How to Register a Sole Proprietorship (Ατομική Επιχείρηση / Αυτοαπασχολούμενος) in Cyprus

Becoming self-employed in Cyprus is an attractive option for many freelancers, consultants, and independent professionals. It offers flexibility, straightforward entry into the market, and lower costs than forming a company. While the process is simpler than corporate registration, there are still administrative steps to complete, including registering for tax, social insurance, and, in some cases, VAT.

The main challenges involve handling the paperwork, estimating taxable earnings correctly, and keeping up with contribution and reporting deadlines. However, the benefits are significant: a generous tax-free allowance, access to state social benefits, and the independence to manage your work on your own terms.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in Cyprus?

In Cyprus, a sole proprietorship is not always labelled as one legal structure the way a company is, but it corresponds to a self-employed individual (“αυτοαπασχολούμενος”) or “sole trader”. All of the following describe essentially the same business model: one person operating independently, without forming a separate legal entity (company/LLC, etc.).

These terms include:

• Self-employed person
• Sole trader
• Independent contractor

They all mean the individual is legally responsible for the business.

How does a sole proprietorship (Αυτοαπασχολούμενος) work in Cyprus?

Αυτοαπασχολούμενος vs. other business structures in Cyprus

There are alternatives to registering as a sole proprietor. The most common is setting up a limited company. The comparison below shows the key differences:

Step-by-step guide: how to register a sole proprietorship in Cyprus

Step 1: Check your eligibility

To become self-employed in Cyprus, you must be a resident or hold the proper immigration status. Citizens of EU and EEA countries generally face fewer barriers, while non-EU nationals may need to obtain additional permits before they can register.

Step 2: Choose your business name

In Cyprus, you can either operate under your own name or choose a trade name. If you use a trade name, you should check its availability online to make sure it doesn’t conflict with an existing business.

Step 3: Gather required documents

You will need:

• Identification (passport or national ID)
• Proof of address (utility bill, rental agreement, etc.)
• If non-resident or non-Cypriot, a relevant immigration or registration certificate
• Bank account details

Step 4: Register with the authorities

The main place to register as a self-employed individual in Cyprus is the Tax Department of the Ministry of Finance, through the Tax for All portal. You must first obtain a Tax Identification Code (TIC / TIN) by submitting Form T.D.2001 (“Application for obtaining a Tax Number”).

Step 5: Pay registration fees and contributions

There is no minimum capital or heavy upfront fee. The main costs are ongoing: social insurance contributions, provisional and annual income tax, and VAT if applicable.

Step 6: Complete post-registration obligations

Once you have your tax number, you must also register with the Social Insurance Service to pay contributions. You must keep proper records of income and expenses, issue compliant invoices, and file annual income tax returns. Self-employed individuals also need to make provisional tax payments twice a year and submit quarterly social insurance contributions. If registered for VAT, you will need to file quarterly VAT returns and maintain VAT-compliant invoicing and bookkeeping. Staying on top of these obligations ensures compliance with Cypriot law and avoids penalties.

Financial and tax obligations for sole proprietors in Cyprus

You are responsible for:

• Income tax: Self-employed individuals in Cyprus pay personal income tax on net profits. The first €19,500 per year is tax-free. Income above that is taxed progressively between 20% and 35%. Provisional tax instalments are paid twice a year (July and December), with a final settlement after the annual return is filed through the Tax Department.
• VAT (ΦΠΑ): The standard VAT rate is 19%, with reduced rates of 9%, 5%, and 0% for specific goods and services. Registration is mandatory if your turnover exceeds €15,600 in any 12-month period. VAT returns are filed quarterly via the Tax for All portal.
• Social insurance and health contributions: Sole proprietors must register with the Social Insurance Service. Contributions are roughly 16.6% of estimated income, paid quarterly, and cover pension, unemployment, and healthcare (GESY). Contributions are paid quarterly.
• Record-keeping: You must keep accurate accounts of all income and expenses, including invoices and receipts. Records must be maintained for at least six years, as authorities can request access during audits.
• Invoicing: Invoices must include your tax identification number, business and client details, date, description of goods or services, and any applicable VAT. Invoices must be numbered sequentially and stored for your records.

Launch your contracting career and stay compliant with Deel

Registering as a sole proprietor gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential Bookkeeping tools
• Create, send, and sign localised work agreements
• Keep accurate records for tax season
• Access expert tax advice and compliance support
• Get paid through multiple payment and withdrawal methods
• Spend your earnings in USD with the Deel Card
• Access funds early with Deel Advance
• Enjoy contractor perks from 150+ partners

Stay independent, without the admin overload. Sign up to Deel for free today.

FAQs

What is the minimum capital required to start an Αυτοαπασχολούμενος in Cyprus?
None. There is no capital requirement for sole proprietorships.

Do Αυτοαπασχολούμενοι need to register for VAT?
Yes, if turnover exceeds €15,600 in any 12-month period. Voluntary registration is also possible.

How much are the standard monthly or annual contributions?
Social insurance contributions are ~16.6% of estimated income, paid quarterly. For example, if your annual estimated earnings are €20,000, you would contribute roughly €3,320 per year.

Can an Αυτοαπασχολούμενος hire employees?
Yes. If you hire staff, you must register as an employer with the Social Insurance Service and meet payroll tax and contribution obligations.

How long does it take to register as an Αυτοαπασχολούμενος in Cyprus?
Usually a few days to a couple of weeks, depending on documentation and whether VAT registration is required.

Can foreign nationals register as Αυτοαπασχολούμενοι in Cyprus?
Yes. EU/EEA nationals can register with minimal additional steps. Non-EU citizens must hold the appropriate residence or work permit.

Do Αυτοαπασχολούμενοι need a separate business bank account?
Not mandatory, but strongly recommended for accounting and compliance purposes.

What happens if I stop working as an Αυτοαπασχολούμενος?
You must deregister with the Tax Department and Social Insurance Service, cancel VAT registration if applicable, and file final tax returns.

Are there any government incentives or reduced rates for new Αυτοαπασχολούμενοι?
While there is no blanket incentive, Cyprus has some schemes for start-ups and SMEs. The generous personal tax-free allowance also benefits new freelancers.

Can I use Deel as an Αυτοαπασχολούμενος to get paid by international clients?
Yes. Deel makes it easy to invoice and get paid in multiple currencies while staying compliant.

Does Deel generate compliant invoices for Αυτοαπασχολούμενοι?
Yes. Deel issues legally compliant invoices tailored to Cyprus’s requirements.

Can Deel help me with taxes as a sole proprietor in Cyprus?
Yes. Deel provides downloadable tax reports and records, simplifying the process, though it does not replace an accountant.

Does Deel offer contracts for freelancers and Αυτοαπασχολούμενοι?
Yes. Deel provides legally sound contract templates.

Can I access benefits through Deel as an Αυτοαπασχολούμενος?
Yes. Deel offers optional benefits like health insurance and retirement savings plans, often unavailable to self-employed workers.