Create a company in Cyprus — or move your company from Hong Kong

Hong Kong is not a place a founder leaves in order to pay less tax. Profits tax runs at 8.25% and then 16.5%, dividends are not taxed again in the shareholder's hands, there is no capital gains tax, and there is no VAT or sales tax at all. Cyprus cannot beat that, and this guide is not going to pretend otherwise.

Updated for 2026 Cyprus tax law and regulations.

Hong Kong to Cyprus on one platform: the company, the books and every return in one place

Sumly is the fully digitalized, one-stop route for taking a business out of Hong Kong and into Cyprus and operating it from the hour it exists. We incorporate the company, open your books the day you order, prepare every Cyprus return box by box, and run the tax residency and non-dom application as one fixed-price service. One dashboard, one provider, four published prices — rather than a corporate services agent for the incorporation, a bookkeeper for the ledger, and nobody at all holding the two together.

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 moving from Hong Kong to Cyprus lower your tax bill?

No. Not on the company's profit, not on the money you take out of it, and not on what that money earns afterwards. This belongs at the very top of the page, because the reader who has got as far as researching this move is well advised and will check every claim on it, and a guide that buries the answer forfeits the right to be believed about anything further down.

The Hong Kong position is short. Corporations are charged profits tax at 8.25% on assessable profits up to HK$2,000,000 and 16.5% on the part above that, under the two-tiered rates that have applied since the 2018/19 year of assessment. Dividends received from a corporation that is itself subject to Hong Kong profits tax are excluded from assessable profits, so there is no second layer when the money is distributed. And the Financial Services and the Treasury Bureau states the rest of it in a single sentence: Hong Kong has no value-added or sales tax, no capital gains tax, no withholding tax on dividends and interest, and no estate duty.

Read that as a founder rather than as a taxpayer. It means nothing is charged when you take profit out, nothing is charged on the gain when you sell, nothing is charged when the proceeds are reinvested, and nothing is charged on the estate. Cyprus matches the first and the third of those for a non-domiciled resident, but it charges the company 15% from tax year 2026 and it charges 19% VAT where Hong Kong charges nothing at all. There is no arrangement of those numbers that produces a saving.

So if the only question you are asking is where the rate is lowest, the answer is the jurisdiction you are already in, and the right thing to do is close this page. Everything below is written for a narrower reader: the founder whose customers, regulators, acquirers or engineering team have moved to Europe while the entity stayed in Hong Kong.

Is the Hong Kong–Cyprus tax treaty in force yet?

It is not, and this is the single most important sentence on this page. Hong Kong and Cyprus signed a comprehensive avoidance of double taxation agreement on 12 June 2026 — Hong Kong's 58th such agreement, and its third of 2026. Signature is not entry into force, and the gap between the two is where a lot of currently published advice goes wrong.

The Inland Revenue Department maintains one table of every concluded agreement, with columns for the date of signature, the date of the section 49 Order, the date of entry into force and the date from which it is effective. The Cyprus row shows the signature date, and then three entries that decide the whole question:

That is the published status, from the Department's own list of comprehensive double taxation agreements concluded, and Cyprus does not appear among the fifty-one jurisdictions whose agreements are already in force. The same conclusion falls out of the Department's rate summary, where the Cyprus row carries the status Pending rather than a live effective date.

The remaining steps are set out in the Government's own announcement. The Chief Executive in Council makes an order under the Inland Revenue Ordinance, that order is then subject to negative vetting by the Legislative Council, and the agreement enters into force after both sides have completed their ratification procedures and notified each other.

What will the Hong Kong–Cyprus treaty do once it is in force?

Rather a lot, which is why the timing matters instead of the terms. The text is published in full by the Inland Revenue Department, and it is a generous instrument by the standards of Hong Kong's network.

Dividends, Article 10. Dividends paid by a company resident in one Party to a beneficial owner resident in the other are taxable only in that other Contracting Party. No rate, no holding percentage, no minimum period — exclusive residence-state taxation, disapplied only where the holding is effectively connected with a permanent establishment in the source state.

Interest, Article 11. The same construction and the same result. Interest arising in one Party and beneficially owned by a resident of the other is taxable only in that other Contracting Party. Penalty charges for late payment are excluded from the definition.

Royalties, Article 12. This is the number the press release led with. Source-state tax on royalties beneficially owned by a resident of the other Party is capped so that the tax so charged shall not exceed 3 per cent of the gross amount of the royalties, against a Cyprus domestic rate that can reach 10%. The definition covers copyright, patents, trade marks, designs, plans, secret formulae and processes, and information concerning industrial, commercial or scientific experience.

