France taxes company profit at 25%, then applies the 30% flat tax when you distribute it. Cyprus charges 15% corporate tax and 0% on dividends for non-dom residents. Here is the comparison for founders.
What determines the outcome is how profit is taxed and distributed. France's corporate tax and flat tax compared with Cyprus.
Founders often compare France and Cyprus on the corporate tax rate alone. What actually decides how much you keep is the full path from company profit to money in your hand. France taxes profit at 25%, then applies the 30% flat tax when you distribute it. Cyprus charges 15% corporate tax and, for non-domiciled residents, nothing further on dividends beyond a small capped contribution. Here is the comparison for a founder.
France vs Cyprus: the headline numbers
| Tax | France | Cyprus |
|---|---|---|
| Corporate income tax | 25% | 15% |
| Tax on dividends to the owner | 30% flat tax (PFU) | 0% for non-dom residents (2.65% GHS, capped) |
| Capital gains on share sale | Taxed, often under the flat tax | Exempt (unless Cyprus real estate) |
| Wealth tax | On real estate (IFI) | No |
How France taxes company profit
A French company pays 25% corporate tax on its profit. That is the first layer.
When profit is distributed, the dividend is subject to the prelevement forfaitaire unique (PFU), a 30% flat tax made up of 12.8% income tax and 17.2% social charges. A founder can elect for the progressive scale instead, but for most distributions the 30% flat tax is the relevant rate.
So a euro of profit is taxed at 25% inside the company, then the remainder is taxed again at 30% on the way out.
On distributed profit, the combination of 25% corporate tax and the 30% flat tax means a large share of each euro of profit is taxed before it reaches the founder. The headline 25% is only the first half of the story.
How Cyprus taxes the same profit
A Cyprus company pays 15% corporate tax. After that:
- No withholding tax applies to dividends paid to non-residents.
- A non-domiciled Cyprus tax resident pays no income tax or Special Defence Contribution on dividends.
- The only charge is the General Healthcare System contribution at 2.65%, capped at 180,000 euros of annual income.
There is no Cyprus capital gains tax on a share sale unless the company holds immovable property in Cyprus, and there is no wealth tax.
What actually changes the outcome
A Cyprus company does not help a founder who stays French tax resident, and French CFC rules can tax a low-taxed foreign company in the owner's hands. France's exit tax can also apply to unrealised gains on substantial shareholdings when a person leaves France.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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