Opening a Cyprus company from the United States

Read this before you form anything: if you are a US citizen or green-card holder, a Cyprus company will not take you out of the US tax net. The United States taxes its people on worldwide income, and a foreign company they control is a controlled foreign corporation whose income can be pulled onto their US return currently — regardless of whether a dividend is ever paid. Cyprus is a strong EU jurisdiction, and it fits plenty of situations. But the honest version of this page separates who it helps from who it does not, so you don’t build a structure that creates US filing problems instead of solving anything.

First: are you a “US person”?

The whole analysis turns on this. A US person means a US citizen, a green-card holder, or someone otherwise US tax resident — no matter where they live. If that is you, the US taxes your worldwide income, and setting up abroad does not change it. If the owners are not US persons, most of the complexity below falls away and a Cyprus company behaves like an ordinary EU entity. Many of the cleanest cases we see are exactly that: non-US founders, or US-connected teams that keep the US-person exposure carefully ring-fenced and advised.

The US–Cyprus treaty exists — but read the saving clause

There is a treaty, and you should not be told otherwise: the US–Cyprus income tax convention signed in 1984 is in force and still active in 2026. What it does for a US person is narrow. Every US treaty carries a saving clause — here in Article 1 — that preserves the US right to tax its own citizens and residents as if the treaty had not entered into force. In practice the treaty’s main use for US persons is supporting the foreign tax credit so the same income is not taxed twice; it does not exempt you from US filing or from US tax on worldwide income. Do not plan around “there’s a treaty, so I’m covered” — for US persons that is precisely what the saving clause removes.

Separately, Cyprus is a FATCA partner: Cyprus financial institutions report US-person accounts to the Cyprus Tax Department, which passes them to the IRS. A Cyprus bank account for a US person is a reported account, not a hidden one.

CFC, Subpart F, GILTI — the part that catches people

If US persons who each own 10% or more together own more than half of a Cyprus company (by vote or value), the company is a controlled foreign corporation (CFC). Two consequences follow for the US owners:

• Subpart F income — passive-type income (dividends, interest, royalties, certain services income) can be taxed to the US shareholders in the current year, even if the company distributes nothing.
• GILTI — much of the remaining active income can also face a current US inclusion.

On top of the tax, there is Form 5471, an information return required of US persons with the relevant interest in a foreign corporation. Its penalties are severe — a $10,000-per-corporation-per-year starting point — and they apply for late or missing filing regardless of whether any tax is owed. This is not a form to hand to a general preparer. It is the single most common way a well-intentioned offshore structure turns into an expensive US compliance problem.

Who Cyprus actually fits

Set against all that, Cyprus is genuinely useful for:

• Non-US persons who want an EU company — corporate income tax at 15% from 2026, EU VAT standing, and a familiar English-language legal system.
• Founders building a real operating base in the EU — staff, management and customers actually in Europe, where a Cyprus entity is the substance, not a label.
• Mixed ownership handled properly — US-person stakes understood, sized and reported with a US advisor, rather than discovered at tax time.

What Cyprus is not, for a US person, is a way to stop paying US tax. If someone sells it to you that way, walk.

How to approach it as a US-connected founder

1. Confirm the US-person map first. Who in the cap table is a US person, and at what percentage — this decides whether CFC/GILTI even applies.
2. Bring in a US international-tax advisor early. We set up and run the Cyprus side; the US filings (Form 5471, GILTI/Subpart F, FBAR/FATCA personal reporting) are theirs. The two need to talk before the structure is fixed.
3. Scope the Cyprus entity for substance. If the point is an EU operating base, build genuine substance — a paper company owned by US persons is the worst of both worlds.
4. Set up remotely. Incorporation runs on certified documents; the beneficial-owner (UBO) filing is due within 90 days of registration, penalised at €100 for the first day and €50 per day after, capped at €5,000.
5. Bank with FATCA in mind. Choose the account against real payment flows and known US-person reporting — the trade-offs are on the bank account page, and the ongoing cost side is in the cost and timeline breakdown.

We will tell you plainly if a Cyprus company does not solve your problem. For a US person chasing a lower tax bill through incorporation alone, it usually does not — and saying so is the point of this page.