Capital gains, Article 13. Gains on immovable property go to the situs state and gains on the movable property of a permanent establishment to the state of the establishment. The land-rich clause is the modern formulation: gains on shares or comparable interests may be taxed in the other Party where, at any time during the 365 days preceding the alienation, they derived more than 50% of their value directly or indirectly from immovable property situated there, with carve-outs for shares listed on an approved stock exchange and for shares exchanged in a reorganization, merger, scission or similar operation. Everything else is taxable only where the person disposing of it is resident.

Residence, Article 4. The individual tie-breaker runs permanent home, then centre of vital interests, then habitual abode, then — and this is a drafting feature peculiar to Hong Kong — right of abode on the Hong Kong side against nationality on the Cyprus side, then mutual agreement. For a company resident in both, the agreement is clean: it is deemed resident only where its place of effective management is situated, with no fallback to a negotiation between the two revenue authorities.

Note what that last rule does to a half-executed move. If you incorporate in Cyprus and keep deciding everything from Kowloon, the tie-breaker sends the company back to Hong Kong. The treaty rewards a real relocation and does nothing at all for a nominal one — which is the same conclusion the Hong Kong residence rules reach on their own, further down this page. The landing page for the agreement, with the full text attached, is the Department's own Cyprus agreement page.

Does the FSIE regime change anything for a Hong Kong founder building in Cyprus?

Yes, and it is the change that actually bites, rather than the one people worry about. The foreign-sourced income exemption regime deems specified foreign-sourced income to be sourced in Hong Kong and chargeable to profits tax when it is received in Hong Kong by an MNE entity, unless an exception applies. It is a deeming provision cutting straight across the territorial principle, for a defined class of passive income.

The two commencement dates matter. From 1 January 2023 the regime covers foreign-sourced interest, dividends, intellectual property income and gains from the sale of equity interests, and from 1 January 2024 the amending Ordinance widened "disposal gain" to any gain or profit from the sale of property, which is to say all asset classes rather than equity alone.

Now the part that concerns this page directly. Only MNE entities are caught, and an MNE group is defined as one that includes at least one entity or permanent establishment not located or established in the jurisdiction of the ultimate parent entity. The Department's own FAQ confirms that a standalone local company is caught if it qualifies as an MNE entity. Put plainly: the day your Hong Kong company acquires a Cyprus subsidiary — or a Cyprus company is placed above it — the group is very likely an MNE group and the Hong Kong entity is very likely an MNE entity. A structure that was outside the regime yesterday is inside it tomorrow, purely because of the restructuring.

The exceptions are real but they are work:

• Economic substance. Adequate employees and operating expenditure in Hong Kong to manage the assets, reduced for a pure equity-holding entity to holding and managing equity participations plus compliance with Hong Kong corporate law. The FAQ is candid that no numerical thresholds are published, because the requirement depends on the extent and complexity of activities, and it is not practicable to specify the exact level of human resources. Advance rulings on substance are available.
• Participation exemption, for dividends and equity disposal gains, where the entity has continuously held not less than 5% of the equity interests for 12 months or more, subject to anti-abuse conditions including a subject-to-tax test set at a minimum foreign rate of 15%.
• Nexus, for intellectual property income, exempting to the extent of an R&D fraction of qualifying over overall expenditure.
• The trader exclusion, taking a non-IP disposal gain out of scope where it accrues to an entity that sells property in the ordinary course of business.

None of that makes Hong Kong a high-tax jurisdiction, and the guide will not claim it does. What it does is turn a Hong Kong holding company into a compliance object — an annual, judgement-heavy substance assessment with documentation behind it and, quite often, a ruling application. If your Hong Kong entity exists mainly to hold things rather than to trade, that is a real and rising cost, and it is a much better argument for consolidating somewhere than any rate comparison is.

Does Hong Kong charge an exit tax when you leave for Cyprus?

No — and it is worth setting out how that conclusion is reached, rather than asserting it, because no official page contains the sentence "Hong Kong has no exit tax" and any guide that claims to quote one is inventing it.

The reasoning is structural. Hong Kong's charge to profits tax is transactional and territorial: section 14 of the Inland Revenue Ordinance charges persons carrying on a trade, profession or business in Hong Kong on profits arising in or derived from Hong Kong, and the Department reproduces the provision's own words, which expressly exclude profits arising from the sale of capital assets. The same page states the basis of charge directly: Hong Kong does not impose tax on the basis of residence or domicile. There is no capital gains tax for a deemed disposal to crystallise and no residence basis of charge for a departure event to hang from, so there is nothing an exit charge could attach to.

One honest caveat about the method. The consolidated Ordinance itself could not be indexed to corroborate this by enumeration: elegislation.gov.hk is a JavaScript application that serves no legislative text to a plain request, so every statutory point on this page is taken from the Inland Revenue Department's own published pages rather than from the primary text. Where that limits what can be said, we say so instead of filling the gap.

