A business does not simply move to Cyprus. It incorporates a subsidiary, registers a branch, transfers its seat, or transfers its functions, and each of those does something different to the original company. The structural choice is made once and is expensive to reverse, but it is the employment arrangements and the order of the steps that decide whether the move works.
Owners describing a relocation usually mean one of four quite different transactions. Incorporating a Cyprus subsidiary, registering a branch, transferring the company's seat here, and moving people and functions while leaving the structure alone produce different answers on liability, tax residence, contractual continuity and what the original jurisdiction can still demand. The choice determines everything filed afterwards. Two further questions then decide whether the plan works: who employs the people, and the order in which the steps are taken.
The four routes
A new Cyprus subsidiary
A separate legal person, owned by the existing company or its shareholders and contracting in its own name. This is the most common route and the most flexible: functions transfer gradually, the balance sheets stay separate, and each entity's exposure to the other is limited. Its cost is duplication, in accounts, filings, boards and intra-group arrangements.
A Cyprus branch of the foreign company
Not a separate legal person: the foreign company registers an establishment here and remains liable for everything the branch does. Registration is lighter than incorporation, but it brings the foreign company within reach of Cyprus filing obligations and does nothing to insulate it from local liabilities. It suits a representative presence rather than an operational move.
Redomiciliation
The Companies Law, Cap. 113, allows a foreign company to continue as a company registered in Cyprus without being wound up and re-formed. The provisions are sections 354A to 354Θ, amended by Law 124(I)/2006 and again by Law 26(I)/2024. Section 354A(1) applies them to a foreign company incorporated or registered under the laws of an approved country or jurisdiction whose own laws allow such companies to continue to exist as legal entities under the regime of another approved jurisdiction, so the first question is answered abroad rather than here. Section 354B asks the second question of the company itself: only a foreign company whose constitutional document provides for the possibility of continuation elsewhere may apply to the Registrar. A constitution that is silent has to be amended before anything is filed. Section 354C(1) sets the file. The authorising resolution has to be passed by the organ and the majority that the company's own law and constitution would require for a special resolution; a revised constitutional document must satisfy the incorporation requirements of Cap. 113 while remaining lawful where the company was formed; a certificate of good standing must come from the authority there; and a director's statutory declaration must confirm the name it will continue under, the jurisdiction and date of incorporation, the resolution, that formal notice has been given to the authority of the country of incorporation with proof of it, and that no administrative or criminal proceedings have begun for breach of that country's laws. A solvency declaration follows.
Section 354Θ is the one to read before any of that work is commissioned, because it lists four grounds on which the application is rejected: dissolution, liquidation, insolvency, arrangement, compromise or execution proceedings begun by or against the company; the appointment of a liquidator, special administrator or receiver; any judgment or order suspending or limiting creditors' rights; and proceedings begun against it for breach of the laws of its country of incorporation. A group considering redomiciliation as a response to difficulty is usually considering it too late.
Where the route is available it preserves the legal identity of the company, and with it the contracts, the non-jurisdictional licences, the banking history and the trading record; where it is not, replicating the effect by asset transfer is a much larger project.
Moving functions without moving the company
Staff relocate, decisions start being taken here and development moves, but the contracting entity stays where it was. This is the route chosen by default when nobody chooses, and the one most likely to create an unplanned permanent establishment or a company no longer managed where it is registered.
There are three ways to move a person, and whichever is chosen must be applied consistently across payroll, permits and insurance. One duty attaches before any of them is chosen. Section 15A of the Termination of Employment Law, Law 24/1967, requires an employer intending to do anything that will result in the transfer or move of an employee to another employer, permanently or temporarily, to warn the employee in writing and as early as practicable, and it says expressly that the duty applies even where the transfer will not change the employee's duties or place of work. An intra-group move announced at the point of signature has already missed it.
Whether the move costs a redundancy payment is decided by section 20, and three of its paragraphs are the ones a relocating group relies on. Under paragraph (b) no redundancy payment is due where the termination is solely by reason of a change of employer and the new employer renews the existing contract, with a proviso letting the Labour Disputes Court award one anyway where the employee shows a reasonable cause for refusing. Under paragraph (c) none is due where the employer is a company registered under the Companies Law and transfers the employee to suitable employment in an associated company, meaning one is a subsidiary of the other or both are subsidiaries of a third, on the definition in section 148 of Cap. 113. Under paragraph (d) none is due where, before termination, another employer that is a company in which the previous employer is principal shareholder or exercises substantial control offers suitable employment. Each of those turns on a word that has to be right on the paperwork: renewed, associated, suitable.
