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

Almost everything an Italian founder reads about moving to Cyprus starts from a premise that stopped being true in 2010. Cyprus is not on Italy's black list, so the presumption that would have kept you Italian-resident until you proved otherwise does not apply. What does apply is narrower, more specific, and far more manageable — once you know which rule is which.

Updated for 2026 Cyprus tax law and regulations.

From Italy to Cyprus, with one provider holding the whole file

Sumly is the one-stop, fully digitalized way to move a business from Italy to Cyprus and to run it from the day the company exists. We form it, open the books on the day you order, prepare every Cyprus return box by box, apply for the Yellow Slip, and handle tax residency and non-dom as one fixed-price service. One dashboard, one provider, prices published in advance — rather than a notary for one part, a commercialista for another, and nobody at all for the join.

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 Cyprus on Italy's black list for a founder leaving the country?

No. It was removed sixteen years ago and has never been put back, and this single fact changes the legal posture of an entire move. It deserves the first section on this page because the Italian search results say the opposite so often that most founders arrive at a meeting already believing it.

Start with what the rule does. Article 2 comma 2-bis TUIR says that Italian citizens who are cancelled from the resident population registers and move to states or territories identified by ministerial decree are considered resident anyway, salvo prova contraria — unless they prove the contrary. Two features make it the harshest provision in the whole departure story: it targets Italian citizens specifically rather than residents generally, and it reverses the burden of proof, so the taxpayer has to dismantle the presumption instead of the administration having to build a case.

The decree it points at is D.M. 4 maggio 1999. And article 2, comma 1 of the ministerial decree of 27 July 2010 says, of the list in that decree, that the following States are eliminated: «Cipro (Kypros) e Malta (Republic of Malta)». The same article takes Cyprus off the CFC list and off the non-deductible-costs list, and article 1 adds it to the white list of states with adequate exchange of information. The recitals give the reasoning openly: Cyprus and Malta are EU Member States, they had concluded protocols widening the legal basis for exchange of information, and the mutual-assistance directive applied to them on accession.

Nothing since has undone it. The next amendment to the 1999 list was the decree of 12 February 2014, which removes San Marino and adds nobody. And the Agenzia delle Entrate itself, in the circular it issued after the 2024 residence reform, states that comma 2-bis was left unamended, that the operative list is still D.M. 4 maggio 1999, and that the list was last updated by the decree of 20 July 2023, which removed Switzerland with effect from 1 January 2024. Three official confirmations, pointing the same way.

Say what this means precisely, because the temptation to overclaim is real. Off the list means the presumption does not run. It does not mean Italy cannot assert that you are still resident. Articles 2 comma 2, 73 and 167 all still operate, and Cyprus arrangements are audited closely. The honest sentence is that the burden of proof sits where it belongs — with the administration — instead of being handed to it before the argument starts. For an Italian passport holder weighing Cyprus against Dubai, Monaco or the Channel Islands, that difference is not cosmetic. It is the difference between a case you can win on evidence and a case you begin by losing.

Does Italy charge an exit tax when an Italian founder moves to Cyprus?

Not on the founder. On the company, if you move the company. English-language pages collapse the two constantly, and the distinction decides whether a departure costs nothing or costs a valuation of everything you own.

Article 166 TUIR is headed Imposizione in uscita, and its first comma resolves the question of scope before it says anything else: the provisions of the article apply to persons carrying on commercial enterprises — "ai soggetti che esercitano imprese commerciali". The triggering events are corporate ones: moving the enterprise's tax residence abroad, transferring assets to a foreign permanent establishment, moving an entire permanent establishment out of Italy, or being absorbed into a non-resident entity. The charge is a deemed realisation — tax on the difference between market value and fiscal cost of what leaves — whether or not anything is actually sold.

There is a real softener for a move into the EU. Comma 9 lets the tax, once computed and reduced by the losses under comma 6, be paid in five equal annual instalments, on election and subject to any security required, where the transfer is to an EU Member State or a qualifying EEA State. Cyprus is an EU Member State, so an Italy-to-Cyprus corporate migration qualifies for the deferral. Comma 12 lists what accelerates the remaining balance, including a later transfer onward to a non-qualifying jurisdiction or a disposal of the assets — so the instalment plan is a timetable, not an amnesty.

Now the individual. Article 166 does not reach a natural person who holds shares and emigrates: its own scope clause binds enterprises, and there is no provision in it deeming a shareholding disposed of at market value on the day Italian residence ends. That is the claim we make, and we make it in exactly that shape. The broader proposition you will see stated casually — that Italy has no exit tax on individuals anywhere in its law — is a negative, and a document search cannot positively prove a negative. Have an Italian professional confirm the wider point against your own facts before you rely on it.

What follows from this is the sentence most Italian founders need and few get told. If you leave and the company stays behind as an Italian S.r.l., no exit charge is triggered on you or on it. If you move the company itself, article 166 values everything it owns on the way out — which for a software business whose worth sits in its code is the most expensive door in the building. "No individual exit tax" and "no exit tax" are not the same statement.

What is esterovestizione, and why is it the real trap for an Italian founder?

Because it is the argument the Agenzia actually runs, it survives every point made above, and in its statutory form it does to you what the black list would have done — reverses the burden of proof. If you read only one departure section on this page, read this one.