Which Hong Kong charge actually follows you after you leave?

Share options, and almost nobody writing about this corridor mentions it. If an option was granted by virtue of an employment or office in Hong Kong, the gain realised on its subsequent exercise, assignment or release is chargeable to salaries tax even after permanent departure from Hong Kong, and both you and your employer are required to report it.

For a founder who has spent a decade accumulating options in a Hong Kong business, that is the closest thing this jurisdiction has to an exit charge, and it survives the move indefinitely. There is a mechanism for closing it out. You may elect a notional exercise, in which the Department computes the gain as though the option had been exercised on a day within 7 days before the date of submitting the tax return for the year of assessment of permanent departure. If you did not make the election before you left, the Department will accept one made within 3 months from the date of permanent departure, in which case your departure date becomes the notional exercise date. Where a non-Hong Kong employment holds a conditional option whose vesting period has not expired, the vesting period is treated as ending on that notional date. And if the real gain later turns out lower than the notional one you were assessed on, you can apply for re-assessment on the actual figure.

The practical consequence is a decision with a short window attached: settle the option position on a notional exercise before or shortly after departure and be finished with it, or leave it live and accept that a Hong Kong salaries tax reporting obligation follows you to Cyprus for as long as the options exist.

Does Hong Kong have CFC rules that reach a Cyprus company?

No. Hong Kong operates no controlled foreign company regime — nothing in the Department's published guidance attributes an offshore subsidiary's undistributed profits to a Hong Kong parent. Like the exit tax, that is a reasoned negative rather than a quoted denial, and the reasoning is that a territorial system does not need an anti-deferral rule: profits arising outside Hong Kong are outside the charge in the first place, so there is nothing to defer. The Financial Services and the Treasury Bureau states the principle as only profits or income arising in or derived from Hong Kong is chargeable to tax.

Three mechanisms do the work a CFC regime does elsewhere, and the third is the one to plan around:

1. The source rules themselves, which keep genuinely offshore profit outside the charge.
2. The FSIE regime above, which addresses the same mischief from the other end — taxing on receipt in Hong Kong by a substance-deficient MNE entity rather than on accrual in a controlled subsidiary.
3. The general anti-avoidance provisions. Section 61 lets the Assessor disregard a transaction that is artificial or fictitious. Section 61A applies to any transaction entered into after 13 March 1986 for the sole or dominant purpose of enabling a person to obtain a tax benefit, and permits an assessment as if the transaction had not happened. Section 61B restricts trafficking in loss companies.

Section 61A is the provision a poorly-executed Cyprus restructuring meets. If the Cyprus company is inserted with no commercial purpose beyond a tax outcome, the Department has an explicit statutory tool and does not need a CFC regime to use it. That is one more reason why the version of this move that works is the one where the founder, the decisions and the business genuinely go.

Can the Inland Revenue Department treat your Cyprus company as Hong Kong resident?

Yes, and this is the risk that survives the flight. A company is a Hong Kong tax resident if it is incorporated in Hong Kong, or incorporated outside Hong Kong but normally managed or controlled in Hong Kong. The second limb is the one that reaches a Cyprus company.

Incorporate in Cyprus and keep making the strategic decisions in Hong Kong, and the Cyprus company is a company incorporated outside Hong Kong that is normally managed or controlled in Hong Kong — a Hong Kong tax resident. Worse, it may also be carrying on a business in Hong Kong so that its profits arise in or are derived from Hong Kong under section 14, which is a charge rather than a status. Cyprus, for its part, tests residence on management and control too, so the company can end up resident in both, and once the treaty is in force the tie-breaker sends it to its place of effective management. If you never actually left, that is Hong Kong, and the exercise has achieved nothing except two sets of filings.

What protects the position is unglamorous and entirely evidential: decisions taken and minuted in Cyprus by a board that genuinely decides, material spending authorised there, contracts signed there, and a record that matches the story an auditor or an assessor would reconstruct. Where a structure needs local officers, our guide to nominee directors in Cyprus sets out what a nominee does and, more usefully, what a nominee cannot fix.

What happens to your Hong Kong company's own residence when you leave?

It stays a Hong Kong tax resident, and this is the point most competing pages get backwards. A company incorporated in Hong Kong is resident on that fact alone under the Department's own test — management and control is the alternative limb for foreign-incorporated companies, not an additional condition for local ones. Moving yourself to Cyprus therefore does not de-residence the Hong Kong company.

What can change is the charge rather than the status. If the trade is genuinely carried on from Cyprus, the profits may fall outside section 14 and outside the Hong Kong charge, while the company remains a Hong Kong resident with filing obligations until it is formally deregistered. Two consequences follow. First, "we'll just leave the Hong Kong company dormant" is a decision to keep a filing entity alive, not a decision to switch one off. Second, a Certificate of Resident Status remains available to it for treaty purposes, which occasionally matters during a transition — the Department publishes the application route, and we deliberately quote no turnaround figure for it here, because we were not able to verify one from the Department's own page.

