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

Most guides about moving a business from Israel to Cyprus open with the Cyprus rate. This one opens with the thing that changes every other answer: there is no double tax treaty between Israel and Cyprus. No tie-breaker for you, none for the company, no reduced withholding, and no treaty article standing between you and section 100A.

Updated for 2026 Cyprus tax law and regulations.

From Israel to Cyprus, with the company, the books and the filings under one roof

Sumly is the one-stop, fully digitalized way to start a Cyprus company from Israel and to move an existing business across — then to actually run it, from Limassol or from Tel Aviv, on the same platform. We register the company, open your books the day you order, prepare every Cyprus return box by box, and handle the tax residency and non-dom application as a fixed-price service. One dashboard, one provider, and four published prices, instead of a lawyer for the incorporation, a bookkeeper for the ledgers, and nobody for the twelve months in between.

Most of the primary material below is published only in Hebrew — the Ordinance, the Tax Authority's circulars and instructions, Form 1348, the National Insurance pages and the Knesset's own budget analysis. Where that is the case we say so, and every figure links to the document itself rather than to a summary of it.

This is Sumly — and what we actually do for you

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

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

Part 1: What leaving actually costs you

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

Is there an Israel–Cyprus double tax treaty in 2026?

No. This is the first thing an Israeli founder should establish, and it is the fact the search results get wrong most often. Israel's Ministry of Finance publishes a register of the country's international agreements, filterable by state and by instrument type, and it settles the question directly.

Query that register for double taxation treaties and it returns 72 entries, with control entries for neighbours you would expect — Greece and Malta both appear as treaty states. Query it for Cyprus and there is exactly one record, and it is not a tax treaty: it is an investment promotion and protection agreement signed on 13 October 1998 and in force from 17 June 2003. Filter Cyprus and double taxation treaties together and the register returns nothing at all.

Four consequences follow, and each of them is load-bearing for the rest of this guide.

• No tie-breaker for you. If Israel says your centre of life is still there and Cyprus says you are resident under its own rules, nothing resolves the conflict. You can be tax resident in both states at once, and neither has agreed to yield.
• No tie-breaker for the company. The place-of-effective-management article that normally rescues a company claimed by two states does not exist here. If the Tax Authority concludes your Cyprus company is managed from Israel, there is no treaty rule to argue against it.
• No reduced withholding. Domestic rates apply in both directions on dividends, interest and royalties. There is no treaty rate to claim and no residency certificate that lowers one.
• No treaty protection on capital gains. Nothing in an instrument that does not exist can stand between a founder's shares and section 100A.

If there is no treaty, what stops the same profit being taxed twice?

Israel's own unilateral foreign tax credit, and it is worth knowing exactly what it does before you rely on it. Part Ten of the Ordinance gives relief that does not depend on any agreement — but it is narrower than treaty relief in ways that matter to a founder holding a Cyprus company.

The mechanism starts with a definition. "Foreign taxes" are taxes paid by an Israeli resident to the tax authorities of a state outside Israel on income produced or accrued in that state, excluding municipal taxes — with no reciprocity condition, which is why the credit is available for Cyprus tax at all. Those taxes are then allowed as a credit against Israeli taxes, provided the person was an Israeli resident in that tax year.

Now the limits, which is where the difference from a treaty shows up:

• The credit is capped per source. Relief for ordinary foreign income cannot exceed a ceiling computed on that category of income, and relief for income taxed at a special rate cannot exceed the Israeli tax charged on that same income. Foreign tax cannot shelter a different basket.
• Excess credit carries forward, but narrowly. Where the foreign tax exceeds the credit, the surplus can be set against Israeli tax on income from the same source, index-linked, in the five following tax years.
• No credit against exempt income, and no deduction instead. Foreign tax on income that is exempt in Israel gives nothing, and foreign tax may not be taken as a deduction in computing foreign income.

Read those together and the practical point is stark. A credit works when Israel taxes the same income and the Israeli tax is the larger number. It does nothing about being resident in two countries at once, nothing about a company that two revenue authorities both claim, and nothing about a deemed disposal on departure. That is precisely the work a treaty would have done, and it is the work nobody is doing here.

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

Yes, in substance — although the phrase most Israelis search for is not in the statute at all. There is no section headed mas yetzia. The marginal heading of section 100A reads "a person who ceases to be an Israeli resident", and knowing that is a decent test of whether a page you are reading has opened the Ordinance.

The rule itself is short. An asset of an Israeli resident who ceases to be an Israeli resident is treated as sold on the day before the day residency ends. The day before, not the day itself — which is what keeps the gain inside the Israeli net. And "asset" is defined for this section to include shares and rights granted under the employee and founder equity provisions, so unexercised options are inside it too.

