Create a company in Cyprus — or move your company from South Korea

Almost every English page about Korean tax is now wrong, because four things changed in fourteen months: the corporate rates, the local rates that ride on them, the departure tax on large shareholders, and the low-tax line that decides whether a Cyprus company is caught. This guide works from the statutes as they stand for 2026 and shows the arithmetic in the open.

Updated for 2026 Cyprus tax law and regulations.

The Cyprus end of a South Korean move, delivered by one team on one dashboard

Sumly is the single, fully digitalized partner for taking a business out of South Korea and standing it up in Cyprus: we register the company, open your books the day you order, prepare every Cyprus return box by box, and deliver the tax residency and non-dom application as one fixed-price service. One provider covers the whole Cyprus half of the journey, so nothing falls into the gap between a corporate secretary in one office and a bookkeeper in another.

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.

What does a South Korean company actually pay in corporate tax in 2026?

More than it did a year ago, and more than almost any English-language summary will tell you. Two separate taxes are involved and they have to be added, not multiplied.

The national charge is a four-step scale. Under the Corporate Tax Act the rates are 10% on a tax base up to ₩200 million, 20% between ₩200 million and ₩20 billion, 22% between ₩20 billion and ₩300 billion, and 25% above ₩300 billion. The commencement rule is on the face of the amending Act: the new scale applies to corporate tax on the income of fiscal years commencing after this Act enters into force on 1 January 2026. A December year-end company is on the new rates for its 2026 year; a June year-end company picks them up from the year beginning 1 July 2026.

What went before matters only because it is still in circulation. The 2022 reform had cut each band by a point, to 9/19/21/24%, and that cut has now been reversed. If a page quotes 24% as Korea's top corporate rate, it was written before Christmas 2025 and has not been touched since.

Then the second tax. Since the 2014 reform, Korea's corporate local income tax is not a surcharge on the national bill — it is a distinct tax, with its own statute, its own return and its own rate table, applied to the same tax base. The Local Tax Act sets the standard rates at 1.0%, 2.0%, 2.2% and 2.5% across the same four bands, and it lets the head of a local government vary the standard rate by up to 50% either way by ordinance. Whether any council currently uses that power we do not know, and we are not going to guess at it.

Put the two together and you get the ladder a Korean company actually climbs.

Cyprus is a single figure at every level: 15% from tax year 2026, first euro to last.

Now concede the row that goes the other way, because it is real. A genuinely small Korean company — under about ₩200 million of taxable profit, which is roughly €130,000 at recent rates, and that conversion is ours rather than anybody's official figure — pays 11.0% in Korea against 15% in Cyprus. On corporate tax alone, that company is better off staying. The crossover is at the top of the first band, and above it the gap is seven points and compounds every year. If your profit is small and your customers are Korean, the honest advice is that this page is not for you yet.

One footnote for the founder converting a sole trade on the way out: a second national rate table exists for corporations required to file a compliance-verification report — principally real-estate lessors and companies converted from a compliance-verification sole trader within the previous three years. It starts at 20% with no small band at all.

Why is 15.4% the wrong number for a South Korean owner-manager's dividends?

Because it is a floor, not an answer, and the floor is crossed at a level most founders pass in their first serious year.

Start with what is true. Ordinary dividend income is withheld at 14% nationally, with the local income tax adding a further tenth of that, so the number people quote is 15.4%. Ordinary interest is withheld at the same 14%, while interest on non-business lending carries 25% and a dividend to an investing joint business proprietor carries 25%.

Now the provision the summaries leave out. Withholding is final only for small amounts. Interest and dividends are excluded from global income only where their total does not exceed ₩20,000,000 and they have been withheld at source. Above ₩20 million the whole of your financial income is drawn into global income and taxed on the progressive schedule, with credit for what was already withheld.

That schedule is itself two taxes stacked. The national rates run 6% to 45%, with the top rate applying above ₩1 billion, and the personal local income tax is again separate, at 0.6% to 4.5% across the same bands, with the same 50% local discretion either way.

So a founder distributing ₩500 million out of their own Korean company is not on 15.4%. They are working up a ladder that reaches 46.2% on the top slice, and 49.5% if the distribution is larger still. That is the number the Cyprus comparison has to be made against, and it is the single largest recurring figure on this page.

Two related points belong here, because founders plan around both and one of them no longer exists.

The first is what happens when you sell rather than distribute. Capital gains on shares are charged separately, and the rate depends on whether you are a large shareholder. A large shareholder pays 20% up to a tax base of ₩300 million and ₩60 million plus 25% above it, rising to 30% on shares in a non-SME held for less than a year. Everyone else pays 10% on SME shares and 20% on other shares, and foreign shares are charged at the same 10% and 20%. The local income tax rides on top of each of those, and it matters here because these are the rates a founder meets on an exit — against a Cyprus regime that exempts gains on qualifying securities altogether.

The second is a regime that a lot of Korean founders are still planning around. The financial investment income tax was legislated in 2020 to start in 2023, deferred to 2025, and then repealed before it ever applied — every article of it now reads as deleted in the consolidated Income Tax Act. If your plan involves realising gains before it arrives, or waiting for its ₩50 million exemption, that plan is built on a law that does not exist. What actually applies is the large-shareholder regime above.