How do you clear tax with the Inland Revenue Department before you leave?

Deliberately, and earlier than feels necessary. Every taxpayer leaving Hong Kong is required to clear their tax liabilities before departure, including taxpayers whose employer bears their Hong Kong tax.

The mechanics run through the employer. Your employer files Form IR56G. Where further emoluments arise after clearance, an additional or revised IR56G is filed, and the employer must not make any payment of money or money's worth for a period of one month from the date of giving notice, with a fresh Letter of Release issued once the additional tax is paid. If you hand a properly completed return with its supporting documents to the assessing officer in person and ask for early clearance, the demand note can generally be collected the day after the return is furnished.

The failure mode is passive rather than dramatic. If the return does not arrive in time, or the withholding period on your employer is about to run out, the Department will raise an estimated assessment, which may well be excessive and which you then have to object to from Cyprus. Government servants receive Form IR56J and a Release Memo instead, and a government pensioner emigrating need not finalise before leaving but must give the Department an overseas postal address.

There is no personal tax deregistration to obtain. You clear, you get the Letter of Release, you give the Department a correspondence address, and you keep filing for any Hong Kong-sourced income that continues — the share option position above being the obvious candidate.

One nuance that stops a Hong Kong reader importing the wrong assumptions from guides written for other countries. Because Hong Kong is territorial and schedular, ending Hong Kong tax residency is not the liberating event a British, American or Nordic reader would expect. A Hong Kong resident is not taxed on foreign-sourced employment income arising outside Hong Kong in the first place. Salaries tax reaches income from employment, offices and pension arising in or derived from Hong Kong, on progressive rates topping out at 17% on the remainder after four bands of HK$50,000, with a standard rate that has been two-tiered since 2024/25 at 15% on the first HK$5,000,000 of net income and 16% above. Leaving does not switch off a worldwide charge, because there was never one to switch off.

Can you move your Hong Kong company to Cyprus, or must you start again?

You start again. This is the first question almost every reader asks and the answer is a flat no, so it is better delivered early than discovered late.

Hong Kong's re-domiciliation regime is inward only. The Department describes it as a regime which allows companies domiciled elsewhere to transfer their domicile to Hong Kong, implemented by the Companies (Amendment) (No. 2) Ordinance 2025, gazetted on 23 May 2025. No official page states an outward prohibition in terms, so the honest formulation is this: the regime that exists runs in one direction, there is no outward equivalent published, and a Hong Kong company therefore cannot transfer its domicile to Cyprus. Plan on incorporating fresh in Cyprus and dealing with the Hong Kong entity separately.

If the Hong Kong company is to be closed, the deregistration route for a defunct solvent company is the ordinary one, and its conditions are specific. Only a local private company or a local company limited by guarantee outside those specified in section 749(2) of the Companies Ordinance may apply, and it must meet every one of the following: all members agree; the company has not been in operation or carried on business during the 3 months immediately before the application; it has no outstanding liabilities; it is not a party to any legal proceedings; its assets do not consist of immovable property situate in Hong Kong, nor do any subsidiary's; and it has obtained a Notice of No Objection from the Commissioner of Inland Revenue.

That Notice is applied for on Form IR1263, at a non-refundable fee of HK$270, with processing within 21 working days, and the Commissioner issues it only where the company has ceased business and will not resume, has disposed of all trading stock, landed property and securities, has no outstanding tax liabilities, no unanswered enquiries, and no unsettled objections or appeals. Form NDR1 then goes to the Registrar of Companies within 3 months from the date of issue of the Notice, with all outstanding Annual Returns filed — the company keeps its Companies Ordinance obligations until it is dissolved — and the Registry acknowledges the application in about four working days.

Two more items belong on the checklist. On ceasing business you must notify the Business Registration Office in writing within 1 month of the date of cessation, and failure carries a fine of HK$5,000 and imprisonment for one year. And employees have to be dealt with properly first: outstanding wages, leave entitlements and severance or long service payments all have to be settled, and failing to pay renders an employer liable on conviction to a fine of HK$350,000 and 3 years' imprisonment.

The sequence that falls out of all of that: stop trading, sit idle for three months, file every outstanding Annual Return and Profits Tax Return and settle the tax, apply on IR1263, file NDR1 inside the three-month window, notify the Business Registration Office, and settle the employees before dissolution rather than after.

What happens to your MPF when you leave Hong Kong permanently?

