Cyprus or Malta? Two EU Jurisdictions, Two Tax Systems

Cyprus appears in every jurisdiction comparison for EU-oriented entrepreneurs - and rightly so. The island offers a transparent tax system with a corporate tax rate of 15%, applicable since 1 January 2026. Added to this is one of the most attractive IP Box regimes in the EU: qualifying income from intellectual property is taxed at an effective rate of approx. 2.5%.

The Non-Dom regime allows tax residents to receive foreign dividends, interest, and royalties tax-free for up to 17 years. The so-called 60-day rule enables tax residency from just 60 days of presence per year - provided there is no tax residency in another country.

Cyprus also offers a legal system based on English common law tradition. This is a significant advantage for international contracts and corporate structures. Setting up a Cypriot company typically takes 5 to 10 working days and can often be handled entirely remotely.

With a broad network of double tax treaties and EU membership since 2004, Cyprus has positioned itself as a serious alternative for entrepreneurs seeking a tax-efficient EU base.

It is not a question of better or worse, but of what fits your specific needs. The choice depends on your business model, income structure, and personal circumstances.

Cyprus can be the better choice if you run a technology-driven company with its own intellectual property and can benefit from the IP Box regime (effective approx. 2.5%). Cyprus also offers advantages if you primarily live off foreign dividends and passive income and want to use the Non-Dom regime for 17 years. The 60-day rule is suitable for entrepreneurs who want flexibility in their physical presence. Furthermore, those seeking a bridge to the Middle East and North Africa will find Cyprus geographically advantageous.

Malta may be the better choice if you run a trading, service, or consulting business and are aiming for an effective tax burden of 5% without IP requirements. Those looking for a permanent solution that does not expire after 17 years will benefit from Malta's indefinite remittance system. Malta offers a well-oiled ecosystem for international entrepreneurs with English-speaking advisors and an established community. Entrepreneurs in the gaming, fintech, and financial services sectors, in particular, will find a regulatory environment in Malta that is internationally recognised.

The global minimum tax of 15% (OECD Pillar Two, also GloBE Rules) has affected both locations differently. The regulation primarily concerns companies with a consolidated annual turnover of over 750 million euros - making it not directly relevant for most international entrepreneurs. Nevertheless, it has altered the tax landscape.

Cyprus reacted by raising its corporate tax rate from 12.5% to 15% on 1 January 2026. This puts the country exactly on the Pillar Two threshold. The previous tax advantage of 12.5% compared to European averages has thus been reduced. The IP Box remains in place, but here too, stricter substance requirements apply under the Nexus approach.

Malta's situation is interesting: the nominal tax rate is 35% - well above the Pillar Two threshold. The effective burden of 5% is created by the refund system at the shareholder level. The EU Commission has classified this system as unproblematic under state aid rules. For Pillar Two calculations, the nominal tax rate (35%) is used as the baseline, not the effective rate after the refund. This means Malta's system remains fully functional even under Pillar Two.

For international entrepreneurs with turnovers below the 750 million threshold, Pillar Two changes little in operational reality. But the signalling effect is relevant: Cyprus had to raise its rate, Malta did not. This reflects the different architecture of the two systems.