The Cyprus position for an arriving founder is short to state. A Cyprus tax resident who is not domiciled in Cyprus pays no Special Defence Contribution on dividends for 17 years, and dividends sit outside Cyprus personal income tax altogether. What is left is the health contribution at 2.65% on income up to €180,000 a year — at most €4,770 however large the distribution. Skip the non-dom registration and a Cyprus-domiciled shareholder instead pays 5% on dividends from 2026 profits, which is why it is done at the start.

Can a South Korean founder own a Cyprus company and carry on living in Seoul?

No — and this is the structural trap that decides whether the rest of the plan works at all. It is written into the definition of a Korean company, not into an anti-avoidance rule you might argue your way around.

The Corporate Tax Act defines a domestic corporation as one whose head office, principal office or place of effective management is in Korea. Three alternatives, any one of which is enough. And the mirror definition is drafted so the point cannot be missed: a foreign corporation is a body whose head office or principal office is abroad, but only where its place of effective management is not in Korea. The parenthetical is a residence rule wearing the clothes of a definition.

Read plainly: a Cyprus company that is actually run from Seoul is a Korean domestic corporation. It is taxed in Korea on its worldwide income at 11.0% to 27.5%, it files Korean corporate returns, it files a separate local income tax return, and the Cyprus 15% becomes an irrelevance — at best a foreign tax credit against a larger Korean bill. Nothing has been saved. What has been added is a second set of filings in a second language.

We are not going to hand you a checklist of what fixes it, because the statute does not contain one. Korean courts have a great deal to say about where a place of effective management sits, and we did not read that case law for this page, so we are not going to invent a rule about board minutes and video calls and present it as law. What the statute supports is the direction of travel: the decisions have to actually be taken where the company says it lives.

The practical consequence for a Korean founder is sharper than for most nationalities on this hub. Relocating the person is a precondition of relocating the company, not an optional add-on. There is no "keep the apartment in Gangnam, own the Cyprus company" version of this. Korean law closes it at the level of the definition, and the absence of a treaty removes the usual escape hatch. If you are not prepared to move, the correct decision is to stay and to run a Korean company properly.

Do Korea's CFC rules catch a Cyprus company — and does the IP Box make it worse?

On rate, yes, and the IP Box makes it considerably worse. This section is where Cyprus's headline advantage turns into a liability if the personal move is not real.

Korea's controlled foreign company rule works from a formula rather than a published percentage. A specified foreign corporation is one where the tax actually borne in its home jurisdiction is no more than the company's actual income multiplied by 70% of the highest rate under article 55 of the Corporate Tax Act, and where the Korean investor is a related party. Undistributed distributable earnings are then deemed to have been paid out to the Korean shareholder.

Because the formula points at the highest Korean corporate rate, the line moved on 1 January 2026 without a word of the Act changing. Seventy per cent of 24% was 16.8%. Seventy per cent of 25% is 17.5%. Every published figure for Korea's CFC threshold predates that, and the arithmetic is the proof.

The Cyprus IP Box brings qualifying income down to 3% from tax year 2026, and for a product company that is normally the largest number in the whole comparison. For a Korean-resident shareholder it points the wrong way. The low-tax test is an effective one — tax actually borne against income actually arising — so every Cyprus relief you successfully claim drives the ratio further under the line rather than providing an exit. We are not going to sell you the IP Box unconditionally. It is worth a great deal to a founder who has genuinely become non-resident in Korea, and it is actively unhelpful to one who has not.

Three things can take a company back out, and two of them are usable:

• The income floor. The rule does not apply where actual income for the year is ₩200,000,000 or less, converted at the standard or arbitrated exchange rate and pro-rated for a short period. A genuinely small Cyprus consultancy is outside Korean CFC on income grounds regardless of the rate. This is a real shelter and it applies to a lot of readers.
• Substance. The rule is disapplied where the company has a fixed facility such as an office, shop or factory in that country, manages, controls or operates the business itself, and mainly carries on business there. Three limbs, all of them cumulative, and a registered address satisfies none of them.
• The shareholder threshold. The charge reaches a Korean person holding 10% or more of the issued shares or capital, directly or indirectly, counting shares held directly by related parties. A founder is always over it.

Now the provision almost nothing in English mentions, and the one most likely to decide a reader's case. Even where the substance exclusion is satisfied, the Act applies the charge anyway to companies in certain industrial classifications: wholesale, finance and insurance, real estate, and professional, scientific and technical services, among others. That last heading covers legal, accounting, management consulting, market research, advertising, research and development and specialised design — which is a very large share of the businesses a founder would think of moving to Cyprus. Wholesale has a proviso that can return a company selling to unrelated local parties; professional services has no equivalent.

Be precise about what that override does and does not do. The sector list is in the statute. The additional quantitative conditions that must be met before the override bites are left to Presidential Decree, and we did not extract them for this page — so the honest statement is that the override is conditional, not automatic, and that a consulting, financial, real-estate or wholesale business cannot assume substance alone will protect it. That is a question to put to a Korean adviser with your actual numbers in front of them.

The one-line answer: a Cyprus company held by a Korean-resident founder fails Korea's low-tax test on the standard rate and fails it badly on the IP Box; substance in Cyprus is the only defence, and for several common sectors that defence may itself be overridden. As with corporate residence, the resolution is that the founder has to genuinely stop being Korean-resident.