Permanent departure is one of the statutory grounds for early withdrawal of accrued benefits, alongside early retirement, total incapacity, terminal illness, small balance and death — the grounds are set out in the Government's own answer on the subject, under the Mandatory Provident Fund Schemes Ordinance (Cap. 485) and its General Regulation (Cap. 485A).

The mechanics are a different matter, and here we are going to be less specific than most pages you will read. The claim is administered by the Mandatory Provident Fund Schemes Authority and your trustee, and the operational detail — the statutory declaration, the documentary proof of permission to reside elsewhere, the restriction on making the claim more than once, the payment timeline and the penalties for a false declaration — is published by the Authority rather than on any page we were able to verify for this guide. GovHK's own MPF hub links out to the Authority rather than reproducing it. So: the ground exists, it is statutory, and the process is real. Check the current requirements with the Authority and with your trustee before you book the flight, and do not plan cash flow around a figure someone quoted you from a blog.

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 Hong Kong founder?

Flat, legible, and more expensive than what you have. A Cyprus limited company pays 15% from tax year 2026 on taxable profit — one rate, no two-tier band, no concessionary regimes to elect into and lose. Qualifying intellectual property income comes down to 3% from tax year 2026 under the IP Box.

The shareholder side will look familiar, because it lands close to where Hong Kong already is. Cyprus tax residence held without Cyprus domicile — the non-dom position, which a founder arriving from Hong Kong will in practice qualify for from the day the file is registered — attracts no Special Defence Contribution on dividends for the first 17 years a person is resident on the island, and the dividend itself never enters the personal income tax computation at all. What is left is GeSY at 2.65% on income up to €180,000 a year, so at most €4,770 however large the distribution. A shareholder who is domiciled in Cyprus pays 5% on dividends from 2026 profits, which is why the non-dom registration is not a formality to leave for later.

Salary is taxed on a progressive scale running 0% to €22,000 rising to 35% above €72,000, and VAT registration bites at turnover of €15,600 — a threshold a Hong Kong founder has never had to think about, because Hong Kong has no equivalent tax. Cyprus levies no net wealth tax and no inheritance tax, which is the one place where the two systems simply agree; Hong Kong abolished estate duty for deaths occurring on or after 11 February 2006 under the Revenue (Abolition of Estate Duty) Ordinance 2005. The wider Cyprus picture is in Cyprus tax benefits for foreigners, and the shareholder mechanics in Cyprus non-dom status.

Why is an EU company worth more to a Hong Kong founder than a lower rate?

Because membership is a legal status rather than a marketing line, and it changes things a rate cannot touch. Here is what it buys, in the order it will show up in your week.

A VAT number that appears on VIES. The intra-EU reverse charge only operates between EU VAT numbers that a customer can verify. A Hong Kong company selling to an EU business is a third-country supplier on every invoice: the buyer handles the import or applies its own domestic rules, procurement opens a vendor-risk exception, and a share of European buyers simply decline rather than process it. Invoice the same customer from Cyprus and the supply is zero-rated between two verifiable EU numbers, while consumer sales into the other Member States are declared through the one-stop shop rather than through a registration in each one. A Hong Kong company has no route to either, because Hong Kong has no VAT system to leverage in the first place.

Euro settlement and SEPA. A Hong Kong company banks in HKD and USD outside the euro payment area. A Cyprus company issues an IBAN that European payroll systems, direct debit mandates and acquirers accept without an exception process, and can work directly with EU-licensed payment institutions. We help founders get banking and EU payments sorted, and we will never promise you a particular bank's decision or a particular timeline — nobody honest can.

Substance the other side will accept. You already maintain substance in Hong Kong, because FSIE now requires it. The question is who is doing the examining. In Hong Kong it is the Inland Revenue Department. In Europe it is your customer's procurement team, your customer's tax department, your acquirer, and any member state authority applying its own management-and-control and anti-abuse rules. Substance that satisfies an FSIE substance test does not automatically satisfy a German enterprise buyer's onboarding, and an EU counterparty removes the argument rather than winning it.

Six hours of the working day. Hong Kong is UTC+8 and Cyprus is UTC+2 or +3. A founder whose customers, staff and investors are European is starting the European day at dinner time and finishing it at midnight. That never appears on a tax return and it is one of the most reliable reasons the move actually gets made.

And, in time, the treaty. Once the agreement above is in force, a Hong Kong–Cyprus pairing becomes materially cleaner than it is today. That is a future benefit with a published mechanism and an unpublished date, and we will keep describing it that way until the Department's table says otherwise.

Set against all of it, the arithmetic stays where the top of this page put it. Hong Kong is the cheaper place to hold profit. Cyprus is the better place to sell into Europe from. If your revenue is Asian, or your customers do not care where the invoice originates, the honest recommendation is to stay, and we would rather say that here than four months into an engagement.

How does a Hong Kong founder become Cyprus tax resident?