What surprises most founders is the deferral, because it works backwards from every other exit tax in Europe. There is no form and no security. A person who simply does not pay at the moment of departure is deemed to have asked to defer the tax to the date the asset is realised, and linkage differentials and interest are added only from the realisation date until the tax is actually paid. Silence is the election, and the deferral period itself is not financed at interest. Compared with Germany, where deferral since 2022 means seven instalments and usually a security, this is genuinely favourable — and it is widely described the other way round.

The price of deferring is the apportionment formula, and it deserves reading slowly. On the eventual sale, Israel taxes a slice of the gain equal to the real capital gain at realisation, multiplied by the days from acquisition to the day residency ended, divided by the days from acquisition to the day of actual sale.

The second row is the one that is missed. Israel is not freezing the departure-date value and taxing that; it is taking a time fraction of whatever the final gain turns out to be. A company that multiplies in value after the move can produce an Israeli charge larger than the tax that would have been paid on departure — while a founder who leaves early in the company's life and sells a decade later hands over a small fraction. Which of those you are is a modelling question, and it is worth answering before you pick a departure date.

Has Israel actually tightened the exit tax?

Not the charge. This needs saying plainly, because a great deal of Hebrew commentary implies otherwise and founders are making decisions on the implication. In the Ordinance as it stands, section 100A reads as set out above: deemed sale the day before, automatic deferral by default, interest only from realisation, apportionment on sale. There is no payment on departure, no advance, no security and no mandatory election. Reports of an exit-tax change in the draft arrangements law published in late 2025 remain exactly that — a draft that has not been enacted, and we do not describe terms that no official text supports.

What has verifiably tightened is the information perimeter around leaving, which is a different thing and in practice a more immediate one. Amendment 272 of 2024 repealed section 134B, the reporting exemption for new immigrants and veteran returning residents, and added a power for the assessing officer to demand returns and information from a company that escapes Israeli residence only because a new immigrant or veteran returning resident manages it from Israel. The ten-year tax exemption for those individuals survives; the ten-year reporting exemption does not. The change applies to people who became Israeli residents from 1 January 2026 onward, so anyone who made aliyah earlier keeps the older position — and that distinction is itself worth checking against your own arrival date.

The other thing worth knowing about the ten-year exemption is what leaving does to it. It is a residence-based benefit: it exempts foreign-source income while you are an Israeli resident, for ten years from the date the person became one. Ceasing to be an Israeli resident ends it and triggers section 100A on the portfolio at the same moment. Leaving in year six does not bank the remaining four.

When does Israeli tax residency actually end?

When your centre of life is no longer in Israel — and the day counts everybody quotes are only presumptions about that question, not the question itself.

The substantive test asks where a person's centre of life is, weighing the location of their permanent home, where they and their family live, their regular or permanent place of occupation, where their active and material economic interests sit, and where they are active in organisations and institutions. On top of that sit two presumptions: your centre of life is presumed to be in Israel if you spent 183 days or more in Israel in the tax year, or 30 days or more in the tax year with 425 days or more across that year and the two preceding it. Three details decide real cases:

1. A day includes part of a day. A morning at Ben Gurion between two flights is a day. Founders who fly in for board meetings burn days considerably faster than their calendar suggests.
2. The presumptions cut both ways and are rebuttable by both sides. Failing the day count does not make you resident, passing it does not make you non-resident, and the assessing officer can rebut a presumption just as you can.
3. Becoming a "foreign resident" on the statutory definition takes four years. The Ordinance defines it as someone who spent at least 183 days outside Israel in each of the tax year and the following one, and whose centre of life was outside Israel in the two years after that. Leave in 2026 and the definition is not complete until 2029.

A draft bill circulated in July 2025 proposed replacing the rebuttable presumptions with conclusive day-count tests. It has not been enacted. The Ordinance still contains the centre-of-life test with rebuttable presumptions, exactly as quoted, and we do not set out the draft's terms here because no official text of it was available to us. Treat any page that describes Israel as having a mechanical residency rule as describing a proposal.

What do you actually have to file in Israel when you leave?

More than most founders expect, and the filing is a statutory duty rather than a courtesy. The core obligation catches an individual who still meets one of the day-count presumptions but claims to have rebutted it: that person must file a report detailing the facts on which the claim is based, with the supporting documents attached. Someone comfortably outside both presumptions is not caught by that subsection, though they may still file for other reasons.