Corporate residence is set by article 73 comma 3 TUIR, rewritten by the 2023 reform. A company is Italian if, for most of the tax period, it has in Italy its registered office, its place of effective management, or its principal ordinary management. The statute then defines the second and third. Sede di direzione effettiva is the continuous and coordinated taking of strategic decisions about the company as a whole. Gestione ordinaria is the continuous and coordinated performance of the acts of current management of the company as a whole.

Three alternative tests, and the third is the one founders underrate. Before 2024 the criteria were the seat of administration and the principal object; the reform replaced them and added a day-to-day operations test that stands entirely on its own. Holding board meetings in Nicosia no longer settles anything if the invoicing, the hiring, the supplier decisions and the daily running of the business happen on a laptop in Bologna. Strategic decision-making and ordinary management are now separately sufficient to make the company Italian.

Then come the presumptions. Under commi 5-bis and 5-ter, a foreign entity that holds control of an Italian company is presumed to have its administrative seat in Italy if, alternatively, it is itself controlled — even indirectly — by persons resident in Italy, or its board is composed predominantly of directors resident in Italy. Control is tested at the closing date of the controlled entity's tax period, and for individuals the votes of family members are counted together.

Two more things belong here. First, the consequences are retrospective: a company held to have been Italian resident was Italian resident all along, so worldwide income is taxable in Italy for the open years, with IRES and IRAP, penalties, and — above the statutory thresholds — exposure under the tax-crime legislation for an omitted declaration. Cypriot tax paid does not simply net off. Second, the defence is factual rather than documentary. What defeats the argument is substance that would exist anyway if the business were genuinely run from Cyprus: directors who live and decide there, premises that are not a mailbox, local staff, banking operated locally, minutes that record real deliberation rather than ratification of decisions taken elsewhere, and a founder whose own diary matches the story. Every item on that list is also what the CFC escape in article 167 comma 5 needs, and what the personal residence analysis wants to see. Structure once, and structure it properly.

When does Italian tax residency actually end under art. 2 TUIR?

When none of four alternative connecting factors is satisfied for the majority of the tax period — and the list of four grew in 2024. The reform is D.Lgs. 27 dicembre 2023, n. 209, and it applies from 1 January 2024, so a founder whose departure straddles that date is being judged by two different rulebooks.

The current wording of article 2 comma 2 TUIR treats as resident those who, for the greater part of the tax period and counting fractions of a day, have residence under the civil code or domicilio in the territory of the State, or are present there, and defines domicilio for this purpose as the place where a person's personal and family relations principally develop. Registration in the resident population registers for most of the period remains a presumption of residence, but only a rebuttable one.

The physical-presence test is the one that catches people who have otherwise done everything right. The Agenzia's guidance is explicit that it is purely objective, applies regardless of the reason for the presence, and that 183 days in a year, or 184 in a leap year, need not be consecutive. Fractions of a day count towards the total, so an arrival day and a departure day are each a full day. Working remotely from Italy is squarely inside it: the circular says that staying in Italy in smart working for 183 days determines Italian tax residence in itself.

Do the arithmetic on a normal year and it stops feeling theoretical. A founder who is AIRE-registered, has moved the family, and owns nothing in Italy can still become Italian tax resident on presence alone — two long summers with the parents, Christmas, Easter and a scattering of client trips gets there faster than anyone expects. Before 2024 that combination was survivable. It is not survivable now.

One more thing worth knowing about the transition: for tax periods up to and including 2023, registration in the anagrafe for most of the year was an absolute presumption of Italian residence, tempered only by treaty tie-breakers. If your departure year is 2023 or earlier, the old rules and the old practice apply to it.

Does registering with AIRE settle your Italian tax residence?

It does not, and treating it as though it does is the most common and most expensive misunderstanding in this whole subject. AIRE is a registry act. It is not a tax election, it never has been, and no amount of correct AIRE paperwork answers the questions article 2 asks.

The obligation is real and it is quick. An Italian citizen transferring residence abroad must declare it to the consular office with jurisdiction over the place of immigration within ninety days of immigration, naming family members who are Italian citizens and attaching documentation proving residence in the consular district.

Here is why the registry act is not the tax answer. AIRE removes you from the anagrafe della popolazione residente, and that defeats exactly one of the four connecting factors above. Civil-law residence, domicilio and physical presence are all untouched by it, and any one of them alone re-establishes Italian tax residence for the year. The Agenzia makes the point with its own worked example: a person who registers with AIRE and starts working abroad, but keeps the centre of their personal and family relations in Italy, is still Italian resident.

The practical version, then. Register with AIRE — it is necessary, it is cheap, and failing to do it now costs money every year. Then understand that a founder who registers, leaves the family in Milan for a school year, keeps the flat available and flies back most weekends holds an AIRE certificate and Italian tax residence simultaneously. The certificate proves where you told the state you live. The other three tests ask where you actually live.

Do Italian CFC rules under art. 167 TUIR catch a Cyprus company?

Usually not for a genuine operating business, and the reason is that two separate tests have to be met together before anything is attributed to you. Getting this right matters in both directions, because the wrong answer either frightens a founder out of a structure that was fine or reassures one who is walking into a problem.

Those figures come from the consolidated text of article 167 TUIR, which sets control at more than 50% of the profits, effective taxation at below 15%, and the passive threshold at more than one third of revenue.