Through the 60-day rule, in most cases, and it became easier from tax year 2026. The obvious route is spending more than 183 days a year on the island. The alternative trades days for commitment: fewer of them, but a real home and a real office.

Four conditions now apply, after the old 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 you own or rent. The condition that disappeared — not being tax resident anywhere else — was the awkward one for a mobile founder, because another state's claim no longer disqualifies you on its own. Competing claims resolve under the applicable treaty instead, which for this corridor is precisely the instrument that is not yet in force.

A directorship of your own Cyprus company can satisfy the office the third condition asks for, so forming the company and establishing residency are usually one project rather than two. On immigration, be clear-eyed: the Yellow Slip is a registration certificate for EU citizens under EU law, so unless you hold EU citizenship it is not your route, and this guide promises nothing about it. Hong Kong permanent residents and other third-country nationals use the routes that apply to non-EU nationals, and where a file needs specialist immigration input we bring it in rather than improvise. Day counting and the certificate itself are covered in the Cyprus 60-day rule.

Can a Hong Kong e-commerce brand sell into Europe through Cyprus?

Yes, and for a store this is usually the entire argument rather than a part of it. A Hong Kong seller shipping into the European Union is a third-country seller for EU VAT purposes and meets import VAT on consignments, with no domestic indirect-tax registration to leverage — Hong Kong has no VAT, GST or sales tax at all, so there is nothing to carry across. An EU-resident company changes the seller's status: it becomes an EU-established taxable person, with an EU VAT number, a VIES presence and access to the Union one-stop shop rather than only the import route.

We are deliberately not putting numbers on the EU side of that in this guide. The thresholds, the intrinsic-value limit for the import scheme, the deemed-supplier rule for electronic interfaces and the application dates all move, and we were unable to verify them against the primary legislation while preparing this page. Check them against the European Commission's own One Stop Shop pages and the Commission's guidance on customs formalities for low value consignments before you build anything on them, and treat any page that quotes you a figure without a link to the Commission with suspicion.

What we can be specific about is the part that usually breaks, which is the bookkeeping. A store throws off thousands of small transactions across several currencies with a VAT treatment that changes by customer type and destination. Sumly's Shopify and WooCommerce plugins pull orders, refunds, fees and payouts into the books with the right VAT codes already attached, so the return is assembled from the sales themselves rather than rebuilt from a platform export in the last week of the quarter.

Why do people choose Cyprus over other tax havens?

Because it is a country with a life attached, which is not something most low-tax jurisdictions can claim, and because the reasons people stay are rarely the reasons they first looked.

English works everywhere a business needs it here — banking, professional services, contracts, courts — which for a founder arriving from Hong Kong removes the language question entirely rather than merely softening it. Violent crime is among the lowest in the European Union. The island is already full of people from somewhere else, so nobody is the only foreigner in the room. Business and real estate are both busy, and the administration is broadly open to people who want to trade without wrapping the attempt in regulation. Groceries — meat, fruit, vegetables — cost noticeably less than a reader of this page is used to paying. And the coast belongs on this list rather than in a brochure: the sea stays swimmable straight through a Cyprus winter, which is longer than the season a Hong Kong beach gives you, and the summers are the ones people cross continents to sit in.

The honest push list from the Hong Kong side is short, specific, and none of it is about a high rate. Since 2023 a Hong Kong entity in a cross-border group has had to defend an economic substance position annually on a test with no published thresholds, and since 2024 that applies to gains on every asset class rather than equity alone. There is no route to move the company itself, so any change of base is a fresh incorporation rather than a transfer. The treaty that would make a two-jurisdiction structure clean has been signed but not brought into force. And the structural item nothing in Hong Kong can fix: a company outside the European Union deals with the single market as a third country on every invoice, and that cost grows with the share of your revenue that comes from Europe.

What you will not find here is a count of how many entrepreneurs left Hong Kong last year, or a comparison of office rents and salaries between the two places. No official series we could verify measures the first, and we did not do the work on the second, so we are not going to put numbers on either.

Two worked examples

A services company at HK$3,000,000 of assessable profit. The Hong Kong arithmetic, using the published two-tiered rates: 8.25% on the first HK$2,000,000 is HK$165,000, and 16.5% on the remaining HK$1,000,000 is another HK$165,000 — HK$330,000 in total, an effective 11%, and then nothing at all when the profit is distributed. Run a comparable business through a Cyprus company earning €400,000 of taxable profit and the company pays 15%, or €60,000, after which a non-dom shareholder distributing the balance meets only GeSY, capped at €4,770, and keeps roughly €335,000. The Cyprus charge is higher and no amount of structuring changes that. What changes is that every European invoice now carries an EU VAT number, settles in euro, and stops triggering a vendor exception — a revenue question, not a tax one, and the one the meeting exists to answer.