Is there a double tax agreement between South Korea and Cyprus?

There is not, and the way that negative was established is worth showing, because a careless search produces the opposite impression.

Korea's treaty register is published by the Ministry of Government Legislation and is searchable. Searched under the modern Korean spelling of Cyprus, it returns nothing at all — which would suggest, wrongly, that the two states have no relationship whatsoever. Searched under the older transliteration that Korea's own instruments actually use, it returns exactly two bilateral instruments: an exchange of notes on visa exemption for holders of diplomatic and official passports, signed in November 2000 and in force from December 2000, and an agreement on maritime transport, signed in December 2008 and in force from July 2009. Searched across Korea's whole set of conventions for the avoidance of double taxation on income, the register returns more than a hundred instruments, and Cyprus is not among them.

The consequences run through everything above:

• No reduced withholding on payments out of Korea to a Cyprus resident. Korea's domestic non-resident rates apply unmodified. We are deliberately not quoting a figure for them here, because we did not verify the non-resident withholding provisions themselves and a wrong rate on a page like this costs a reader money.
• No residence tie-breaker, which is what makes the dual-resident company problem above unfixable rather than merely awkward.
• No treaty definition of permanent establishment, so Korea's domestic rules apply as written.
• No mutual agreement procedure, so where both states tax the same income the only relief is a unilateral credit.
• No treaty limitation on Korea's CFC rules or its departure tax. Nothing in this guide can be argued away by reference to an agreement, because there is no agreement.

And one thing the absence does not buy you. No treaty does not mean no visibility. Tax administrations exchange information under multilateral arrangements that have nothing to do with bilateral treaties, and a Cyprus bank account is not invisible to Korea because the two states never signed a convention. Anyone implying otherwise is selling you a risk, not a structure.

This is, honestly, the strongest argument against the Cyprus route for a Korean founder specifically. A founder moving to Ireland, the Netherlands or Singapore arrives inside a treaty. A founder moving to Cyprus arrives inside domestic law on both sides and nothing else. That is a real cost and it should be weighed rather than glossed over.

What does South Korea's departure tax cost a large shareholder who leaves?

It treats you as having sold your shares on the day you get on the plane. The regime was re-enacted at the end of 2024, its rate schedule was wholly replaced in December 2025, and its scope was extended to foreign shares in February 2026 — so establishing the current position took more work than any other part of this page, and almost everything published in English describes a version that no longer exists.

Who is caught. Both conditions must be met. First, the person must have had a domicile or abode in Korea for five years or more during the period from ten years before the departure date to the departure date. Note the wording: five years or more, not more than five — the boundary is a day earlier than several neighbouring regimes and writers copy the wrong formulation across constantly. Second, the person must be a large shareholder as at the end of the year preceding the year of departure. Meet both and the shares are deemed to have been transferred on the departure date.

What makes you a large shareholder. For an unlisted company, holding — with related shareholders — either 4% or more of the shares, or shares with a market value of ₩1 billion or more, tested at the end of the preceding business year. For a founder-owner of their own company that test is met by definition. If you are reading this page, you are almost certainly inside it. Note also that the test bites at the prior year end: diluting below the line in March and leaving in June does not help, because the question was settled on 31 December.

The rates. The schedule was wholly rewritten in December 2025. Domestic shares are charged at 20% up to a tax base of ₩300 million, and ₩60 million plus 25% of the excess above it. Foreign shares — a limb that did not exist at all before — are charged at 10% for SME shares and 20% otherwise. The 10% SME rate is genuinely useful to this audience, because a Cyprus company will usually be an SME. The base is the market value at departure less acquisition cost, with an annual deduction of ₩2,500,000, computed separately from your other income.

Set out as a table, because the two limbs are easy to confuse:

Those are the national rates and they are all we will print. Whether the personal local income tax attaches to the departure charge, and at what rate, we could not establish from the statutes — the local capital gains provisions cross-refer to the ordinary transfer categories rather than to the departure article. So do not take a combined figure from anywhere, including from us, until a Korean adviser has confirmed it on your facts.

The escape hatch on foreign shares. The February 2026 extension came with a real de minimis: foreign shares are excluded from the charge where their aggregate transfer value at departure is ₩500,000,000 or less, alongside carve-outs for long-serving foreign employees who leave within six months of their Korean work ending, and for their spouses and under-20 descendants on shares acquired before that work began. A founder whose Cyprus company is worth under roughly €300,000 is outside the foreign-share limb entirely — though they may still be caught on their Korean shares. We could not extract the addendum setting out exactly which departures the February 2026 change applies to, and that is a question to settle before you book a flight rather than after.

Deferral, and what it costs. Payment can be deferred, but only on both providing tax security and reporting a tax manager — both, not either. The deferral runs until the shares are actually sold, and where they have not been sold within five years of departure, the tax falls due within three months of the end of the month containing the fifth anniversary. The ten-year extension that summaries mention is available only for overseas study. Moving abroad to run a business does not qualify for it. Interest accrues on the deferred amount at a statutory rate we did not verify and therefore do not quote.