The 15% number invites a careless conclusion in either direction, because a Cyprus company's headline rate is now 15% from tax year 2026. Read the Italian test carefully: it is about effective taxation, not the headline rate. Cypriot reliefs — the participation exemption, the exemption for gains on securities, the notional interest deduction, the IP Box — can pull the effective rate below the headline in a given year, so matching rates on paper proves nothing. Equally, a Cyprus trading company paying tax on substantially all of its accounting profit is not in difficulty on that limb.

And the passive limb is where most founder-run businesses simply fall out of the regime. A consultancy, an agency, a SaaS company selling to customers, a distributor — revenue from operating a business is not interest, royalties, dividends or low-value-added intra-group services. Both tests must be met for attribution, so failing one is enough.

The IP Box needs its own sentence, because it cuts both ways. Qualifying intellectual property income taxed at an effective 3% from tax year 2026 is obviously below the 15% effective-taxation threshold, and IP royalties are a listed passive category. That does not automatically mean CFC: the passive test asks whether more than a third of revenue falls into those categories, which depends on what the company actually sells, and a product company doing its own development with its own staff in Cyprus has the genuine-activity escape available regardless. It does mean the IP Box is a conversation to have with your Italian adviser before you claim it, not after.

The honest summary is that CFC is not the main risk for a founder who genuinely moves. Article 167 is built for the person who stays in Italy and owns a Cyprus company. Esterovestizione is built for the person who says he moved.

What does quadro RW require from an Italian who owns a Cyprus company?

An annual declaration of the holding at value, for every year you remain Italian tax resident, with no de minimis. This is the compliance obligation most reliably forgotten and most disproportionately punished, and it deserves more than a footnote.

The duty sits in article 4 D.L. 167/1990: Italian-resident individuals, non-commercial entities and società semplici holding foreign investments or foreign financial assets capable of producing income taxable in Italy must report them in the annual income tax return. It extends to beneficial owners as defined by the anti-money-laundering legislation, so nominee arrangements, trusts and layered ownership do not remove it. Foreign bank and current accounts fall away below a maximum value of €15,000 during the year — but that threshold applies to accounts, and there is no equivalent for shareholdings. Shares in a Cyprus company are squarely a foreign investment, at whatever value.

The penalties are the sting, because they are computed on the asset rather than on any tax. Article 5 sets 3% to 15% of the undeclared amounts, rising to 6% to 30% where the assets sit in a State with a privileged tax regime, with a fixed €258 where the return is filed within ninety days of the deadline. A founder who pays every euro of tax correctly and misses the box on a €2 million holding is looking at a percentage of two million, for a pure reporting failure, in each open year. And here the black list fact pays out in cash: because Cyprus is off the 1999 list, the higher band does not apply.

Two practical notes. The obligation ends when Italian tax residence genuinely ends, which routes back to article 2 and nothing else. And non-reporting is not a strategy in any case: Cyprus and Italy exchange financial account information automatically, so the account and the holding are visible whatever the return says.

Is IVAFE Italy's wealth tax on a Cyprus shareholding?

In everything but the name, yes — and it is the most concrete recurring number in the entire analysis. Italy levies no general net wealth tax; there is no annual charge on a resident's aggregate net worth. What it levies instead are two targeted taxes on the value of assets held abroad, and for a founder holding a Cyprus company one of them lands directly.

IVAFE is set by article 19 of D.L. 201/2011 at 2 per mille a year on the value of financial products held abroad, with a fixed €34.20 per foreign current account or savings book held by an individual, and a higher 4 per mille rate from 2024 on products held in states with a privileged tax regime. The base is value, not income: market value where available, otherwise nominal or redemption value, apportioned by holding percentage and by days of ownership. It is due whether or not the asset produced a single euro of return. The companion levy, IVIE, applies at 1.06% of the value of property situated abroad, reduced for a foreign main residence.

Why it decides so much: shares in a Cyprus company held by an Italian tax resident are foreign financial assets. Two per mille every year on a holding valued at €3 million is €6,000, payable out of pocket in a year with no distribution and no profit. That is the running cost of the "leave the company abroad but keep living in Italy" plan before anyone has argued esterovestizione or CFC — and it is the line the calculator at the top of this page models as Italy's wealth tax. The Cyprus column has no equivalent, because Cyprus levies no net-wealth tax and no inheritance tax at all.

We model the ordinary 2 per mille rate rather than the higher one, which is right for Cyprus. But we will flag the limit of what we checked: the higher rate refers generically to states with a privileged tax regime, and we did not find an official page tying that phrase, for IVAFE purposes, to the same 1999 decree that governs the residence presumption. We model the ordinary rate and say so, rather than asserting a link we have not verified.

And the mirror image is the cleanest argument on this page: IVAFE is a residence-based tax. It stops when Italian tax residence genuinely stops, and not a day earlier.

How does the 1974 Italy–Cyprus treaty actually allocate taxing rights?

Along an older pattern than most commentary assumes, which matters because the widely repeated numbers are wrong. The instrument is the convention signed at Nicosia on 24 April 1974 with its protocol, plus an amending protocol and exchange of notes signed at Nicosia on 7 October 1980, ratified by Legge 10 luglio 1982, n. 564 and published in the Gazzetta Ufficiale of 16 August 1982. A further additional protocol was done at Nicosia on 4 June 2009 and ratified by Legge 3 maggio 2010, n. 70. That protocol is commonly described as modernising the exchange-of-information article; we did not find the annexed protocol text rendered on an official source, so we do not tell you which articles it changed.

