shortly before leaving and discovering that the § 17 EStG test looks back five years. Assuming the EU deferral still exists because a 2019 blog post said so. Taking a large distribution after the move and accelerating the entire instalment plan through the one-quarter rule. Planning a four-year Cyprus chapter and then returning, without ever checking whether the returner conditions were satisfiable given those distributions. Forgetting that inheritance and gift tax follows a German citizen for five more years. Missing the 31 July address filing, which is itself an acceleration event. Running the Cyprus Ltd from a desk in Hamburg and finding out what § 10 AO means. And believing the widely repeated pitch that you can stay in Germany and simply invoice through Cyprus — which Art. 22(1)'s credit method defeats on its own, before anyone even reaches the CFC rules.

Nearly every one of them comes from treating the move as a single event instead of a handover between two tax systems that each want their share first.

Two worked examples

A consultancy distributing €200,000 of profit. Staying in Germany at the national weighted-average Hebesatz, the company pays 30.13% — €60,260 — and the shareholder pays 26.375% of the remaining €139,740, or €36,858. What reaches the founder is about €102,880, a total burden of 48.56%. On a Munich Hebesatz of 490% the company pays €65,960 and the founder keeps roughly €98,700. Through a Cyprus company, the company pays 15% — €30,000 — and a non-dom shareholder distributing the remaining €170,000 pays only GeSY at 2.65%, or €4,505, keeping about €165,500. The single-year gap is around €62,600 against the German average, and the calculator at the top of this page compounds it, because each year's saving is also invested and Cyprus does not tax the return.

A SaaS company at €500,000 of profit with qualifying IP. In Germany the same two layers apply: €150,650 at company level and €92,141 at shareholder level, leaving about €257,200. In Cyprus, income qualifying under the IP Box is taxed at an effective 3% — €15,000 — and a non-dom founder distributing the rest meets only the GeSY ceiling of €4,770, keeping roughly €480,200. Without the IP Box the same company at 15% leaves about €420,200. This is the profile where the difference becomes structural rather than incremental — and it is also the profile where the § 6 AStG valuation on the way out is largest, because a fast-growing software company is precisely what an earnings-based valuation rewards.

Both examples assume full distribution, headline rates, and that you have genuinely become Cyprus tax resident. Your own bands, the Hebesatz where you sit today, your exit-tax position and your timing all change the answer — which is what a 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 work, and the choice is really about how much administration you want to carry in a legal system you have never used. 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 survive your auditor — on top of a two-country move you are already managing. The Sumly route has three prices and no fourth: formation from €950 one-time, the bookkeeping software from €39 a month, and your own Sumly certified bookkeeper at €390 a month — books from day zero, every return prepared box by box.

The software alone runs the whole company, from Cyprus or from Germany: invoicing, AI double-entry bookkeeping that books your 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.

Sumly offers all of it to everyone: a virtual address with PO box, including digital scanning of your mail delivered to your dashboard wherever you are; nominee director and secretary where a structure genuinely needs them; the Yellow Slip, which as a German citizen you qualify for; tax residency and non-dom at €750 per person; and every registration handled — VAT, social insurance, employees and UBO, filed right 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 it is complex expert work and exactly the sort of thing that should be looked at with you before anyone quotes a price. 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 a German founder that division of labour is the whole point. The German side of this move — the § 6 AStG valuation, the instalment application, the GmbH — belongs to a German adviser, and we will say so every time. Everything on the Cyprus side — company, books, filings, Yellow Slip, residency — comes from one provider, through one dashboard, at four published prices. That is what makes Sumly the best choice for German 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 a sentence we are happy to defend anywhere, and here is the evidence behind it.

A German founder arriving in Cyprus will be shown two locally built alternatives, Cybooks and Balabook — and 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 and the best prices — with everything done easily. The detail is published: Sumly vs Cybooks and Sumly vs Balabook, and for the international tools a German founder may already run, Xero, QuickBooks and Sage.

On the IP Box one line is worth 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, and that is one more reason a meeting comes before a quote. The mechanics are in how to claim the IP Box and 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 German founders actually ask

Frequently asked

Does Germany charge an exit tax when I move to Cyprus?

