Setting Up a Sole Trader in Cyprus

Setting up a sole trader in Cyprus is the simplest way to start a business in this country. Find out below how to do that with the help of our local law firm.

Quick Facts
Applicable law	The Partnerships and Business Names Law (Cap. 116) for the business name, plus the Income Tax, VAT and Social Insurance laws
Special requirements related to the name	Conduct business either using the owner’s actual name or by officially registering a trade name.
Legal personality	A sole trader in Cyprus has no separate legal personality; the owner and the business are the same person.
Activities permitted	Only to the registered person (owner).
Registration availability for foreigners	Yes, foreigners can register and conduct business in Cyprus.
Special requirements for foreign citizens (if any)	Yes, non-EU citizens need a residence permit.
Registration requirements (if any)	Yes, with the Tax Department and Social Insurance Services; a business name is registered with the Department of Registrar of Companies and Intellectual Property only if the trader uses a name other than his/her own.
Local address required (YES/NO)	Yes.
Liability	Cypriot sole traders bear personal responsibility for VAT and income tax obligations, unlike corporations.
Tax registration	Register for income tax if your annual income exceeds €22,000 (from 1 January 2026) as an individual or if you are a legal entity (e.g., a company) registered in the Republic of Cyprus.
VAT registration requirement (YES/NO)	Only if taxable turnover exceeds EUR 15,600 in the preceding 12 months (or is expected to within the next 30 days); voluntary registration is possible.
Social insurance registration requirement (YES/NO)	Yes, it is mandatory.
Taxation of sole traders in Cyprus	From 1 January 2026: – up to EUR 22,000: 0%; – EUR 22,001–32,000: 20%; – EUR 32,001–42,000: 25%; – EUR 42,001–72,000: 30%; – above EUR 72,000: 35%.
Support in setting up a sole trader in Cyprus	Our Cypriot lawyers provide assistance to both local and international individuals seeking to establish a sole proprietorship.
Other services	Our lawyers can also assist you with: – tax filing; – bank account opening; – and trademark registration, etc.

Can I open a sole proprietorship in Cyprus if I am a foreigner? Are there any specific requirements I should be aware of?

Yes, you can. The main aspect to consider is that you need to obtain a residence permit first if you come from a non-EU/EEA country. As an EU/EEA citizen, you are not subject to this condition; however, you must live and have a local address in Cyprus.

What are the main features of a sole trader in Cyprus?

If you decide to open a business in Cyprus this way, here are some of its main traits:

you own and run the enterprise alone, but you may hire employees (registering as an employer with Social Insurance);
you will be liable for the debts and obligations of the business with your personal assets.

What are the steps to open a sole trader in Cyprus?

The procedure for establishing a sole proprietorship in Cyprus is the same as the company registration process and implies:

selecting a name for the business and submitting it for approval with the Cyprus Companies Registrar;
registering the business name (if any) with the Department of Registrar of Companies and Intellectual Property, just like in the case of companies;
setting up the business’ bank account (the sole trader needs to have a different account than the owner’s bank account);
applying for the necessary business licenses for the Cypriot sole trader, if required;
registration with the local tax authorities for the income and value added taxes (the tax and VAT numbers will be issued);
registering for social security purposes is also mandatory in the case of sole traders in Cyprus.

It is important to note that in the case of those setting up sole traders for offering services related to certain professions, specific requirements apply. Among these, the competent professional body or licensing authority will request the diploma and proof of qualification of the applicant. Also, in certain cases, the sole trader will need to register with specific associations or unions in Cyprus.

We invite businessmen to watch a short presentation on how to set up a sole trader in Cyprus.

What documents do I need to register a sole proprietorship in Cyprus?

The following:

a valid ID or passport;
the business name certificate;
proof of a Cypriot address;
the application form;
a specimen signature.

It must be taken into consideration that a business name can be registered by the owner with the Registrar of Companies; a lawyer's help is optional.

Do I need to register for VAT in Cyprus if I work as a sole trader?

You are not required to register for VAT until you reach a minimum turnover of EUR 15,600 during a calendar year. However, you can also register voluntarily if you decide so.

Do I need to apply for any business license as a sole trader in Cyprus?

Yes, depending on the activities you will carry out, a trade license will be required.

How am I taxed as a sole trader in Cyprus?

You will be subject to the personal income tax, which is levied progressively based on the income bracket at rates ranging from 0% to 35%.

Why should I open a sole trader in Cyprus?

Those who are considering starting a business in Cyprus should know that the sole trader will offer them the following advantages:

it is the simplest business form recognised under Cypriot law (Cyprus has no Commercial Code);
the registration procedure of such business form is simple and straightforward;
the registration requirements are also simple, while the documents to be filed are quite a few;
the sole trader can be easily converted into another business form (most of the time into a limited liability company).

For complete details about all formalities that must be fulfilled for setting up a sole proprietorship, you can contact our attorneys in Cyprus.