Article 4 is the safety net and the ordering is what matters. For an individual resident in both states, the tie-breaker runs: permanent home available; then centre of vital interests; then habitual abode; then nationality; then agreement between the competent authorities. For a company, residence goes to the place of effective management. Read the first limb again with an Italian move in mind. Keeping the apartment in Milan "just in case" is not a neutral act — the same flat feeds the first tie-breaker limb, the domicilio analysis under article 2, and, if you use it, the physical-presence count, all at once.

On dividends, article 10 lets Italy as the source state withhold no more than 15% of the gross amount of the dividends paid to a Cyprus resident, and dividends paid by a Cyprus company to an Italian resident are not taxed in Cyprus beyond the corporate-level charge. Both rules give way where the recipient has a permanent establishment in the source state to which the holding is effectively connected. What is not in article 10 is the 5% rate for a 25% shareholding that English-language pages assert routinely. That two-tier structure belongs to later OECD-model treaties; a 1974 convention does not contain it, and we read the article to check. Whether the EU Parent–Subsidiary Directive rather than the treaty governs a parent-subsidiary flow between the two states, and on what conditions, is a separate analysis we have not done, so we make no claim about it.

Article 13 governs gains. Gains from the alienation of movable property are taxable in the contracting State of which the alienator is a resident, subject to an exception where the property is attributable to a permanent establishment or fixed base in the other State. Shares are movable property. The convention contains no clause reallocating gains on shares that derive their value mainly from immovable property — characteristic of its vintage, and stated here as a fact about the treaty rather than as a plan.

That combination makes sequence the whole game on a sale. A share disposal is taxed where the seller resides when it happens, and Italy has no individual charge at the border. It also means the administration has every incentive to argue that the residence change was ineffective, which routes straight back to article 2 and article 73. A pre-arranged sale following a paper move is precisely the fact pattern that gets challenged, and we would rather say so than imply a clean arbitrage exists.

What happens to your INPS contributions and your Italian pension?

Nothing is lost, and the coordination framework is better than the folklore around it. This is worth stating plainly, because fear of losing contributions is a real reason founders hesitate and it is unfounded.

Moving within the EU does not create a European pension. It coordinates national ones, under Title II of Regulation (EC) No 883/2004 and its implementing regulation, and INPS puts the purpose in its own words: the EU rules do not create a European social security system but coordinate the national ones and protect migrant workers' rights. Contributions already paid into INPS sit where they are and count towards entitlement: international totalisation aggregates insurance periods across the member states plus Iceland, Liechtenstein, Norway, Switzerland and the United Kingdom, with a minimum of one year, 52 weeks, under the EU rules. It is free, it does not transfer contributions from one state to another, and each state then pays its own pro-rata share on its own record.

What you are leaving behind is expensive. For 2026 the Gestione Separata rates are 26.07% for a libero professionista and 35.03% for company directors, statutory auditors and collaborators with DIS-COLL cover, with a ceiling of €122,295.00 and a floor of €18,808.00. A founder-director paying himself through an Italian company meets 35.03% on the fee, up to that ceiling, before IRPEF touches it. Be fair about what it buys, though: maternity and paternity cover, sickness, DIS-COLL unemployment cover for collaborators, the ISCRO income-continuity component, and a preserved and totalisable pension record. It is not a deadweight cost and we will not describe it as one.

One interaction nobody else connects, and it is the sharpest point in this section. The posting rules in article 12 of the regulation let a worker sent temporarily abroad keep paying into the sending state's scheme, for a period that may not exceed 24 months, certified by a Portable Document A1 and requiring an organic link between employer and worker throughout. Founders reach for the A1 because it is administratively convenient. But an A1 asserts that the real employer and the real activity remain Italian — which is exactly the fact pattern the Agenzia uses to argue esterovestizione and continuing personal residence. The certificate you obtain for convenience is evidence against you on the tax side. A founder who genuinely moves and works in Cyprus is normally subject to Cypriot social insurance, and that is the position you want on paper.

What does an Italian founder actually pay today?

Enough that the comparison is not close, and the components are worth seeing separately rather than as one grievance. Start with the company.

IRES, the corporate income tax, is 24% for 2026. Alongside it sits IRAP, the regional tax on productive activities, whose ordinary rate is 3.9% of net production value, with regions free to vary it by up to 0.92 percentage points in either direction. A note for anyone who checks: the consolidated text of the IRAP article still prints an older, lower figure that was repealed before it took effect. The operative rate is the one in the Agenzia's own instruction booklet, and that is the one cited here.

Then the owner takes the money out. Dividends paid to a resident individual outside a business meet a 26% withholding, a titolo d'imposta — final, with no qualified/non-qualified distinction. Financial capital gains meet the same rate: the unified 26% substitute tax applies to returns falling due from 1 July 2014. Here too an older consolidated article still shows a superseded rate, and here too we cite the instrument that actually raised it.

Stack them and the arithmetic is unpleasant. This is derived from the verified rates above, not a figure any source publishes, so we show the work:

Two caveats on that table, both honest. The 27.9% line adds two taxes that do not share a base — IRES falls on taxable profit, IRAP on net production value, from which much labour cost is historically not deductible — so it flatters a company with a large payroll and penalises one with a small one. And IRAP is the structural complaint rather than the rate complaint: because labour is largely non-deductible from its base, it is payable by a company that made no profit at all. For a services business whose main cost is people, it behaves less like a profits tax and more like a payroll surcharge. The counterweight, from the same official source, is that since 2013 ordinary-statute regions may reduce IRAP to zero by their own law, so the burden genuinely is not uniform across the country.