The questions that decide the choice
Where will management and control actually sit? Cyprus taxes companies by reference to management and control, and other jurisdictions apply similar tests. If the board meets here and the decisions are taken here, the company is likely to be resident here whatever the register says: either the intended result or a serious problem, depending on the route.
What does the original jurisdiction charge on the way out? Exit taxation, deemed disposals on the transfer of intellectual property and continuing residence tests in the departing state are what most often make a plan uneconomic. That advice belongs to advisers there, it dictates the calendar, and it is needed before the Cyprus structure is settled. Whether a double tax treaty is in force, and what it provides on residence, permanent establishment and withholding, must be confirmed at the same time: without one, the same profit can be taxed twice.
What does moving the assets cost? Intellectual property, customer contracts, regulatory licences and data have to be assigned, novated or re-created; change of control clauses require counterparty consent, and licences are frequently not transferable. This determines the timetable far more than incorporation does, and an operating entity left behind keeps filing, tax and employment obligations that need an owner.
Who employs the people
The corporate part of a relocation is a set of filings; the employment part is a set of relationships with accrued rights attached, and it is where the disputes are. There are three ways to move a person, and whichever is chosen must be applied consistently across payroll, permits and insurance.
Transfer to the Cyprus entity. Employment with the foreign company ends and employment with the Cyprus company begins, or the contract is assigned where the outbound jurisdiction permits. Cleanest for substance and tax, and sharpest on accrued entitlements: whether service is continuous, and what happens to leave balances, bonuses and equity awards.
Secondment. The individual stays employed by the foreign company and is posted here. It preserves the original contract but is most likely to create a taxable presence for the foreign employer, and can leave the Cyprus company without the employment relationship it needs to support permit applications.
Fresh engagement. A new contract with no continuity: simple to document, and the most likely to be challenged as a device where the role and the work are unchanged.
A foreign governing law, which inherited group templates usually specify, does not displace Cyprus law. An employee working here has the protection of Cyprus employment legislation whatever the contract says, on written particulars, notice, termination, working time, leave, parental rights and social insurance, and those terms must be taken from the statute in force. An unlocalised template is unenforceable where it matters to the employer and non-compliant where it matters to the employee.
For staff who are not EU nationals the right to work must be secured before employment begins, and it attaches to a specific employer and role, so start dates are uncertain and a change of role or entity afterwards may require a fresh application.
The Cyprus company must register as an employer, operate payroll and account for the statutory contributions. Social insurance is charged on insurable earnings and split between employer, employee and the state, the employer's share being 8.8 per cent on the rates published by the Government, with further employer contributions to the redundancy fund at 1.2 per cent, the human resource development fund at 0.5 per cent and the social cohesion fund at 2 per cent. Those rates step upwards at intervals and should be confirmed for the year in question. Where a person is posted rather than transferred, whether contributions continue in the home state depends on whether a social security agreement is in force; without one, the same employment can attract them in both.
Work created by relocating employees must belong to the entity intended to own it, so where development moves here while the intellectual property stays with the parent, the chain must be built expressly through assignment provisions in the local contracts and a written intra-group arrangement. Covenants drafted elsewhere need review, a restraint of trade being enforceable here only so far as it protects a legitimate interest and goes no further.
If you are at this point
The sequence decides how long the move takes. Send us your headcount and dates or write to office@kleanthousplatis.com.
The order of the steps
The steps form a chain, and a correction costs months rather than money. Establish the tax and regulatory position in both jurisdictions first, then choose the route. Where residence is to rest on employment or business activity the company must usually exist before the immigration application, because it is the applicant or the sponsor; and because several residence routes are administrative schemes rather than statutory entitlements, whichever the plan depends on must be confirmed as available when it is made.