The reliefs, which are broader than most. If the shares eventually sell for less than the deemed departure value, an adjustment credit gives back the difference at the same rate, claimed by amended assessment within two years of the actual disposal. Foreign tax on the real disposal can be credited — but expressly not where the destination country steps the acquisition cost up to the Korean departure-date value, so you cannot have both a step-up and a credit. And the whole charge is refunded, or the deferred tax cancelled, where within five years of departure the person returns to Korea and becomes a resident again without having disposed of the shares, gifts the shares to a Korean resident, or an heir inherits them, applied for within one year of the event. Refunds on the gift and inheritance limbs carry no interest.

That last provision deserves a moment. A five-year refund on return is unusually generous, and the gift and inheritance limbs are broader than the equivalent reliefs in several comparable systems. Korea charges you for leaving, and then genuinely gives it back if the move does not stick.

When does South Korean tax residency actually end — and what happens to your pension?

Residence ends on the facts, and Korea gives you no ceremony to mark it. The statute defines a resident as an individual having a domicile in Korea or a place of abode in Korea for 183 days or more, and a non-resident as anyone who is not a resident. The two limbs are alternatives, not a cumulative test: a person with a Korean domicile is resident from day one regardless of days, and a person with no Korean home who lives here for 200 days is caught by the abode limb.

The detailed tests for what counts as a domicile or an abode — the presumptions built on where your family lives and where your property sits — are set by Presidential Decree, and we did not extract them for this page. That matters, because those are the tests that decide real cases. Do not read "leave and you are out" as frictionless: it is a substance question, and it is the point at which a Korean adviser earns their fee.

One thing to be clear about for Korean nationals. Korea does have a remittance basis, under which foreign-source income is taxed only when paid in or remitted to Korea, but it applies to a foreign resident whose aggregate domicile or abode in Korea over the ten years to the end of the tax period is five years or less. A Korean national never has access to it, at any duration. If you are Korean, the choice is binary: resident and taxed on everything, or non-resident.

There is no general "notify the tax office you are leaving" income tax form. What Korea has instead is the departure-tax reporting obligation above, which applies only to large shareholders and is far more demanding. What there is, and what the sequence turns on, is the emigration report filed with the authorities — a consular and immigration act rather than a tax one, but the act that opens the pension route.

On the National Pension: for a Korean national, the lump-sum refund of contributions becomes payable on loss of nationality or emigration, among other events, and the Service describes the route as filing the emigration report and departing, or departing and then filing it, before claiming the refund of contributions paid. That is worth pausing on, because several neighbouring systems shut their own nationals out of the equivalent benefit entirely. For a foreign national who has been contributing in Korea, the refund is narrower: it is available only where the person's home country pays an equivalent benefit to Koreans, where a social security agreement covers it, or where they held one of a short list of employment visas. Whether a Korea–Cyprus social security agreement exists we could not confirm, and given that the two states have signed a grand total of two bilateral instruments the honest answer is that you should assume nothing and check.

The right of claim lapses after five years, with a later route on reaching 60. And the sequencing point is simple enough to put in one line: report the emigration, then leave, then claim. A founder who simply flies out has not started the process.

We are saying nothing here about Korean national health insurance on departure, or about the alternative of keeping your contribution record and drawing a pension abroad later. Both are real questions and neither was verified for this page, and an unverified answer about a pension is worse than no answer.

Why is South Korean inheritance tax the reason most of these moves actually happen?

Because the rate is high, the valuation rules can load it further, and — uniquely among the systems on this hub — the exit from it is clean. If you read one section of this page slowly, make it this one.

The rates. Inheritance tax runs on a five-step scale of 10%, 20%, 30%, 40% and 50%, with the top rate applying above ₩3 billion. Gift tax uses the same table, which is why the two rates are always quoted together — they share a statute.

The scope, which is the whole point. The charge is drawn by reference to the deceased, not the heir: where the deceased was a resident, all inherited property; where the deceased was a non-resident, all inherited property located in Korea. And residence for this purpose is the ordinary test: a person having a domicile in Korea or a place of abode for 183 days or more.

Read those two provisions together and the most consequential sentence in this guide follows. Korea's inheritance tax has no trailing period. Residence is tested at the date of death, on the ordinary income tax definition, with no nationality condition and no look-back. There is no rule keeping a departed national inside the worldwide charge for a further ten years, no separate clock running on the heir's own residence history, and no deemed-domicile concept that survives the move.

That absence is genuinely unusual. Several of the systems a Korean founder would compare against — and they are the systems most of the competing content is written about — keep an emigrant inside their worldwide estate charge for years after departure, sometimes with the heir's residence extending the exposure further. Korea does not. It is one of the few dimensions on which Korea is dramatically easier to leave than its neighbours, and no page currently ranking for this topic draws the contrast.

Now be precise about what that does and does not mean, because overselling it would be the exact error this page exists to correct.

It does mean that once you have genuinely ceased to be a Korean resident, non-Korean property falls outside the Korean charge on death, immediately, without a waiting period. It does mean that the timing of a move can be the single most valuable decision a founder makes for their family, in a way that timing is not decisive where a ten-year tail applies — because with a tail, leaving early is what matters, and without one, leaving properly is what matters.