On administrative load we are going to be qualitative, because no official Italian statistic quantifying compliance hours exists and we are not going to invent one. What is checkable is the shape of the machinery: the IRAP return alone is a full annual declaration with separate schedules for partnerships, corporations, non-commercial entities and public bodies, plus a regional apportionment schedule that allocates the production base region by region against per-region rate codes — a complete return, with sub-national allocation, for a single 3.9% tax. Add a parallel annual track for foreign holdings in quadro RW with IVAFE and IVIE computed alongside, and separate declarations and separate authorities for income tax, IRAP and social contributions. That is the burden described from what the forms actually require.

And the pace of change is its own cost, demonstrable from the sources on this page rather than asserted: the definition of individual tax residence rewritten from 2024, the definition of corporate residence rewritten in the same reform, the neo-resident flat tax amended twice, the reduced IRES rate that existed for exactly one tax period, a new IVAFE rate from 2024 and a new AIRE sanction from 2024. Six substantive changes touching a relocating founder inside about two years.

Where Italy is genuinely better than its reputation

Two places, and a page that only lists reasons to leave is a brochure rather than a guide. If your problem is one of these, Italy may already be the better answer and you should hear that from us.

Succession is cheap. Italian inheritance and gift tax share a rate and allowance structure, and for a founder passing a business to children it is mild by Western European standards: 4% for a spouse and direct-line relatives above a €1,000,000 allowance per beneficiary, 6% for siblings above €100,000, 6% for other relatives to the fourth degree, and 8% for everyone else, with the same rates applying to lifetime gifts and a larger allowance where the beneficiary has a severe disability. An Italian founder who leaves principally to protect an estate for children is very often solving a problem Italy does not have.

Italy pays to attract people in. The neo-resident regime in art. 24-bis TUIR substitutes a flat annual charge for personal income tax on foreign income, regardless of amount, now at €300,000 per tax period, reduced to €50,000 for each qualifying family member, for up to fifteen years, available to someone who has not been Italian tax resident for at least nine of the previous ten periods. Most live commentary still quotes an older, lower figure; the €300,000 amount comes from the amendment made by the budget law of 30 December 2025. Separately, the impatriati regime taxes qualifying employment and self-employment income produced in Italy at 50% of its amount, within an annual limit of €600,000, falling to 40% where the worker moves with a minor child, for the year of transfer and the four following periods.

The honest paragraph is this. Italy taxes earning heavily and taxes passing wealth to your children lightly, and it spends real money attracting people who have been away. If your issue is an estate or a one-off event, the answer may well be domestic. If it is a recurring mid-forties percentage on distributed operating profit plus a quarter to a third again in contributions, that is structural, and the inbound regimes do not help you — they are, by design, only open to people who have already spent years somewhere else.

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 Italian founder?

Flatter, and with far fewer moving parts. A Cyprus limited company pays 15% from tax year 2026 on taxable profit — one rate, no bands, no regional variation, no second tax computed on a differently defined base. Where the profit comes from qualifying intellectual property, the IP Box takes the effective rate on it down to 3% from tax year 2026.

The gap opens when the owner takes the money out. Non-dom status, which nearly every arriving founder qualifies for, exempts a Cyprus tax resident who is not domiciled in Cyprus from Special Defence Contribution on dividends for 17 years of residence, and dividends fall outside personal income tax in any case. A shareholder who is domiciled in Cyprus pays 5% on dividends from 2026 profits. What is left for the non-dom is the health contribution, GeSY, charged at 2.65% on income up to €180,000 a year, so €4,770 is the ceiling however large the distribution. A salary runs through the ordinary bands instead, 0% to €22,000 rising to 35% above €72,000. Registration for VAT becomes compulsory once taxable turnover passes €15,600, and the standard rate is 19%. There is no net wealth tax and no inheritance tax, so the IVAFE line above has no Cyprus counterpart at all. The mechanics are set out in Cyprus non-dom status and Cyprus corporate tax.

How does an Italian founder become Cyprus tax resident, and does the Yellow Slip apply?

Through the 60-day rule in most cases, and yes — as an EU citizen the Yellow Slip is open to you, which removes the immigration question that dominates a third-country founder's file.

From tax year 2026 the 60-day rule has four conditions, after a fifth was removed from the 60-day rule: at least 60 days in Cyprus; no more than 183 days in any other single state; a business, employment or office held through the year in a person tax resident in Cyprus; and a permanent home in Cyprus owned or rented. The condition that fell away was "not tax resident anywhere else", which was the awkward one for mobile founders — another country's claim no longer disqualifies you by itself, and competing claims resolve under the treaty tie-breaker in article 4.

Read that alongside the Italian side and a plan appears. The second condition, no more than 183 days in any other single state, sits directly on top of the Italian physical-presence test, which needs 183 days counting fractions. They are not the same test, but they push in the same direction, and a founder who keeps a real day count is answering both at once. The third condition is usually satisfied by the directorship of your own Cyprus company, which is why forming the company and establishing residency are one project rather than two — and why a directorship that involves real decisions taken in Cyprus does triple duty across article 73, article 167 comma 5 and the 60-day rule.