The instrument is Form 1348, the residency declaration annexed to the individual annual return, and reading it is more instructive than reading any commentary about it. The form asks for a passport copy, for day counts across the tax year, the preceding year and the two preceding years, and for a tax residency certificate from your country of residence for that year — which is the practical crunch, because it means a Cyprus certificate has to exist before the Israeli claim is filed. Then it walks a grid of centre-of-life questions, each answered Israel or country of residence or elsewhere: whether you own a dwelling in Israel and whether it was let, where your permanent home is, where your spouse lives, where your minor children live and are educated, where your parents and siblings live, your regular place of occupation, where your employer is resident, and whether you filed a resident return in the other country.

That grid is the audit. A founder who keeps the Tel Aviv apartment empty, leaves the children in an Israeli school and keeps an Israeli employer is answering "Israel" all the way down the column, whatever the day count says.

Two further filings are triggered by the same move and are easy to miss. A controlling shareholder in a controlled foreign company or a foreign professional company files an annual return — so owning the Cyprus company creates an Israeli filing duty by itself. And an Israeli resident who transfers NIS 500,000 or more out of Israel within any twelve months reports it, for the year of the transfer and the year after. Capitalising a Cyprus company can cross that line on its own.

Can the Tax Authority treat your Cyprus company as an Israeli company?

Yes — and this is the failure mode that destroys the whole plan, so it is worth getting the citation right. The rule is in section 1, in the definition of "Israeli resident" for a body of persons. A company is Israeli resident if it was incorporated in Israel, or if control of its business and its management are exercised in Israel, with a carve-out where that control is exercised by a new immigrant or veteran returning resident inside their ten-year window. A Cyprus company whose real decisions are taken from Israel is an Israeli company, taxed at the Israeli corporate rate on worldwide income, whatever the certificate of incorporation says.

The Tax Authority has published what it looks at. Supplement 1 to Circular 4/2002, issued in August 2016 after the Supreme Court's judgment in Niago and the district court decisions in Yanko Weiss and Shai Tzmarot, states that a formal and technical examination is not enough and that a substantive one is required. Its operative sentence is the one to internalise: in the present technological era the emphasis is not on the appointment of a foreign director or the physical location of board meetings, but on a substantive examination of who in fact takes the material decisions on the company's business policy, and where that person is. The same document notes that where outside professionals are used, the question is whether they were given genuine independent discretion or are no more than advisers and service providers — and that in a tax appeal the burden of proof sits with the taxpayer, who is expected to produce real evidence rather than declarations.

What protects a company is ordinary and unglamorous: real decision-makers based in Cyprus, board discussions that genuinely decide rather than ratify, strategy and material spending signed off locally, and a record that matches the story. Our guide to nominee directors in Cyprus sets out where a nominee helps and where it does not.

What does section 68A actually do?

Something different from the residency rule, and the two are constantly confused. Section 68A denies benefits rather than deciding residence: a foreign-resident body is not entitled to a tax benefit, reduction or exemption under the Ordinance by virtue of being a foreign resident, if Israeli residents are its controlling shareholders or are entitled to 25% or more of its income or profits, with controlling shareholders defined for that section as holding more than 25% of a means of control.

In practice this means an Israeli-owned Cyprus company cannot pick up the Israeli reliefs written for genuine foreign investors. It is a real provision with real consequences for a company that still earns Israeli-source income. It is simply not the rule that makes a Cyprus company Israeli — that is section 1(b)(2), above. If a page tells you section 68A is the management-and-control rule, it has not read either one.

Do Israel's CFC rules catch a Cyprus company at 15%?

They can, and the honest answer runs against the received wisdom. Cyprus charges 15% from tax year 2026, and the Israeli low-tax test asks whether the rate applying to a company's passive income abroad does not exceed 15%. Fifteen does not exceed fifteen. The low-tax limb is met, not escaped. Any guide telling an Israeli founder that Cyprus moving to 15% lifts them out of the Israeli CFC net has read the threshold as "below 15%", which is not what it says.

Two more points sharpen it. First, the 15% figure has been the law since Amendment 198, which replaced the earlier 20% and applies to income produced or accrued from 1 January 2014. The Tax Authority's own standing CFC circular, published in 2003, still prints the superseded 20%; anyone citing that circular for the current threshold is citing the wrong document. Second, the test measures an effective rate — foreign tax actually charged on passive income divided by total profits from passive income — so Cyprus exemptions and deductions push the measured rate down rather than up. A Cyprus company whose dividend income is exempt under Cyprus law can sit near zero on that income regardless of the headline rate.

But being caught by one limb is not being a CFC. All four must be satisfied together, and the statute says so expressly:

So the limb that actually decides the outcome is the passive income test, and that is the most useful thing an Israeli founder can learn about this regime. Passive income means interest, linkage differentials, dividends, royalties, rent and proceeds of an asset sale — but expressly excludes income that would have been business or vocational income had it been produced in Israel. A Cyprus company with genuine trading, software or service revenue has a minority of passive income and is not a CFC, however low its rate. The exposure lands on holding companies, IP-licensing vehicles and companies parking cash. Whether your company is one of those is a computation on your own figures, not a conclusion this page can reach for you.