It does not mean the move is frictionless. Residence still has to be real. The Presidential Decree tests for domicile — including the treatment of a person whose family and property remain in Korea — are exactly where the argument happens, and we did not extract them, so this page will not pretend to settle them. It also does not touch Korean-situs property. Korean real estate, and shares in a Korean company, remain within the charge whatever the deceased's residence. A founder who moves to Cyprus but keeps the Seoul apartment and the Korean operating company has moved a smaller part of the estate than they think.

The 60% headline, and why it probably is not your number. Korean coverage overwhelmingly quotes an effective 60% rate. That figure is the 50% top rate multiplied by a valuation premium: shares of the largest shareholder and related parties are valued with an additional 20% added to the assessed value. But the same provision excludes small and medium enterprises, mid-sized companies below a revenue threshold, and companies with continuous losses over the preceding three years — the exclusions being set out in the Enforcement Decree, which fixes the mid-sized company test at three-year average revenue below ₩500 billion. Most readers of a page like this one sit squarely in an excluded category and face 50%, not 60%. Quoting 60% at an SME founder is scaremongering and a Korean reader will spot it immediately. One anti-avoidance detail worth knowing: shares transferred or gifted within a year before the valuation date are added back for the purposes of applying the premium, so gifting your way below the line the previous year does not work.

Deductions and deadlines. The basic deduction is ₩200,000,000, the spouse deduction runs on a statutory-share formula capped at ₩3,000,000,000, and there is ₩50,000,000 per child. The spouse deduction carries a hard procedural condition that cross-border estates lose routinely: the estate must actually be divided, registered where registration is required, and the division reported to the tax office within nine months of the return deadline. The return itself is due six months from the end of the month of death, extended to nine months where the deceased or an heir has an address abroad — an extension that turns on either side having a foreign address, which is worth knowing for a partly emigrated family. Gift tax returns are due three months from the end of the month of the gift, and gift deductions run per donor-recipient pair on a rolling ten-year window: ₩600 million from a spouse, ₩50 million from a lineal ascendant or descendant, and ₩10 million from other relatives within four degrees.

Against all of that, Cyprus has no inheritance tax and no gift tax. Not a low rate — no tax. So on estates the comparison is 50% against nothing, which is the largest single number anywhere on this page.

On wealth taxes the two countries draw: neither levies one. But be careful how you say it, because Korea does levy a comprehensive real estate holding tax and a local property tax, and describing Korea as having "no tax on wealth" without that distinction is the specific error a Korean reader will use to dismiss the whole page. It is a property tax, not a net wealth tax, and we did not verify its current rates and thresholds so we quote none.

Part 2: What Cyprus gives you

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

What does the Cyprus side look like for a founder arriving from South Korea?

Simpler than Korea's two-tax structure, and flatter. A Cyprus limited company pays 15% from tax year 2026 on taxable profit, with no band structure and no separate municipal return to file alongside it. Qualifying income under the IP Box falls to 3% from tax year 2026.

Salary is taxed on a progressive scale running 0% to €22,000 rising to 35% above €72,000 — a top rate ten points below Korea's national 45% and fourteen and a half points below the combined 49.5%. Dividends to a non-dom shareholder sit outside income tax entirely, leaving only the health contribution. VAT registration starts at turnover of €15,600 at a standard rate of 19%, so a Cyprus company is inside the VAT system almost from the first invoice rather than after it has grown into it. Cyprus levies no net wealth tax and no inheritance tax. The wider picture is in Cyprus tax benefits for foreigners, the shareholder detail in Cyprus non-dom status, and the process itself in how to register a company in Cyprus and what it costs.

What does EU membership buy a South Korean business that a lower rate cannot?

Legal facts that no Korean entity can acquire at any price, and they are usually worth more than the rate.

A VAT number a European customer can verify. The intra-EU reverse charge works only between verifiable EU VAT numbers. A Korean company invoicing a European business is a third-country supplier every time — the customer applies import or domestic rules, procurement opens a vendor exception, and a proportion of buyers decline rather than work through it. Cyprus changes that: business-to-business supplies inside the union are zero-rated, and consumers across the bloc are reached through the one-stop shop.

Euro settlement inside SEPA. A Korean company banks in won and dollars, outside the euro payment area. A Cyprus company issues an IBAN that European payroll, direct debit and acquiring systems accept without an exception process. Sumly helps founders get banking and EU payments sorted. What we will not do is promise how any particular bank decides, because nobody honest is in a position to.

A working day that overlaps your market. Korea sits at UTC+9 against Cyprus at UTC+2 or +3. A founder whose customers, investors and engineers are European starts the European day in the evening and finishes it after midnight. It never appears on a tax return and it is one of the most reliable reasons the move actually happens.

One company instead of two. The alternative most Korean founders try first is a European branch or a sales subsidiary bolted onto the Korean parent, which leaves the group filing in both places, transfer-pricing its own invoices, and defending a Korean tax residence for the European entity anyway. Consolidating into a single Cyprus company that you personally are resident behind removes the internal pricing question, the second consolidated audit, and the argument about where management sits — none of which shows up as a tax rate, and all of which shows up as time.

Coherence rather than savings. If your customers are Korean and your profit is under ₩200 million, Cyprus costs you money and you should stay. If your revenue is European while your substance is Korean, you are paying for that mismatch in procurement friction, payment rails and time zones, and consolidating in Cyprus resolves all three at once.

How does a South Korean founder become Cyprus tax resident?