The Yellow Slip is what turns EU free movement into a Cyprus address on paper. It records where you live; it decides nothing about where you are taxed, and our guide sets out that difference while Sumly files the application. Tax residency and non-dom are the separate step at €750 per person, and the day counting is covered properly in the 60-day rule guide.

What happens to your existing S.r.l.?

It is a decision with three shapes, and the Italian answer differs from every other country's because of what article 73 comma 5-bis does to one of them.

Keep it, standing alone. An Italian S.r.l. with its registered office in Italy stays Italian resident and keeps paying IRES and IRAP. That is coherent where there is continuing Italian trade, Italian staff or Italian customers who want an Italian counterparty. Your Cyprus company then sits beside it rather than above it, and the comma 5-bis presumption is not triggered — though your own personal residence position still has to be clean.

Put a Cyprus holding company on top of it. This is the structure founders ask for by name, and it is the one configuration Italian law is specifically built to attack. A foreign company controlling an Italian company, itself controlled by Italian residents or with a mostly Italian-resident board, is presumed Italian resident under comma 5-bis with the burden on you. If there is a commercial reason to do it anyway, do it with directors who genuinely live and decide in Cyprus, and get Italian advice before you sign anything.

Migrate the company itself, or wind it down and start fresh. Moving the S.r.l.'s tax residence to Cyprus is an article 166 event: market value against fiscal cost on everything that leaves, with the five-instalment EU deferral available because Cyprus is an EU Member State. For a company whose value is in its intellectual property, that is often the most expensive route, and the instalment plan spreads the cost rather than removing it. For many founders the cleaner shape is to wind the Italian company down on their adviser's timetable and incorporate fresh in Cyprus — how to register a company in Cyprus covers what the Cyprus end of that involves, and what it costs covers the money.

Whichever route you take, the quadro RW obligation on the new Cyprus participation starts the moment you hold it and runs for as long as you are Italian tax resident.

Can an Italian e-commerce brand run through Cyprus?

Yes, and for an Italian seller the honest framing is operational rather than about market access — you are inside the single market either way, and we are not going to pretend otherwise. The argument is about the rate the profit meets and how much of the month-to-month compliance you still have to touch by hand.

A Cyprus company holds an EU VAT number your customers can verify in VIES, zero-rates intra-EU business sales on the usual conditions, and uses the one-stop shop for consumer sales across the bloc. Your customers in Milan or Bari notice nothing different at checkout. What changes is which state taxes the profit, and whether a second production-value tax with a regional apportionment schedule is sitting underneath the first one.

Where an online store actually falls over is the bookkeeping: thousands of tiny transactions a month, two or three payment processors, several currencies, and a VAT treatment that flips depending on who the buyer is and which country they are in. Sumly's Shopify and WooCommerce plugins pull orders, refunds, fees and payouts into the books with the right Cyprus VAT codes already attached, so the return assembles itself out of the sales instead of being reconstructed from an export the week it is due. Live bank feeds and multi-currency invoicing do the rest, and the VAT feature shows the return building as the quarter goes on.

Why do people choose Cyprus over other tax havens?

Because it is a country people want to live in, and most of the alternatives are places people tolerate. The tax is why founders look. It is almost never why they stay.

The violent crime rate is among the lowest in the Union, which is usually the first thing an arriving family remarks on rather than the last. Cyprus is an English-speaking country in every practical sense — business, banking, professional services and most of the paperwork run in English, which for an Italian founder is a materially easier landing than Portugal or Greece and a different world from Dubai. People from every corner of the world are already here, so nobody ends up being the only foreigner in the room. Business and property are both booming, and the state stays open towards people who want to trade rather than wrapping every step of it in another authorisation. Groceries — meat, fruit, vegetables — are cheap, which is not the first thing an Italian expects to find abroad. Then the beaches, which never really close: you can swim through a Cyprus winter, and the summers are the reason people fly here from the other side of the world.

The Italian push list is specific rather than rhetorical, and everything on it is sourced above: a mid-forties effective percentage on distributed profit once IRES, IRAP and the 26% withholding are stacked; a regional tax computed on a base from which labour is largely non-deductible, payable by a company that made no profit; Gestione Separata at up to 35.03% on a director's fee; a residence definition and a corporate residence definition both rewritten inside two years; and a presumption regime — esterovestizione — that hands the burden of proof to the taxpayer whenever the structure looks like the obvious one. Set against that, we said the fair things too: succession is genuinely cheap, and the inbound regimes are genuinely generous to people arriving.

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 from Italy look like, month by month?

Timelines depend entirely on your own facts, so read this as shape rather than schedule.

• Before anything is filed — and this is where we start. We put an Italian adviser from our network on your departure date, on the S.r.l., and on whether anything you own would be caught by article 166 if the company moved. Together we settle the structure — standalone Cyprus company, or something with an Italian entity in it — before we incorporate, not after, and we map the day count for the year of departure with you.
• Month 1. We form the Cyprus company, with the books open the day you order, and start the Yellow Slip file. You take up the directorship that anchors the 60-day rule, and we minute the real decisions in Cyprus.
• Months 1–3. We register for VAT and, where relevant, social insurance, employees and UBO, and get banking and EU payments moving. Your Italian adviser files the AIRE declaration inside the ninety days — a hard deadline with a per-year penalty attached, and one we diarise alongside them.
• Months 3–6. You rent or buy the permanent home the 60-day rule requires, and we tell you what qualifies. You move the ordinary running of the business — invoicing, hiring, supplier decisions — to Cyprus, because that is the test article 73 now applies, and we run it from here with you. Your adviser deals with the S.r.l. on their own timetable.
• Month 12 onward. We apply for the Cyprus tax residency certificate and register you as non-dom. Your Italian adviser reports the Cyprus holding in quadro RW for any year you were still Italian tax resident, and keeps reporting it until residence genuinely ended. We keep the day counts and the board records clean — permanently, not for a season.

