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Moving to Cyprus: mere business owner + medical insurance vs BO & employee + public healthcare

A

A Rebours

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Jan 12, 2025
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#1
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Hello

as I've started to get things in motion for my move to Cyprus. I wasn't exactly pleased with learning that my future company, as an employer of myself, will have to pay 26% of employer's tax on what it pays me as a salary. Considering also that accountants charge specifically for payroll, payslips and the like, I was wondering if anybody could share their thoughts about these two possibilities:

being simply a business owner, no salary, only dividends and getting a private medical insurance (ideally just for the 2-3 months I spend in Cyprus, which would always be Jan Feb and March) in order to become a non-dom resident
vs
owning the business but being also and employee of it, having therefore payslips, employer's contribution payments and, because of this, having a right to the Cyprus national healthcare system

I'm an EU passport holder, I'm in my late 30s, I don't smoke, drink normally or less than that, no conditions, good health and would just need the private insurance for those 3 months tops.

Many thanks
 
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#4
W Fish said:
or use / rely on travel insurance which you may already have with a credit card for example?
Click to expand...
That's probably good to have as well.

Having a private (international) health insurance through a Cypriot insurer can make immigration paperwork easier. Even as an EU national, there is a bureaucratic process to go through to obtain residence papers. The best thing you do with Cypriot bureaucracy is give them what they are used to so they don't have to think. Provide whatever they are used to seeing and save yourself some headache.
 
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#6
W Fish said:
or use / rely on travel insurance which you may already have with a credit card for example?
Click to expand...
Some travel insurance only works if you are actually living in your stated residency country. If you only stay in Cyprus for 2 months but claim your CY residency for purposes of your credit card, they may notice it and refuse to pay.

When claiming travel insurance you are always asked to show your flight TO your destination where you had an accident. If you left your country more than 3 months ago they might just not pay you.
 
#7
Frankie said:
Some travel insurance only works if you are actually living in your stated residency country. If you only stay in Cyprus for 2 months but claim your CY residency for purposes of your credit card, they may notice it and refuse to pay.

When claiming travel insurance you are always asked to show your flight TO your destination where you had an accident. If you left your country more than 3 months ago they might just not pay you.
Click to expand...
That's how insurance companies are increasing the number of concierge key holders.
 
#8
Sols said:
Take out dividends instead of salary.

Get a private health insurance for a few thousand EUR/year.

Leave Cyprus before undertaking or if needing major/serious medical care.
Click to expand...
If the private health insurance is A FEW thousand euros (5k? or more), I'm better off with salary, as the 26% is proportional to the salary I'm paying myself, which is otherwise tax free until 19k a year, I believe?
 
#9
Sols said:
That's probably good to have as well.

Having a private (international) health insurance through a Cypriot insurer can make immigration paperwork easier. Even as an EU national, there is a bureaucratic process to go through to obtain residence papers. The best thing you do with Cypriot bureaucracy is give them what they are used to so they don't have to think. Provide whatever they are used to seeing and save yourself some headache.
Click to expand...
I wouldn't even need it "international", just for Cyprus.
 
#10
A Rebours said:
If the private health insurance is A FEW thousand euros (5k? or more), I'm better off with salary, as the 26% is proportional to the salary I'm paying myself, which is otherwise tax free until 19k a year, I believe?
Click to expand...
Yes, the first 19,000 is not taxed.

An international health insurance is probably around 1–2,000 EUR/year if it's just for you and no spouse/children/other dependents.

A Rebours said:
I wouldn't even need it "international", just for Cyprus.
Click to expand...
Then you can find something much cheaper. If you work with a reputable service provider (law firm or immigration assistant), they can usually help you get some basic insurance for a few hundred a year. You can find even cheaper if you do it yourself but I wouldn't bother with that. In Cyprus, it's worth paying to have things done for you even if that means paying a few hundred extra so someone gets their commission.
 
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#11
A small salary is totally enough for you to be in the social system in Cyprus. And the general health system is pretty good compared to most EU countries. So for someone who spends a lot of time in Cyprus it makes sense.

As you mention that you stay only 2 months a year in Cyprus for the non dom, an international private health insurance makes more sense for you in my opinion. Anyhow you can also have both, the public and private health insurance, so do I.

At the end of the day I suggest you to get a proper consultation as there are more factors to consider, also in terms of taxation and compliance.
 
#16
A Rebours said:
I wouldn't even need it "international", just for Cyprus.
Click to expand...
Hi,

So about the salary, this is taxed at bands:

0-19,500 = 0
19,501 - 28,000 = 20%
28,001 - 36,300 = 25%
36,301 - 60,000 = 30%
60,000 and above = 35%

In addition to this you also have to pay social insurance and GESY, therefore depending on your salary your tax, SI and GESY could be quite high.

On the other hand you can just pay 12.5% corporate tax at the company level, an no tax/SDC on dividends as a non dom, so taking salary does not really make sense.

The health insurance for the purposes of getting a yellow slip as an EU national costs around Euro 150 per year. So being an employee in your own company in your situation makes no sense.

Happy to PM you to discuss this more.





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#17
Sols said:
That's attractive for people joining companies as employees. As a business owner, you're better off paying dividends.
Click to expand...

it always depends on personal circumstances:

- if you are obsessed with paying zero tax, then yes, dividends only is the solution;

- IF you are dealing every other day with some monkeys of banks, brokers, landlord to rent a flat, medical insurance company or any insurance provider, car rental companies, mobile phone provider, auditors, accountants, taxman, government officials and any other similar bureaucrat or counterparty, THEN it is better to pay a little bit of tax (roughly 10k per year) to shut them up by presenting a payslip (which by the way also makes stronger your story line of living/working in that country)

PS
obviously paying yourself a salary reduces by that "little" that amount taxable by corporate tax and for many monkeys a company having some expenses is more credible than one which only pay outs dividends
 
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#20
My advice would be to pay yourself the minimum salary and that way you get the health insurance included.
You could pay yourself EUR 1k/month salary and contributions would cost you just extra 130. Take the rest as dividends and that's about it.

Calculator
https://taxapp.cy/income-tax-calculator/

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