Independent consultants are among the highest-taxed professionals in Europe. Not because the rates are unusually punitive for consultants specifically, but because the combination of progressive income tax and social contributions hits hardest when your income is all earned, not invested.
A management consultant billing EUR 120,000 in Germany faces an effective rate of roughly 42%. In France, through a SASU, the combined corporate and dividend tax approaches 48%. In the Netherlands, Box 2 changes pushed the combined corporate and dividend tax to around 40%.
Cyprus, under the Non-Dom structure, brings that same EUR 120,000 to an effective rate of around 5.5%. This guide explains how that math works and what it actually takes to set it up.
The EU Baseline: What Consultants Pay in Major Markets
Before the Cyprus numbers, it helps to have the comparison clearly laid out:
| Country | Effective Rate (EUR 120k revenue) |
|---|---|
| Sweden | ~50% |
| France | ~48% |
| Germany | ~42% |
| Netherlands | ~40% |
| UK | ~35% |
| Cyprus (Non-Dom) | ~5.5% |
The gap isn't from some obscure loophole. It comes from three overlapping features of the Cyprus system:
- 15% corporate tax on company profits
- 0% personal income tax on dividends for Non-Dom residents (Special Defence Contribution applies at 0% for Non-Doms)
- 2.65% GHS (GESY) health contribution — the only tax that applies to dividends
How the EUR 120,000 Calculation Works
Let's walk through a realistic example. You're a strategy consultant billing EUR 120,000/year through your Cyprus LTD, with approximately EUR 30,000 in deductible expenses.
Company level:
- Revenue: EUR 120,000
- Expenses (including salary to yourself, office, software, etc.): EUR 30,000
- Taxable profit: EUR 90,000
- Corporate tax at 15%: EUR 13,500
- Net profit available for dividend: EUR 76,500
Personal level (Non-Dom):
- Dividend received: EUR 76,500
- SDC (Special Defence Contribution) for Non-Dom: 0%
- GHS contribution at 2.65% on dividend: EUR 2,027
- Income tax: EUR 0
Total tax paid: EUR 15,527 on EUR 120,000 revenue → 12.9% gross, ~5.5% effective on net income
For comparison, the same billing in Germany would yield a total tax bill of EUR 50,000+ depending on structure.
The Cyprus Non-Dom status guide covers the full regime, including the 17-year maximum duration and how domicile is determined.
B2B Invoicing to EU Clients: No VAT Issue
One of the practical concerns consultants have when considering a Cyprus entity is VAT. If your clients are in Germany, France, or the UK, billing from Cyprus doesn't create double VAT:
- EU clients receive invoices with reverse charge — they account for their own VAT
- Non-EU clients (UK post-Brexit, US, etc.) are generally outside the EU VAT system
- Cyprus VAT registration is required if your Cypriot revenue exceeds EUR 15,600/year, but this rarely affects B2B consultant billing
What Physical Presence Actually Looks Like
The Non-Dom structure requires Cyprus tax residency. The minimum path is the 60-day tax residency rule: 60 days in Cyprus per year, provided you don't spend more than 183 days in any other single country and you have genuine ties here (a home, a company, or employment in Cyprus).
For consultants who travel frequently for client work, this is often the relevant option. You're not required to live in Cyprus full-time. You maintain a base there — typically an apartment you own or rent — and spend the required days on the island. Many consultants find this aligns naturally with their existing travel patterns.
EU nationals who establish residence in Cyprus also need to register with local authorities. The first step is the Yellow Slip guide — the MEU1 certificate that formally registers your EU freedom of movement rights in Cyprus. It's a practical document that opens bank accounts, employment registration, and other services.
Annual Running Costs
Cyprus is not a zero-cost jurisdiction. Running a compliant Cyprus LTD involves real expenses:
- Company registration: ~EUR 1,500 one-time
- Annual audit and accounting: EUR 1,500–2,500/year (audit is mandatory for all Cyprus LTDs)
- Tax filings and compliance: often bundled with accounting
- Registered office fees: EUR 300–600/year
Total annual compliance cost: approximately EUR 2,500–4,500, depending on complexity and the firm you use.
At EUR 120,000 in annual revenue, a EUR 35,000 annual tax saving (vs Germany) covers these costs many times over.
Is Non-Dom Status Still Available?
Yes. Despite the UK abolishing its non-domicile regime in 2025, Cyprus Non-Dom is a completely separate, domestically designed system. It remains in force and the Cypriot government has repeatedly confirmed it as a long-term policy. The regime lasts for up to 17 years from the date you first become a Cyprus tax resident.
For consultants currently based in high-tax EU countries who have flexibility over where they operate, Cyprus remains one of the most straightforward legal paths to a significantly lower effective rate. The structure is established, the compliance requirements are clear, and the numbers hold up at income levels from EUR 60,000 to EUR 500,000+.
Detailed breakdown of the Cyprus Non-Dom status and the 60-day tax residency rule are the two guides to read before engaging a Cyprus tax advisor.
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