Banking follows and is least within anyone's control, a company with no office, no local officers and no contracts being a difficult application: pursue it in parallel and treat the date as uncertain. Intra-group agreements go in place before value flows across them. A residence application needs an address evidenced by a lease or by title, an argument for renting rather than buying while the position is unsettled, and permits for the principal and for derivative dependants follow. Tax residence comes last, determined by presence and connecting factors rather than conferred by a permit and settled at the end of a tax year, so days must be recorded from the first. Reversing the order produces companies that exist on the register, cannot open an account, and are billing through an entity that no longer employs anyone.
What to send us
The existing corporate structure and shareholder list, the last audited accounts, the material contracts and any licences held, where decisions are actually taken today, and what you intend to move first. For the people: the current employment contracts, and a list of those proposed to move with role, nationality, length of service, remuneration and intended employing entity. Send any tax advice taken in the outbound jurisdiction, and tell us which steps you have already taken.
Corporate structuring and company formation sit within our corporate and commercial practice, residence and family matters within our private client practice. Incorporation and the duties that follow are dealt with in Setting Up a Cyprus Company, what the group must evidence afterwards in Substance in a Cyprus Company, and individual permits in Working in Cyprus as a Non-EU National.
Discuss your own situation with us
Questions we are asked
What does relocating a business to Cyprus actually mean?
One of four quite different transactions, and owners describing a relocation usually mean one of them without saying which: incorporating a Cyprus subsidiary, registering a branch of the foreign company, transferring the company's seat here by redomiciliation, or moving people and functions while leaving the structure where it is. They give different answers on liability, tax residence, contractual continuity and what the original jurisdiction can still demand, and the choice determines everything filed afterwards.
Can the company keep its identity and its contracts when it moves?
That is what redomiciliation is for. The Companies Law, Cap. 113, allows a foreign company to continue as a company registered in Cyprus without being wound up and re-formed, which preserves the legal identity of the company and with it the contracts, the non-jurisdictional licences, the banking history and the trading record. Whether the route is open depends on the conditions in those provisions, which have been amended and should be read against the current text, on whether the outbound jurisdiction permits the transfer, and on the company's own constitution.
We are only moving the staff, not the company. Is that simpler?
It is the route chosen by default when nobody chooses, and the one most likely to create an unplanned permanent establishment or a company no longer managed where it is registered. Cyprus taxes companies by reference to management and control, and other jurisdictions apply similar tests: if the board meets here and the decisions are taken here, the company is likely to be resident here whatever the register says, which is either the intended result or a serious problem depending on the route.
Our contracts are governed by foreign law. Does that hold for staff working here?
A foreign governing law, which inherited group templates usually specify, does not displace Cyprus law. An employee working here has the protection of Cyprus employment legislation whatever the contract says, on written particulars, notice, termination, working time, leave, parental rights and social insurance, and those terms must be taken from the statute in force. An unlocalised template is unenforceable where it matters to the employer and non-compliant where it matters to the employee.
What most often makes a relocation uneconomic?
What the departing jurisdiction charges on the way out: exit taxation, deemed disposals on the transfer of intellectual property, and continuing residence tests in that state. That advice belongs to advisers there, it dictates the calendar, and it is needed before the Cyprus structure is settled. Whether a double tax treaty is in force, and what it provides on residence, permanent establishment and withholding, has to be confirmed at the same time, because without one the same profit can be taxed twice.
How do we actually move the people?
Three ways, and whichever is chosen has to be applied consistently across payroll, permits and insurance. Transfer to the Cyprus entity is cleanest for substance and tax and sharpest on accrued entitlements. Secondment preserves the original contract but is the most likely to create a taxable presence for the foreign employer, and can leave the Cyprus company without the employment relationship it needs to support permit applications. A fresh engagement is simple to document and the most likely to be challenged as a device where the role and the work are unchanged. For staff who are not EU nationals the right to work must be secured before employment begins, and it attaches to a specific employer and role.
Related Reading
This article is for general information only and does not constitute legal advice. Laws and their application can change, and individual circumstances differ. For advice on your own matter, contact Klitos Platis at klitos@kleanthousplatis.com or telephone +357 22 680 330.
Klitos Platis
Advocate, Partner
Kleanthous & Platis LLC, Nicosia · Revised 4 August 2026
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