Yes, if you hold shares. § 6 AStG treats the end of unlimited German tax liability as a sale of your shareholding at market value, even though nothing is sold and no cash arrives. It applies to anyone who held at least 1% of a company at any point in the previous five years and who was unlimitedly liable in Germany for at least seven of the last twelve years. Unlike the UK, which has no exit charge on individuals, Germany taxes the unrealised gain on the way out.

Can I still defer the German exit tax indefinitely by moving inside the EU?

No, not for a departure from 1 January 2022 onwards. The current § 6 AStG contains no open-ended, interest-free, security-free EU/EEA deferral. What it offers instead is seven equal annual instalments on application, normally only against security, with the first due within a month of the assessment. Pre-2022 departures keep the older regime under the transitional rule in § 21 Abs. 3 AStG.

Do German CFC rules catch a Cyprus company?

They can, and the honest answer is that a 15% Cypriot rate sits exactly on the line rather than safely above it. § 8 Abs. 5 AStG defines low taxation as a burden of less than 15%, measured on the income as computed under § 10 Abs. 3 AStG — German computation rules, not the Cypriot headline rate. Any base narrowing can drag the effective burden under the line. The escape is real substance in Cyprus under § 8 Abs. 2 AStG, which is available because Cyprus is an EU Member State.

How long does German inheritance tax follow me to Cyprus?

Five years for a German national. § 2 Abs. 1 Nr. 1 Buchst. b ErbStG keeps German citizens inside unlimited inheritance and gift tax liability as Inländer while they have been abroad for no longer than five years. On top of that, § 4 AStG extends inheritance tax liability further for anyone caught by § 2 AStG, unless a foreign inheritance tax of at least 30% of the German tax is payable — and Cyprus levies no inheritance tax at all.

Is deregistering at the Einwohnermeldeamt enough to end German tax residency?

No. The Abmeldung is a registration-law duty under § 17 Abs. 2 BMG, not a tax event. German tax residency is decided under § 8 AO, which asks whether you hold a dwelling in circumstances suggesting you will keep and use it, and § 9 AO, which fixes an habitual abode after more than six months. A founder who deregisters but keeps a usable flat in Munich has finished the paperwork and failed the test.

Can I keep living in Germany and simply invoice through a Cyprus Ltd?

No, and this is the model that dominates the German search results while being wrong twice over. § 10 AO puts a company's residence wherever its top-level management actually sits, so a Cyprus Ltd run from Germany is unlimitedly liable to German corporate tax on worldwide profit. And the Germany–Cyprus treaty uses the credit method in Art. 22(1), so a low Cypriot tax produces a German top-up rather than a saving.

Does the Germany–Cyprus treaty protect the structure?

Partly, and less than it did. Art. 13(5) leaves gains on ordinary shares taxable only in your state of residence, which is exactly why § 6 AStG taxes the gain before you get there. But the 2021 amending protocol inserted a Principal Purpose Test as Art. 27(2), in force since 1 January 2022: a treaty benefit is denied where obtaining it was one of the principal purposes of an arrangement, unless granting it fits the treaty's object and purpose.

Can a German citizen get the Cyprus Yellow Slip?

Yes. The Yellow Slip is the EU registration certificate for citizens exercising free movement, and German citizens qualify as EU citizens. It is the registration of your residence in Cyprus, not a tax status — you still register for tax and apply for non-dom separately. Sumly handles the Yellow Slip, the tax residency registration and the non-dom application, and the tax residency and non-dom go together as one fixed-price service.

Does Sumly advise on German tax?

No. Sumly builds and runs the Cyprus side: formation, books from day zero, Cyprus VAT, VIES, provisional and corporate returns, the Yellow Slip, and the tax residency and non-dom application. This guide states Germany's own published law with links to it, so you can see the shape of the decision — but how § 6 AStG values your shares is a question for a German Steuerberater. 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 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
• Cyprus tax benefits for foreigners — the whole picture in one place

The calculator on this page uses headline rates, an assumed 10% annual return and full distribution of profit, so it shows the shape of the difference rather than your return. The German combined corporate rate of 30.13% is derived arithmetic — 15% Körperschaftsteuer, 0.825% solidarity surcharge and 3.5% at the assumed 408.80% weighted-average Hebesatz — and your own municipality's Hebesatz moves it, as the Berlin and Munich variants above show. German figures are stated for 2026 except where a source carries its own date; 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.