Where the rules do bite, a controlling shareholder — defined for this chapter as an Israeli resident holding at least 10% of a means of control — is treated as having received a deemed dividend of their pro-rata share of the undistributed profits, taxed at dividend rates, with relief when the dividend is actually paid and an ordered credit for foreign tax. One carve-out is worth knowing: for this chapter, "Israeli resident" excludes a person inside their ten-year new-immigrant or veteran-returning-resident window, so those holdings do not count toward the control test during that period.

Is your Cyprus company a "foreign professional company" under Israeli law?

This is the trap that catches consultants and agencies, and almost nobody writing about the Israel–Cyprus corridor mentions it. Sitting in the same chapter as the CFC rules is a second regime aimed at professional service companies, and it has no low-tax test and no passive income test at all.

A foreign professional company is a foreign-resident body where all of the following hold: it is a closely held company; 75% or more of a means of control is held, directly or indirectly, by individuals resident in Israel; controlling shareholders or their relatives holding 50% or more engage on the company's behalf in a "special profession" as prescribed by the Minister of Finance; and most of the company's income or profits in the year come from that profession. Where it applies, the Israeli-resident controlling shareholder is treated as receiving a deemed dividend of their share of those profits — taxed at the corporate rate rather than the dividend rate, with a credit for foreign corporate tax actually paid, capped at the Israeli tax.

Read that against the CFC section above and the shape becomes clear. The escape route from the CFC rules — real trading income earned by real people — is exactly what puts a professional services company inside this one. A Cyprus consultancy owned overwhelmingly by Israeli-resident individuals who personally do the work is the profile this regime was written for, and the charge lands annually on trading profits whether or not anything is distributed. If your Cyprus company is you and a laptop, this is the section to take to an Israeli adviser first.

What does an Israeli founder actually pay today?

Enough that the comparison is not close, and the direction of travel is set out in the state's own budget documents. The company pays corporate tax at 23%. Then the owner takes the money out, and the rate depends on how much of the company they hold: dividends are taxed at 25% for an individual and 30% for a material shareholder, where a material shareholder is anyone holding at least 10% of a class of means of control. There is a twelve-month look-back on that status, so diluting below 10% in December does not buy the 25% rate in January. A founder relocating a company they own is a material shareholder by definition, which means 30% is the rate they actually meet.

On a share sale the individual rate is capped at 25%, or 30% for a material shareholder, on the real, inflation-adjusted gain, with the same twelve-month look-back.

On top of both sits the surtax. Its statutory form is a 3% additional charge above a threshold, and from 2025 a further 2% applies to taxable income from capital sources — so capital income bears 5% in total. The Tax Authority's execution instruction sets the ceiling at NIS 721,560, being the 2024 amount, with annual indexation frozen for tax years 2025 to 2027 — so the 2026 figure follows from the freeze rather than from a separately published 2026 notice, and that is how we present it here.

Put the verified rates together and the arithmetic — our arithmetic, not a quoted figure — runs like this: 23% corporate tax, then 30% on the remaining 77%, is a combined 46.1% on distributed profit; add the 5% surtax on the dividend above the ceiling and the marginal figure approaches 50%. On a share sale, 30% plus 5% is 35% marginal on the real gain.

The Knesset's own research centre documents the direction. Its February 2026 analysis of state revenue records the undistributed-profits legislation passed on 31 December 2024, whose stated purpose was to reduce the use of business companies to defer tax and to encourage distribution, and it reports the behavioural response: after that legislation, collection in January 2025 ran about NIS 9 billion, some NIS 7.5 billion above the January average of recent years, as companies accelerated distributions to get ahead of it. The same report's revenue table shows the three-year freeze of income tax brackets and credit points adding NIS 2,400 million in 2026 and NIS 2,300 million in 2027, and projects the adoption of a Pillar Two minimum corporate tax contributing from 2028. A bracket freeze is a real-terms increase that requires no rate change at all, and the Pillar Two line matters directly to anyone modelling a low-tax European structure for an in-scope group.

Does Israel tax wealth or inheritance?

No on both, and the second one has a clean statutory answer. Estate tax was abolished: the repeal law provides that the Estate Tax Law of 1949 is repealed, with effect for the estate of a person who died after 31 March 1981. Its fingerprints survive in today's Ordinance, which still tells you how to price an inherited asset for someone who died after that date — and in doing so tells you something practically important: there is no step-up on death. The heir takes the deceased's original cost base. Israel swapped an estate tax for a deferred capital gains charge, which for a founder holding appreciated company shares is a materially different thing from an exemption.