Usually through the 60-day rule, which got easier from tax year 2026. The straightforward route is more than 183 days a year on the island; the alternative asks for fewer days and more commitment on the ground.

Four conditions apply now, the awkward fifth having been removed from the 60-day rule: at least 60 days in Cyprus; no more than 183 days in any other single state; a business, employment or office in a Cyprus tax-resident person held through the year; and a permanent home in Cyprus you own or rent. The dropped condition — not being tax resident anywhere else — was the difficult one for a mobile founder. For a Korean reader it is worth being blunt about what its removal does and does not do: it removes a Cyprus-side obstacle, but because there is no Korea–Cyprus treaty, a competing Korean residence claim is not resolved by an agreement. You have to actually fail the Korean tests, not merely pass the Cyprus ones.

A directorship of your own Cyprus company can serve as the office the third condition requires, which is why the company and the residency are normally one project. On immigration, be precise: the Yellow Slip is a registration certificate for EU citizens under EU law, so it is not available to a Korean national and this guide promises nothing about it. Korean citizens use the routes that apply to third-country nationals, and where a file needs specialist immigration input we bring it in rather than improvise. The day counting and the certificate are covered in the Cyprus 60-day rule, and non-resident formation is set out at company formation for non-residents.

Can a South Korean e-commerce brand sell into Europe through Cyprus?

Yes — and for an online store the question of market access normally outweighs anything on the tax side. A Korean seller shipping into the European Union is a third-country seller for EU VAT and meets import VAT on consignments; a Korean domestic VAT registration does nothing about that. An EU-resident company changes the seller's legal status altogether — an EU-established taxable person, with an EU VAT number, a VIES presence and access to the Union one-stop shop rather than only the import route.

We publish no EU-side thresholds here. The intrinsic-value limit for the import scheme, the deemed-supplier rule for electronic interfaces and the application dates all move, and we did not verify them against the primary legislation while writing this page. Take them from the European Commission's guidance on customs formalities for low value consignments, and be sceptical of any page quoting a figure without linking to the Commission.

What breaks first in practice is the ledger. A store throws off thousands of tiny transactions across several currencies, and the VAT answer changes with the customer type and the destination country. Sumly's Shopify and WooCommerce plugins pull orders, refunds, fees and payouts into the ledger with the right VAT codes already attached, so the return is built out of the sales rather than reconstructed from a spreadsheet export at quarter end.

Why do people choose Cyprus over other tax havens?

Because it is a country you can live in, which most of the shortlist is not, and because what keeps people is rarely what brought them.

English is the working language of everything a business touches here — banking, professional services, contracts, courts — so a Korean founder who already works in English at the office does not have to acquire a third language to run the company. Violent crime is among the lowest in the European Union. The island is already full of people from everywhere else, so nobody arrives as the novelty. Business and real estate are both busy, and the administration is broadly content to let people trade without wrapping the attempt in process. Groceries — meat, fruit, vegetables — are noticeably cheaper than in Seoul. And treat the sea as a fact rather than a brochure line: in a Cyprus winter you can still go to the beach, and the summers are a paradise people travel from all over the world for.

The push list from the Korean side is specific, and none of it is a complaint about how the country is run:

• The rates went up, not down. Corporate tax was restored to 10/20/22/25% for fiscal years starting from 1 January 2026, and the local rates moved with it. A founder who planned around 24% is now planning around 27.5%.
• Dividend aggregation. Above ₩20 million a year, an owner-manager's distributions climb a schedule reaching 49.5%, against nothing but a capped health contribution in Cyprus.
• The estate charge. Fifty per cent, sixty on a controlling stake in a large company, against no inheritance tax and no gift tax at all in Cyprus.
• No treaty. This one cuts against the move rather than for it, and it belongs on the honest list precisely because of that.
• Korean law leaves no half-measures. Effective management decides corporate residence, and the CFC substance exclusion is overridden for several common sectors. There is no partial version of this move that works, which is paradoxically a reason to do it properly rather than a reason to avoid it.

And the things you will not find here: a count of how many Korean founders left last year, or a comparison of Seoul and Limassol rents and salaries. No official series we could verify measures the first, and we did not do the work for the second.

Two worked examples

A consultancy with ₩600 million of taxable profit. In Korea the company pays 11.0% on the first ₩200 million and 22.0% on the remaining ₩400 million — ₩22 million plus ₩88 million, or ₩110 million, an effective 18.3% before any relief. The founder then distributes what is left, and because the distribution is far above ₩20 million it is aggregated into global income rather than settled at 15.4%, climbing a schedule that reaches 44.0% and 46.2% on the upper slices. Run the same business through a Cyprus company earning €400,000 of taxable profit and the corporate charge is a flat 15%, or €60,000, with a non-dom shareholder meeting only the health contribution on the distribution, capped at €4,770 whatever the size. The corporate gap is meaningful; the shareholder gap is the one that changes the founder's life.

A software business licensing its own code. Qualifying income under the Cyprus IP Box is taxed at an effective 3%, against 22.0% combined in Korea on the second band — so on €700,000 of qualifying income the difference runs to six figures a year, and the founder's dividend then meets only the health contribution. Two conditions attach, and the second is the one this guide keeps returning to. The nexus side has to be evidenced properly, because the deduction depends on where the development expenditure actually happened. And the low rate is only an advantage once the founder is genuinely non-resident in Korea: while they remain resident, an effective 3% sits far below Korea's 17.5% CFC line and makes the company easier to catch, not harder. Applying for the IP Box is complex expert work, and it opens with a conversation rather than a form.

