Why UAE companies set up subsidiaries in Cyprus to trade with EU clients
Over the last decade, the UAE has positioned itself as a leading global business hub, attracting entrepreneurs, family offices, and multinational corporations. However, when it comes to expanding into the European Union (EU) market, many UAE companies face practical, regulatory, and tax-related challenges.
This is where Cyprus becomes a strategic choice.
Why Cyprus?
Cyprus is more than just a gateway to Europe — it offers a unique bridge between the UAE and the EU, thanks to its EU membership, business-friendly ecosystem, and strong cultural and commercial ties with the Middle East.
- EU Market Access – A Cyprus entity is considered an EU company, allowing UAE businesses to sell services and goods freely across the EU.
- Tax Efficiency – Cyprus offers one of the lowest corporate tax rates in the EU at 12.5%, plus access to over 65 double tax treaties, including with the UAE.
- Reputation & Compliance – Having a Cyprus subsidiary enhances credibility with EU clients who prefer dealing with EU-registered companies subject to European regulations.
- Proximity & Connectivity – Short flight times between the UAE and Cyprus, plus similar time zones, make coordination seamless.
- Cost-Effective Setup – Cyprus provides competitive incorporation and operational costs compared to other EU jurisdictions.
The UAE-Cyprus-EU Model in Practice
- Parent company in the UAE – Retains regional operations and global management.
- Subsidiary in Cyprus – Acts as the EU trading arm, signing contracts and invoicing EU clients.
- Efficient Tax Planning – Profits can be managed between UAE and Cyprus under favorable tax rules.
This dual structure allows UAE companies to maintain their headquarters in the UAE’s thriving business environment, while leveraging Cyprus as a springboard to Europe.
Who Benefits Most?
- Technology & SaaS providers expanding into Europe
- Trading companies selling goods into the EU
- Professional & financial services targeting European clients
- Shipping, logistics, and aviation companies with EU links
Conclusion
By setting up a Cyprus subsidiary, UAE businesses gain a trusted European presence that strengthens client relationships, optimizes tax exposure, and opens doors to the entire EU market.