Director, secretary, registered office and above all genuine substance: how a Cyprus Limited is built and why the structure decides between recognition and trouble.
Every Cyprus Limited consists of several mandatory components:
The most important point for recognition is economic substance. A company whose management is effectively in Germany and which only has an address in Cyprus risks CFC taxation under sections 7–14 AStG – profits are then attributed to the German shareholder and the benefit is gone.
Genuine substance typically means: management on the ground, an actual office, a traceable activity and predominantly active income. We plan and document exactly these building blocks from the start.
| Management | Effective management/director in Cyprus |
| Office | Real premises instead of a mere address |
| Activity | Traceable, active business operations |
| Income | Predominantly active rather than purely passive |
| Documentation | Contracts, minutes, evidence kept cleanly |
In simple terms: if there is no genuine substance and passive income predominates, the German tax office attributes the foreign company's profits to the German shareholder (sec. 7–14 AStG). The tax saving is then lost.
It depends on the business model. Rule of thumb: the company must clearly be managed from Cyprus and be really active there. We size the substance to fit your case.
Note: not tax or legal advice. A tax saving requires a properly set up structure with genuine economic substance. Figures as of 2026.
Free, no obligation and honest. In about 20 minutes we clarify whether and how the step makes sense for you.
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