On annual net wealth tax, there is no single official page saying Israel has none, so the honest way to establish it is by enumeration. The Knesset research centre's revenue analysis lists every tax measure legislated in recent years, split into direct and indirect taxes — capital gains and betterment on second dwellings, corporate tax, credit points, depreciation, cash-transaction limits, purchase tax, the undistributed-profits tax, the bracket freeze, the 2% capital surtax, national insurance, a bank surtax, VAT on financial institutions and Pillar Two. No annual net wealth tax appears anywhere in that enumeration, and none appears among the projected 2026–2029 revenue lines. Israel levies no annual net wealth tax; what is actually sourced is that the Knesset's own enumeration of Israeli taxes contains none.

Cyprus, for its part, levies no net wealth tax and no inheritance tax at all.

What happens to your National Insurance when you move to Cyprus?

It runs on a completely separate track, decided by a different institution on its own test — and this is the part founders most often assume follows the tax position. It does not.

Two things are verified and both matter. An Israeli resident staying abroad who is not working pays minimum contributions of NIS 266 a month from 1 January 2026, covering national insurance and health insurance, for as long as residency continues — and the institute warns that arrears in health contributions while abroad can damage entitlement both to health services and to benefits. And residency does not lapse quietly. Someone who has left and moved their centre of life abroad completely can apply to end it, but in most cases residency is revoked from the date of the notice to the institute — prospectively, not from the day the plane left.

Three further points come straight from the institute's own page and they change how the move should be sequenced.

• The whole family unit is examined. An application will not be approved where the spouse and children remain in Israel. That stacks precisely with the Form 1348 grid above: the same family facts sink both claims.
• It can be reopened retroactively. The institute's own worked example describes a couple whose residency was terminated after six months abroad and re-examined across the following two years on their return; if their centre of life is found to have remained in Israel, they are treated as residents throughout and charged contributions for the whole period.
• The institute openly recommends keeping residency, to preserve health cover and social rights — an unusual position for a body that collects the contributions, and worth weighing rather than dismissing.

Israel operates bilateral social security conventions with a number of states, and the institute notes that those conventions do not cover health insurance, so health contributions continue throughout a stay abroad. Whether one reaches Cyprus is a question to put to the institute directly for your own file, and we do not state it either way here — a claim on that point is worth nothing unless it comes from the institute.

What happens to your existing Israeli company?

It stays Israeli. A company incorporated in Israel is an Israeli resident company under the first limb of the definition, wherever its shareholders live, so it continues to pay corporate tax on worldwide income, and distributions to a material shareholder still meet the 30% rate. Moving yourself does not move it, and the absence of a treaty means there is no tie-breaker to resolve a company both states end up claiming.

That leaves three practical routes and the choice belongs to your Israeli adviser, not to a website.

Keep it and let it trade. Sensible where there are Israeli customers who need an Israeli counterparty, contracts that cannot be novated, or employees staying put. It is a continuing Israeli filing and tax position, not a dormant shell, and it needs someone competent running it.

Wind it down and build fresh in Cyprus. The cleanest structural answer for a founder genuinely leaving, and usually the cheapest — but the timing interacts with section 100A, with the ten-year exemption if you are inside one, and with the surtax if a large distribution lands in a single year. Sequencing is the whole game.

Keep it as a subsidiary or a sister company. Workable, and the point at which the CFC and foreign professional company sections above stop being theory. Where an Israeli company sits above a Cyprus one, dividends sourced in income produced outside Israel are inside the Israeli corporate tax base rather than outside it — so a Cyprus dividend received by an Israeli holding company is not sheltered by the ordinary inter-company exclusion.

The one thing that does not work is the model that dominates the search results: stay in Israel, invoice through a Cyprus company, and treat the Cyprus rate as the answer. Section 1(b)(2) makes that company Israeli, section 68A denies it the reliefs available to genuine foreign investors, and there is no treaty to appeal to. It is not a structure; it is an assessment waiting to be issued.

Part 2: What Cyprus gives you

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

What does the Cyprus side look like for an Israeli founder?

Flat, and short enough to state in a paragraph. A Cyprus limited company pays 15% from tax year 2026 on taxable profit — one rate, no bands, the same on €80,000 as on €8 million. Qualifying intellectual property brings the effective rate on that income down to 3% from tax year 2026 under the IP Box. Personal income tax runs from 0% to €22,000 rising to 35% above €72,000.