What mistakes do Italian founders actually make?

The expensive ones are consistent, and almost none of them are exotic.

Believing Cyprus is black-listed and either abandoning the plan or paying for advice about a presumption that does not apply. Believing that "no individual exit tax" means no exit tax, and then migrating a company full of intellectual property into article 166. Registering with AIRE and treating the certificate as the end of the residence question. Missing the ninety-day AIRE deadline and collecting a penalty for each year it runs. Building the Cyprus holdco on top of the Italian S.r.l. and converting a winnable argument into a statutory presumption. Keeping the Milan flat available and feeding the domicilio test, the first treaty tie-breaker limb and the presence count all at once. Counting only whole days abroad when the physical-presence test counts fractions. Taking an A1 posting certificate for convenience and handing the administration evidence that the real activity is still Italian. Forgetting quadro RW and meeting a penalty computed on the asset rather than on any tax. And running a Cyprus company's ordinary day-to-day management from Italy while directors in Nicosia sign what they are sent.

Nearly all of them come from treating the move as a paperwork event rather than as two tax systems handing over to each other.

Two worked examples

A consultancy at €250,000 of annual profit. Through an Italian company, IRES and IRAP together take about €69,750 at the combined 27.9% used in the table above, leaving €180,250; the 26% dividend withholding takes €46,865 more, so roughly €133,385 reaches the founder — an effective rate near 46.6%. Through Cyprus, the company pays 15%, or €37,500, and the €212,500 distributed to a non-dom meets only GeSY, capped at €4,770 because the 2.65% charge stops at €180,000 of income. About €207,730 in hand. The gap in a single year is large; the calculator at the top of this page compounds it, because each year's difference is also invested and Cyprus does not tax the return or the holding.

A SaaS company at €600,000 of qualifying profit. In Italy the same stack applies: roughly €167,400 of IRES and IRAP, then €112,476 of withholding on the €432,600 distributed, leaving about €320,124. In Cyprus, income that qualifies under the IP Box is taxed at an effective 3% — €18,000 — and the €582,000 distributed meets the same €4,770 GeSY ceiling, leaving about €577,230. This is the profile where the difference becomes structural rather than incremental. It is also the profile where migrating the existing Italian company is most dangerous, because article 166 values the intellectual property on the way out, and where the CFC passive-income limb deserves a proper look with your Italian adviser rather than a shrug.

Both examples assume full distribution and headline rates, and both use the derived combined Italian rate whose limits are set out above. Your own regional IRAP rate, your remuneration mix, your timing and the residence question itself all move the answer, which is what a meeting is for.

Part 4: Who does the work

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

Do it yourself — or have Sumly do it

Both routes are real, and the choice is really about how much administration you want to carry inside a legal system you have never used. Doing it yourself means the Registrar's forms and fees, a registered office you arrange, VAT and VIES registration, provisional tax twice a year, annual statements and books that survive your auditor — on top of a two-country move you are already running. Sumly's version has exactly three prices: €950 one-time for the formation, €39 a month for the software, and €390 a month if you want a Sumly certified bookkeeper running it — books open from day zero, every return prepared box by box.

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

Sumly offers all of it to everyone: a virtual address with PO box, including digital scanning of your mail delivered to your dashboard wherever you are; nominee director and secretary where a structure genuinely needs them; the Yellow Slip, which as an Italian citizen you qualify for; tax residency and non-dom at €750 per person; and every registration handled — VAT, social insurance, employees and UBO, filed right the first time.

Each of those is an extra, scoped to your case. Tell us what you need in the meeting and you get one clear package-deal offer covering all of it — the IP Box application included where it fits, since it is complex expert work and exactly the sort of thing that should be looked at with you before anyone quotes a price. No hourly billing, no surprises.

Sumly, a law firm, and a traditional bookkeeping firm

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

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

For an Italian founder that division of labour is the entire point. The Italian side — the S.r.l., the article 166 question, the residence file, the RW box — belongs with an Italian professional, and we will say so every time. Everything on the Cyprus side comes from one provider, through one dashboard, at four published prices. That is what makes Sumly the best choice for Italian 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 will defend anywhere, and the evidence sits below it.

The two locally built alternatives an Italian 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.

Put plainly, and we mean every item on it: the best support, the best bookkeeping software, the best AI for bookkeeping, the best bookkeeper, the best prices, and everything done easily. The detail is published: Sumly vs Cybooks and Sumly vs Balabook, and for the international tools an Italian founder may already run, Xero, QuickBooks and Sage.

On the IP Box one line is worth repeating: the IP Box is the largest single line in a Cyprus product company's tax position — and the easiest one to forfeit through bookkeeping that was never set up for it. The application starts as a conversation, which is one more reason the meeting comes before a quote. How the claim is actually built is set out in how to claim the IP Box, and the IP Box service page covers what we do on it.