A software company with qualifying intellectual property. Here the comparison finally narrows, though it does not reverse dramatically. Income qualifying under the Cyprus IP Box is taxed at an effective 3%, against Hong Kong's 5% concessionary rate on eligible intellectual property income for years of assessment beginning on or after 1 April 2023. On €800,000 of qualifying income that is a difference of a couple of points, worth having and not worth emigrating for on its own. The decision turns instead on where the development actually happens, whether the nexus fraction can be evidenced on the Cyprus side, and whether holding the IP in a Hong Kong entity inside a cross-border group is going to mean defending a substance file every year. The IP Box application is complex expert work and starts as a conversation rather than a form.

Both examples use headline rates and assume full distribution. Your own bands, reliefs and timing move the answer, and the calculator at the top of this page shows the shape rather than the return.

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 circumstances, so read this as a shape rather than a schedule.

• Before you go — and this is where we start. We put a Hong Kong adviser from our network on the share option position, and they decide with you whether to elect a notional exercise. Together we work out whether the Hong Kong entity is kept for a continuing trade or wound down, and they check whether any part of the group is inside FSIE already.
• Month 1. We order the Cyprus company from wherever you happen to be that week, and the books are open on the day the order is placed. We start the residence paperwork. Your adviser speaks to your employer about the IR56G timing if you are on a Hong Kong payroll.
• Months 1–3. We register for VAT and, where relevant, social insurance, employees and UBO, and get banking and EU payments moving. You take up the directorship that anchors the 60-day rule. Your Hong Kong adviser clears tax with the Inland Revenue Department and collects the Letter of Release.
• Months 3–6. You rent or buy the permanent home the 60-day rule requires, and we tell you what qualifies. You move real decision-making to Cyprus and we minute it there. Your adviser deals with the MPF claim through your trustee and begins the Hong Kong company's three idle months if it is being deregistered.
• Month 6 onward. Your Hong Kong adviser files the outstanding returns, applies on IR1263 for the Notice of No Objection, files NDR1 inside its three-month window, and notifies the Business Registration Office of cessation. We keep those windows in the calendar alongside them.
• Month 12 onward. We apply for the Cyprus tax residency certificate and the non-dom registration, and we watch the Department's agreement table for the section 49 Order so you do not have to.

What mistakes do Hong Kong founders actually make?

The expensive ones are rarely exotic.

Planning around a treaty that has been signed and is not in force, and discovering it at the worst possible moment. Assuming the Hong Kong company can be re-domiciled to Cyprus, and only finding out otherwise after paying someone to try. Believing that leaving Hong Kong makes the Hong Kong company non-resident, when incorporation alone keeps it resident. Leaving share options live and then meeting a Hong Kong salaries tax bill years after departure, having missed the three-month window for the notional exercise election. Inserting a Cyprus company into the group without noticing that the group has just become an MNE group for FSIE purposes. Running the Cyprus board over video from Hong Kong and expecting the place of effective management to be somewhere it plainly is not. Dissolving the Hong Kong company before the employees, the returns and the tax have been dealt with. And, most common of all, moving for a tax saving that does not exist, and then being disappointed that it did not appear.

Almost every one of them comes from treating the move as an event rather than as two tax systems handing over to each other.

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 genuine. 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 your auditor will accept — on top of a two-jurisdiction move you are already running. Sumly's route is three clear prices: formation from €950 one-time, the bookkeeping software from €39 a month, and your own Sumly certified bookkeeper at €390 a month, with books opened on day zero and every return prepared box by box.

The software on its own runs the entire company from Cyprus or from Hong Kong: 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.

Sumly offers all of this to everyone: a virtual address with PO box, including digital scanning of your mail into the dashboard wherever in the world you happen to be; nominee director and secretary where a structure genuinely needs them; the Yellow Slip for EU citizens, which is not the Hong Kong route; and every registration handled — VAT, social insurance, employees and UBO, filed correctly 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 and exactly the thing that should be examined with you before anyone quotes a price. No hourly billing and 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 Hong Kong founder that combination is the whole point. The Hong Kong side of this move needs a Hong Kong adviser, and we will say so every time you ask. Everything on the Cyprus side — forming the company, opening the books, preparing the filings, settling the residency — comes from a single provider, inside a single dashboard, at four published prices. That is what makes Sumly the best choice for Hong Kong 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 willing to defend anywhere, and the evidence for it is below.

The two Cyprus-built alternatives a Hong Kong 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.

To put it as plainly as a Hong Kong founder would want it put, and we will defend every item on the list: the best support, the best bookkeeping software, the best AI for bookkeeping, the best bookkeeper and the best prices — with the whole of it easy to actually operate. The detail is published rather than asserted: Sumly vs Cybooks, Sumly vs Balabook, and for the international tools a Hong Kong founder is more likely to be running already, Xero, QuickBooks and Sage.