Then the owner distributes, and this is where the gap opens. Someone who is Cyprus tax resident but not Cyprus-domiciled — the non-dom position almost every arriving founder can claim — falls outside the Special Defence Contribution on dividends for 17 years, and the dividends themselves are outside personal income tax entirely. A domiciled shareholder, by contrast, meets 5% on dividends from 2026 profits. What a non-dom does pay is GeSY, the health contribution, at 2.65% on income up to €180,000 a year — a maximum of €4,770, whatever the distribution.

One structural note for an Israeli reader who has been told that Cyprus non-dom "is like the oleh benefit". It is not. The ten-year exemption for a new immigrant or veteran returning resident is residence-based and exempts foreign-source income for a decade; Cyprus non-dom is a domicile-based exemption from a specific Cyprus levy, running seventeen years. Different mechanism, different scope, and there is no Hebrew term for non-dom because there is no equivalent in Israeli law — Israel taxes on residence, not domicile. VAT registration in Cyprus begins at €15,600 of taxable turnover, with a standard rate of 19%.

How does an Israeli founder become Cyprus tax resident?

Through the 60-day rule, in most cases, and it got easier in 2026. The familiar route is spending more than 183 days a year on the island. The alternative asks for far fewer days and rather more commitment on the ground.

From tax year 2026 the rule carries four conditions, 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, owned or rented. The condition that went — not being tax resident anywhere else — was the awkward one for Israeli founders in particular, because Israel's centre-of-life test can keep a claim alive for years after departure and, with no treaty in the picture, there is no mechanism to resolve the overlap. Its removal means another state's claim no longer disqualifies you from Cyprus residency by itself.

Two practical notes. A directorship of your own Cyprus company can be the office the third condition asks for, which is why forming the company and establishing residency are usually one project rather than two. And the Yellow Slip is a registration certificate for EU citizens exercising free movement, so it is not the Israeli route; we promise nothing about it here and instead handle the residence paperwork that does apply to third-country nationals, bringing in immigration specialists where a file needs them.

Why do people choose Cyprus over other tax havens?

Because it is somewhere people actually want to live, which is not true of most of the alternatives. The rate is what gets a founder to book the flight; it is almost never what keeps them here afterwards.

Cyprus is an English-speaking country in every way that matters to a business — banking, professional services, contracts and courts all operate in English, which removes the single largest friction of moving anywhere else in the European Union. It has among the lowest violent crime rates in the EU. The island is already full of people from somewhere else, so nobody arrives as the only foreigner in the room. Business and property are both running hot, and the state is open to people who want to trade without burying them in regulation. Groceries — meat, fruit, vegetables — are noticeably cheap. And the beaches are not a footnote: a Cyprus winter still leaves the sea swimmable, and the summers are what other people cross the planet to see. For an Israeli founder there is also the plain geography of it: this is the nearest EU member state, and the flight is short enough that a trip home is not an expedition.

The honest push list on the Israeli side is legislative rather than emotional, and the state's own documents carry it: a combined burden on distributed profit approaching 50% once the surtax bites, a surtax that grew from 3% to 3%-plus-2% on capital income in 2025, brackets and credit points frozen in nominal terms for three years, a new charge aimed at profits kept inside closely held companies, and a projected Pillar Two minimum corporate tax from 2028.

On emigration, we will state the flows and stop there. The Central Bureau of Statistics reports that 69.3 thousand residents left Israel in 2025 and 19.0 thousand returned, and that the population stood at about 10.178 million at the end of the year. The CBS publishes the movement; it does not publish a cause, and neither do we. You will see pages attributing these numbers to tax, to politics or to the security situation. No official Israeli statistical source supports any of those attributions, and we are not going to invent one. Likewise, there is no official series counting Israeli founders or companies that move specifically to Cyprus, so we do not quote a number for it.

Can an Israeli e-commerce brand run through Cyprus?

Yes, and for a seller shipping into Europe the single-market question is often larger than the tax one. An Israeli company deals with the European Union as a third country: customs formalities, import VAT, and separate arrangements for selling digital goods or distance-selling to EU consumers. A Cyprus company sits inside the EU VAT system with a VAT number customers can check in VIES, zero-rates intra-EU business sales and uses the one-stop shop for consumer sales across the bloc.

The bookkeeping is where this usually breaks, because a store throws off thousands of small transactions in several currencies with a VAT treatment that changes by customer type and country. Sumly's Shopify and WooCommerce plugins pull orders, refunds, fees and payouts straight into the books with the right VAT codes, so the return is built from the sales rather than reconstructed from a spreadsheet at quarter end.

Part 3: How the move runs

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

What does the move look like, month by month?

Every file moves at its own pace, so treat what follows as an order of operations rather than a calendar.