Both examples assume headline rates and full distribution, and the currency conversions are ours rather than an official rate. Your own reliefs, timing and shareholding will move the answer, and the calculator at the top of this page shows the shape rather than predicting your result.

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?

No two of these moves keep the same calendar, so read what follows as the shape of the work rather than as dates.

• Before you go — and this is where we start. We put a Korean adviser from our network on your large-shareholder status as at the last 31 December, because that date has already decided whether the departure charge applies. They establish whether your Cyprus holding will sit above or below the ₩500 million foreign-share de minimis, and together we settle the fate of the Korean operating company.
• The month before departure. Your Korean adviser appoints and reports the tax manager and files the schedule of holdings — by the day before you fly, not after. If you intend to defer, they arrange the tax security in the same window, because deferral needs both, and we hold the Cyprus schedule to it.
• Month 1. We register the Cyprus company. It is ordered online and the books open the same day. Your adviser files the emigration report; we start the residence paperwork.
• Months 1–3. We register for VAT and, where relevant, social insurance, employees and UBO, and get banking and EU payments moving. You take up the directorship that anchors the 60-day rule. Your adviser claims the National Pension refund once the emigration report is through.
• Months 3–6. You rent or buy the permanent home the 60-day rule requires, and we tell you what qualifies. You move the decisions and the board to Cyprus and stop taking them from Seoul — this is the step that determines whether the company is Cypriot or Korean — and we keep the minutes.
• Months 6–12. Your Korean adviser deals with the operating company, settles the departure-tax return within its deadline, and takes the estate position now that residence has changed.
• Month 12 onward. We apply for the Cyprus tax residency certificate and the non-dom registration, and we keep the board records clean from the first meeting rather than reconstructing them later.

What do South Korean founders get wrong?

The expensive mistakes are ordinary rather than exotic.

Quoting themselves 9/19/21/24% from a page written before the rates were restored. Treating the local income tax as a 10% surcharge on the national bill instead of a separate tax with its own return — the arithmetic happens to agree today, but the mechanism does not, and it has broken before. Modelling the whole comparison at a 15.4% dividend rate that stops applying at ₩20 million. Forming in Cyprus and continuing to run everything from Seoul, which makes the Cyprus company Korean rather than making the founder Cypriot. Assuming a treaty exists, or assuming its absence means nobody can see the accounts. Planning around the financial investment income tax, which was legislated, deferred twice and then repealed before it ever took effect — every article of it now reads as deleted. Leaving without filing the tax manager and the holdings schedule the day before departure, and paying a 2% penalty that is never refunded even when the tax itself is. Reading "no ten-year inheritance tail" as "no inheritance exposure", when Korean real estate and shares in a Korean company stay in charge regardless. And assuming the 10-year departure-tax deferral extension covers a business move, when it is for overseas study only.

Every one of them comes from treating the move as a single event rather than as two tax systems handing over to one another with no treaty to referee it.

There is a second family of mistakes that costs nothing in tax and a great deal in time: doing the steps in the wrong order. The departure-tax filings are due before you fly, the National Pension refund runs off an emigration report rather than off the flight itself, and the 60-day rule in Cyprus wants a permanent home and an office held through the year rather than acquired in December. Sequencing is most of the work, which is why the month-by-month list above exists and why the first conversation is usually about dates rather than rates.

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

Either route gets you there. The self-run version means the Registrar's forms and fees, a registered office you organise yourself, VAT and VIES registration, provisional tax twice a year, annual statements and a ledger your auditor will sign — all on top of a two-country move you are already managing in a second language. The Sumly route is three published numbers and nothing hidden behind them: from €950 one-time to create the company, from €39 a month for the software, and €390 a month if you want a Sumly certified bookkeeper doing it. Books open on day zero and every return is prepared box by box.

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

Sumly offers every one of these to everyone: a virtual address with PO box, with your mail scanned into the dashboard wherever you happen to be that month; nominee director and secretary where a structure genuinely needs them, explained in our guide to nominee directors; the Yellow Slip for EU citizens, which is not the Korean route; and all the registrations handled — VAT, social insurance, employees and UBO, filed properly the first time.

Each of those is an extra, scoped to your case. Say what you need in the meeting and you get one clear package-deal offer covering the lot, the IP Box application included where it belongs, because that is complex expert work and exactly what should be examined with you before a price is attached to it. No hourly billing and no surprises later.

Sumly, a law firm, and a traditional bookkeeping firm

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

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

For a Korean founder that is the whole proposition. The Korean side of this move — the departure filing, the residence argument, the estate position — needs a Korean adviser, and we will say so every time you ask. The Cyprus side comes from one provider, on one dashboard, at four published prices. That is what makes Sumly the best choice for South Korean 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. We are content to be held to that sentence, and the table below is why.

The two Cyprus-built alternatives a Korean founder will be pointed at 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 without decoration: the best support, the best bookkeeping software, the best AI for bookkeeping, the best bookkeeper, the best prices — and everything done easily. We publish the detail rather than assert it: Sumly vs Cybooks, Sumly vs Balabook, and for the international tools a Korean business is more likely already running, Xero, QuickBooks and Sage. The features themselves are documented at AI bookkeeping, bank feeds, invoicing, IP Box, payroll, purchases and VAT.