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 Italian founders actually ask

Frequently asked

Is Cyprus on the Italian black list for someone moving abroad?

No. Cyprus was struck off the D.M. 4 maggio 1999 list by the decree of 27 July 2010, whose article 2 says in terms that Cyprus and Malta are removed from it. The next amendment, in February 2014, removed only San Marino, and the Agenzia delle Entrate confirmed in November 2024 that the last change to the list was the removal of Switzerland in July 2023. Because Cyprus is off the list, the art. 2 comma 2-bis presumption — the rule that presumes an emigrating Italian citizen still resident and makes them disprove it — does not apply to a move to Cyprus.

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

Not on you personally. Article 166 TUIR, the provision routinely translated as "the Italian exit tax", opens by saying it applies to persons carrying on commercial enterprises. It taxes a company that moves its residence or its assets abroad at market value, and it is real and expensive if you migrate the company itself. It does not reach a natural person who simply owns shares and emigrates. Because this is a statement about scope rather than a search of the whole statute book, take a practitioner's confirmation on your own facts before you act on it.

What is esterovestizione and does it apply to a Cyprus company?

It is the Italian tax administration's argument that a foreign-registered company is really Italian resident. Article 73 comma 3 TUIR makes a company Italian if its registered office, its place of effective management, or its principal day-to-day management is in Italy for most of the tax period. Commi 5-bis and 5-ter go further: a foreign company that controls an Italian company is presumed Italian-resident when it is itself controlled by Italian residents or its board is mostly Italian-resident. That presumption reverses the burden of proof onto you, and it is the single biggest risk in an Italy-to-Cyprus move.

Is registering with AIRE enough to stop being Italian tax resident?

No, and this is where Italian founders lose cases. AIRE removes you from the resident population register, which defeats one of four alternative connecting factors in art. 2 comma 2 TUIR. Civil-law residence, domicilio — since 2024 defined as where your personal and family relations principally develop — and simple physical presence are all untouched by it, and any one of them alone for most of the tax period makes you Italian resident again. The declaration is due within 90 days of moving, and omitting it carries its own money penalty.

Do Italian CFC rules catch a Cyprus company?

Only if two tests are met together. Article 167 TUIR needs control — art. 2359 civil-code control or more than 50% of the profits — plus effective taxation below 15% and more than a third of revenue from passive categories such as interest, royalties, dividends and low-value-added intra-group services. A Cyprus trading company paying tax on substantially its whole accounting profit, with real customers and real work, fails the passive limb comfortably. And comma 5 excludes a controlled entity that carries on a genuine economic activity with people, premises, equipment and assets.

Do I have to declare a Cyprus company in quadro RW?

Every year you are Italian tax resident, at value, with no minimum threshold for shareholdings. The obligation sits in art. 4 D.L. 167/1990 and reaches beneficial owners as well as registered holders, so nominee or layered ownership does not remove it. The penalties in art. 5 are a percentage of the asset, not of tax evaded — 3% to 15% of the undeclared amount — so a founder who pays every euro of tax correctly and forgets the box still faces a real charge. Italy and Cyprus exchange account information automatically in any case.

What is IVAFE and why does it matter for a Cyprus shareholding?

IVAFE is Italy's annual levy on the value of financial assets held abroad, set by art. 19 D.L. 201/2011 at 2 per mille a year. Italy has no general net wealth tax, but for a founder who keeps Italian residence while owning a Cyprus company, IVAFE is a wealth tax in everything but name: it runs on the gross value of the holding whether or not it paid a dividend, whether or not it made a profit. That is the line the calculator on this page models under wealth tax, and it is why "leave the company abroad, keep living in Italy" is expensive before anyone argues residence.

Does the Italy–Cyprus treaty give a 5% dividend rate?

No, and this one is worth checking yourself. The convention was signed at Nicosia on 24 April 1974 and ratified by Legge 564/1982. Reading article 10 in the Gazzetta Ufficiale, Italy as source state may withhold up to 15% of the gross dividend, and there is no reduced rate tied to a 25% shareholding anywhere in it — that two-tier pattern belongs to later OECD-model treaties. English-language pages assert the 5% figure regularly. The 1974 text does not contain it.

Does Sumly advise on Italian tax?

No. Sumly builds and runs the Cyprus side: the company, the books from day zero, every Cyprus VAT, VIES, provisional and corporate return prepared box by box, the Yellow Slip, and the tax residency and non-dom application. This guide sets out Italy's own published law so you can see the shape of the decision, but how art. 2, art. 73 and art. 167 land on your family, your flat and your S.r.l. is a question for an Italian professional. Where a case needs one, we connect you with expert lawyers from our network — and either way the first step is a meeting.

Keep reading

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

The calculator on this page uses headline rates, an assumed 10% annual return and full distribution of profit, so it shows the shape of the difference rather than your own return. The Italian combined corporate rate of 27.9% is derived arithmetic — 24% IRES plus the 3.9% ordinary IRAP rate — and the two taxes do not share a base, so your own regional rate and payroll move it. The wealth-tax line models IVAFE at 2 per mille, which is what an Italian tax resident pays annually on the value of foreign financial assets, a Cyprus shareholding included. Italian figures are stated for 2026 except where a source carries its own date; Cyprus figures apply from tax year 2026. All Sumly prices exclude VAT, and government expenses on a formation are invoiced separately once your application is approved.