• Before anything else — and this is where we start. We put an Israeli adviser from our network on your departure date, on section 100A across your holdings, and on what happens to the Israeli company. If you are inside a ten-year exemption window, they model what leaving costs you before you commit to anything.
• Month 1. We order the Cyprus company; the books open the same day the order goes in, and we start the residence paperwork. You take up the directorship that anchors the 60-day rule.
• Months 1–3. We register for VAT and, where relevant, social insurance, employees and UBO, and get banking and EU payments moving. You rent or buy the permanent home the 60-day rule requires, and we tell you what qualifies.
• Months 3–6. You move real decision-making to Cyprus and we record it there — this is the section 1(b)(2) evidence, and it is built by habit, not by a memo, which is why we keep it rather than leaving it to you. Your Israeli adviser notifies the National Insurance Institute if and when your family situation actually supports the application.
• Month 12 onward. We obtain the Cyprus tax residency certificate and the non-dom registration, and your Israeli adviser files the residency claim on Form 1348 with the certificate attached. We keep the day counts and the board records clean while the four-year foreign-resident definition completes.

What mistakes do Israeli founders actually make?

The expensive ones are rarely exotic.

Believing a treaty exists, and building a structure on relief that has no legal source. Assuming the exit tax must be applied for, when the deferral is automatic and the real risk is the apportionment on a much larger future gain. Reading the CFC threshold as "below 15%" and concluding that Cyprus at 15% is safe. Confusing section 68A with the residency rule, and therefore fixing the wrong problem. Appointing a Cyprus nominee director and treating that as substance, when the Tax Authority has published that it is not. Running a consulting company from Cyprus without checking the foreign professional company section, which has no rate test to hide behind. Filing the tax residency claim while the family stays in Israel, and losing the National Insurance application on the same facts. Moving more than NIS 500,000 to capitalise the company without filing the report that triggers. And flying in for board meetings, forgetting that part of a day counts as a day.

Almost all of them come from treating the move as an event, when it is two tax systems handing over to each other with nothing agreed between them.

Two worked examples

A consultancy distributing €300,000 of profit. Staying in Israel, the company pays 23% corporate tax, leaving €231,000, and the founder — a material shareholder by definition — pays 30% on the distribution. That is €69,000 plus €69,300, and roughly €162,000 kept from €300,000, before any surtax. Through Cyprus, the company pays 15% and a non-dom shareholder pays only GeSY, capped at €4,770, keeping about €250,000. This is also the profile most exposed to the foreign professional company rules, so the Israeli-side advice matters more here than the arithmetic does.

A software company at €600,000 of profit with qualifying IP. In Israel the same stack applies: 23%, then 30% on what comes out, leaving roughly €323,000. In Cyprus, income qualifying under the IP Box is taxed at an effective 3%, and the distribution again meets only the capped GeSY — on the order of €577,000 if all the income qualifies. That is the profile where the difference stops being incremental and becomes structural. It is also the profile where the passive income test needs care, because licensing income and trading income are not the same animal under section 75B.

Both examples assume full distribution and headline rates, ignore the surtax, and take no view on your own basis or timing. The calculator at the top of this page runs the same shapes against your figures; a meeting runs them against your facts.

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 are genuine options, and plenty of founders start on one and move to the other. Doing it yourself means the Registrar's forms and fees, a registered office you arrange, VAT and VIES registration, provisional tax twice a year, annual statements and books that will stand up to your auditor — on top of a two-country move you are already managing, in a language the Israeli side of the paperwork is not written in. 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 from day zero and every return prepared box by box.

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

Sumly offers all of this to everyone who asks: a virtual address with PO box, including digital scanning of your post into the dashboard wherever you happen to be; nominee director and secretary where a structure genuinely needs them; the Yellow Slip, which is an EU-citizens-only route and therefore not the Israeli one; and every registration handled — VAT, social insurance, employees and UBO.

Each of those is an extra, scoped to your case. Tell us what you need in the meeting and you get one clear package-deal offer covering all of it, the IP Box application included where it fits, since that is complex expert work and exactly the kind of thing that should be looked at with you before anyone quotes it.

Sumly, a law firm, and a traditional bookkeeping firm

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

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

For an Israeli founder that division of labour is the point. The Israeli side of this move — section 100A, the residency claim, the fate of the Israeli company — belongs with an Israeli adviser, and we will say so every time. Everything on the Cyprus side runs through a single provider, a single dashboard, and four prices published before you order. That is what makes Sumly the best choice for Israeli founders creating a company and relocating to Cyprus.

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

Sumly is the best accounting software for a Cyprus limited company — because it is built for exactly one thing, Cyprus tax law: all 16 Cyprus VAT codes mapped to the official VAT return boxes, VIES and provisional tax native, not a localization. That is the claim, and the evidence for it is checkable line by line.