One line on the IP Box deserves repeating, with the Korean caveat attached: 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. For a founder who has genuinely left Korea it is the biggest number available. For one who has not, it makes the CFC position worse. Which is one more reason the meeting comes before any number does. Ordering it as a service is at IP Box.

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 South Korean founders actually ask

Frequently asked

What is the real corporate tax rate a South Korean company pays in 2026?

Not the 9/19/21/24% still printed almost everywhere, and not the national scale on its own. National corporate tax was restored to 10/20/22/25% for fiscal years commencing on or after 1 January 2026, and the local income tax is a separate tax on the same base charged at 1.0/2.0/2.2/2.5%. Added together the ladder a Korean company actually climbs is 11.0/22.0/24.2/27.5%. A founder with meaningful profit sits in the second band at 22.0%, against a flat 15% in Cyprus.

Is a South Korean founder's dividend really taxed at 15.4%?

Only up to a point, and that point is low. Withholding is 14% national plus 1.4% local, but interest and dividends above ₩20,000,000 in a year are pulled into global income and taxed on the progressive scale, which reaches 45% nationally and 49.5% once the personal local income tax is added. An owner-manager taking real money out of their own company is in aggregation territory, so quoting 15.4% at them flatters Korea and misleads them.

Can I keep living in Seoul and own a Cyprus company?

Not in the way the marketing suggests. Korean law treats a company as a domestic corporation if its head office, its principal office or its place of effective management is in Korea. A Cyprus company whose decisions are taken in Seoul has its place of effective management in Korea, becomes a Korean domestic corporation, and is taxed in Korea on worldwide income. Because there is no Korea–Cyprus tax treaty, there is no tie-breaker article to resolve the resulting dual residence.

Does South Korea tax my estate after I leave?

Only Korean-situs property, once you have genuinely ceased to be a Korean resident. Inheritance tax is charged on all property worldwide where the deceased was a resident, and on Korean property only where the deceased was a non-resident. Residence is domicile or 183 days of abode, tested at death, with no trailing period and no nationality condition. That absence of a tail is unusual and it makes the timing of a move genuinely decisive.

Does South Korea have an exit tax on shares?

Yes. A resident who has had a domicile or abode in Korea for five years or more in the ten years to departure, and who was a large shareholder at the end of the preceding year, is treated as having sold their shares on the day of departure. Domestic shares are charged at 20% up to ₩300m of tax base and ₩60m plus 25% above it; foreign shares at 10% for SME shares and 20% otherwise. A tax manager and a schedule of holdings must be filed by the day before you leave.

Do Korea's CFC rules catch a Cyprus company?

On rate alone, yes. The low-tax test compares the tax actually borne with the company's actual income multiplied by 70% of the highest Korean corporate rate. With that rate now 25%, the line sits at 17.5%. Cyprus at 15% falls below it and the IP Box falls far below it. What can take a company back out is the ₩200,000,000 income floor, or genuine substance in Cyprus — though the substance exclusion is itself overridden, on conditions, for several sectors.

Is there a double tax agreement between South Korea and Cyprus?

No. Korea's treaty register holds exactly two bilateral instruments with Cyprus: an exchange of notes on visa exemption for diplomatic and official passports from 2000, and a maritime transport agreement from 2008. Neither is a tax treaty, and Cyprus appears nowhere among Korea's income-tax conventions. Everything therefore runs on the domestic law of both states, with relief by unilateral credit only.

What happens to my National Pension contributions when I emigrate?

For a Korean national, emigration is one of the events that opens the lump-sum refund of contributions — which is the opposite of the position in several neighbouring systems, where nationals are shut out. The refund is triggered by the emigration report filed with the authorities, not simply by getting on a plane, so the order matters: report the emigration, leave, then claim. The right lapses after five years, with a later route on reaching 60.

Does Sumly handle the Korean side of the move?

No. Sumly builds and runs the Cyprus side — the company, the books from day zero, Cyprus VAT, VIES and corporate returns, and the tax residency and non-dom application. This guide sets out what the Korean statutes say so you can see the shape of the decision, but how they apply to your shareholding, your residency history and your family is a question for a Korean-qualified adviser. Where a case needs one, we connect you with expert lawyers from our network.

Keep reading

• Every country's route to Cyprus — the departure guide for wherever you are now
• Cyprus non-dom status — how the 17-year exemption works
• The Cyprus 60-day rule — the day counts and the certificate
• Cyprus tax benefits for foreigners — the full list, in one place
• How to register a company in Cyprus and what it costs
• What changed in the 2026 Cyprus tax reform
• The savings calculator, VAT calculator and salary calculator

Korean figures on this page are stated for 2026 and for fiscal years commencing on or after 1 January 2026 where the statute says so; Cyprus figures are for tax year 2026. Won-to-euro conversions are our own approximations and not an official rate. The calculator at the top runs on headline rates, full distribution and an assumed 10% annual return, so it draws the shape of the gap and not your own outcome. All Sumly prices exclude VAT, and government expenses on a formation are invoiced separately once your application is approved.