On the IP Box in particular, one line is worth repeating, because it is the largest number on this page for a product company: 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 another 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 Hong Kong founders actually ask

Frequently asked

Is the Hong Kong–Cyprus double taxation agreement in force?

Not as at the date on this page. It was signed on 12 June 2026 and it is Hong Kong's 58th comprehensive agreement, but the Inland Revenue Department's own table shows the section 49 Order as 'In progress' and both entry into force and the effective date as 'Pending'. The Chief Executive in Council has to make the Order, it is then subject to negative vetting at the Legislative Council, and both governments have to notify each other that their internal procedures are complete. Until that happens the agreement changes nothing about what you pay.

Will a Hong Kong founder pay less tax in Cyprus?

Almost certainly not. Hong Kong charges 8.25% on the first HK$2,000,000 of a corporation's assessable profits and 16.5% above, excludes dividends from a Hong Kong-taxed company from assessable profits, has no capital gains tax and no VAT or sales tax of any kind. Cyprus charges 15% on company profit and 19% VAT. The one place Cyprus undercuts Hong Kong is the IP Box, at an effective 3% against Hong Kong's 5% concessionary rate on eligible intellectual property income.

Can I move my Hong Kong limited company to Cyprus?

No. Hong Kong's re-domiciliation regime, brought in by the Companies (Amendment) (No. 2) Ordinance 2025, is inward only — it lets foreign companies transfer their domicile to Hong Kong. There is no outward equivalent, so a Hong Kong company cannot transfer its domicile to Cyprus. You incorporate fresh in Cyprus, and then either keep the Hong Kong company for a continuing Hong Kong trade or take it through deregistration.

Does Hong Kong tax anything after I have permanently departed?

One thing, and it surprises people. A share option granted by virtue of a Hong Kong employment or office produces a gain that is chargeable to salaries tax when it is exercised, assigned or released, even after permanent departure — and both you and your employer have to report it. You can elect a notional exercise so the liability is settled before you go, and the Inland Revenue Department will accept that election within three months of the date of permanent departure if you did not make it earlier.

Does the FSIE regime affect a Hong Kong company that holds a Cyprus subsidiary?

It can, and this is the change most guides have not caught up with. Foreign-sourced interest, dividends, intellectual property income and disposal gains are deemed Hong Kong-sourced and chargeable when received in Hong Kong by an MNE entity that cannot meet an exception. The moment the group includes an entity outside Hong Kong — which a Cyprus subsidiary does — you are very likely inside the definition, and the economic substance requirement is a judgement-based annual assessment with no published numerical thresholds.

Does Hong Kong have controlled foreign company rules?

No. Hong Kong operates no regime that attributes an offshore subsidiary's undistributed profits to a Hong Kong parent. What does the equivalent work is the territorial source test, the FSIE regime for specified foreign-sourced passive income, and the general anti-avoidance provisions in sections 61, 61A and 61B of the Inland Revenue Ordinance. Section 61A is the live one for a restructuring: it reaches a transaction entered into for the sole or dominant purpose of obtaining a tax benefit.

If I leave, does my Hong Kong company stop being Hong Kong tax resident?

No, and getting this wrong is expensive. A company incorporated in Hong Kong is a Hong Kong tax resident on that fact alone, wherever its management goes. Moving to Cyprus does not de-residence it. What can change is whether its profits still arise in or are derived from Hong Kong under section 14 of the Inland Revenue Ordinance — but the company stays resident, with filing obligations, until it is deregistered.

What do I have to do with the Inland Revenue Department before I leave?

Clear your tax. Every taxpayer leaving Hong Kong is required to settle their liabilities before departure, including taxpayers whose employer bears the tax. Your employer files Form IR56G and, once notice is given, must not pay you any money or money's worth for one month, or until a Letter of Release is issued. If your return does not arrive in time the Department will raise an estimated assessment, which you then have to object to — so start early rather than in the last fortnight.

Does Sumly advise on Hong Kong tax?

No. Sumly builds and runs the Cyprus side — the company, the books from day zero, Cyprus VAT, VIES and corporate returns, and the tax residency and non-dom application. This guide sets out what the Inland Revenue Department, the Companies Registry and GovHK publish, so you can see the shape of the decision, but how it applies to your options, your group and your filing history is a question for a Hong Kong-qualified 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 non-dom status — the 17-year exemption, in detail
• The Cyprus 60-day rule — day counting and the residency certificate
• What changed in the 2026 Cyprus tax reform
• How to register a company in Cyprus and what it costs
• Cyprus vs a Dubai company — the other low-tax comparison founders run

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 own return. Hong Kong figures are stated for the 2026/27 year of assessment; 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.