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

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

Said plainly: the best support, the best bookkeeping software, the best AI for bookkeeping, the best bookkeeper and the best prices, with everything done easily. The detail is published: Sumly vs Cybooks, Sumly vs Balabook, and against the international tools an Israeli founder is likely already running — Xero, QuickBooks and Sage.

On the IP Box specifically, one line bears repeating: the IP Box is the largest single line in a Cyprus product company's tax position — and the easiest one to forfeit through bookkeeping that was never set up for it. The application begins as a conversation, which is one more reason the meeting comes before the quote.

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 Israeli founders actually ask

Frequently asked

Is there a double tax treaty between Israel and Cyprus?

No. The Ministry of Finance publishes a register of Israel's international agreements by state. Filtered to double taxation treaties it returns 72 entries, and Cyprus is not among them. The only bilateral instrument the register holds for Cyprus is an investment promotion and protection agreement signed on 13 October 1998 and in force from 17 June 2003, which is not a tax treaty. Pages in both Hebrew and English currently market an 'Israel–Cyprus tax treaty 2026'. There is no such instrument.

Has Israel tightened its exit tax under section 100A?

Not the charge itself. Section 100A still treats your assets as sold on the day before residency ends, and still gives an automatic deferral to whoever simply does not pay on departure — the statute deems that person to have asked to defer. Linkage and interest run only from the date of actual realisation, not from departure. What has tightened is the reporting perimeter around leaving, through Amendment 272 of 2024 and the section 131 filing duties.

Does Cyprus moving to 15% take my company out of the Israeli CFC rules?

No, and this is the single most common mistake in the material aimed at Israeli founders. The low-tax limb in section 75B asks whether the rate on passive income abroad 'does not exceed 15%'. Fifteen does not exceed fifteen, so the limb is met, not escaped. It is also an effective rate — foreign tax actually charged on passive income divided by passive profits — so Cyprus exemptions push it down rather than up. What keeps an operating company out of the regime is the passive income test, not the rate.

Which section makes an Israeli-run Cyprus company Israeli?

Section 1 of the Ordinance, in the definition of 'Israeli resident' for a body of persons, limb (b)(2): a company is Israeli resident if it is incorporated in Israel or if control of its business and its management are exercised in Israel. It is not section 68A. Section 68A is a separate benefit-denial rule that strips Israeli tax reliefs from a foreign company 25% or more Israeli-owned. Competing guides routinely mix the two up.

How many days can I spend in Israel after moving to Cyprus?

There is no single safe number, because the day counts are only presumptions about the substantive test, which is the centre of your life. Your centre of life is presumed to be in Israel if you spend 183 days or more there in the tax year, or 30 days or more in the year with 425 days or more across that year and the two before it. Both presumptions can be rebutted by you and by the assessing officer, and part of a day counts as a day.

Do I have to file anything in Israel when I leave for Cyprus?

Very likely, yes. Section 131(a)(5e) requires a report from an individual who still meets one of the day-count presumptions but claims to have rebutted it, filed on Form 1348 with supporting documents. Separately, a controlling shareholder in a controlled foreign company or a foreign professional company files annually, and any Israeli resident who moves NIS 500,000 or more out of Israel within twelve months reports that too. Funding a Cyprus company can trip the last one on its own.

What happens to my Israeli National Insurance when I move?

It runs on its own track. National Insurance residency is decided by the National Insurance Institute, not by the Tax Authority, and it does not end because you filed a tax residency claim. An Israeli resident abroad who is not working pays minimum contributions of NIS 266 a month from 1 January 2026. Termination is generally prospective from the date you notify the NII, the whole family unit is examined, and residency can be reopened retroactively if you come back.

Can I keep the Israeli company and just run it from Limassol?

You can keep it, but it stays Israeli. A company incorporated in Israel is an Israeli resident company wherever its owner lives, so it keeps paying corporate tax at 23% on worldwide income, and distributions to a material shareholder still meet 30%. Moving yourself does not move it. Because there is no treaty, there is also no place-of-effective-management tie-breaker to resolve a company that both states claim — which is why the decision about the Israeli entity should be taken before the move, not after.

Does Sumly advise on Israeli tax?

No. Sumly builds and runs the Cyprus side: the company, the books from day zero, Cyprus VAT, VIES, provisional and corporate returns, and the tax residency and non-dom application. This guide quotes Israel's own published law so you can see the shape of the decision, but how it lands on your facts belongs to an Israeli adviser. Where a case needs one, we connect you with expert lawyers from our network, and the first step either way is a meeting.

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 tax benefits for foreigners and the IP Box service

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 outcome. Israeli figures are stated from the Income Tax Ordinance as published by the Israel Tax Authority, with amendments cited separately where they postdate that text; 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.