Northern Cyprus Free Port company 2026: formation, tax and cost
What a Northern Cyprus Free Port and Zone company is, how it differs from a local company, the condition for the tax exemption, capital, formation steps, timeline and cost, with current figures.
"Forming a company in Cyprus" covers three separate structures: the local limited company of Northern Cyprus, the Northern Cyprus Free Port and Zone company, and a company in the south of the island (South Cyprus). These three differ in tax regime, capital requirement and field of use. This article deals with the Free Port company, using the rules and figures in force as of 10 October 2026. Details on rates are set out in our article on Northern Cyprus tax.
What is a Northern Cyprus Free Port company?
A Northern Cyprus Free Port company is a limited company registered in the Free Port and Zone in Famagusta. Its legal basis is Free Port and Zone Law No. 26/1983, together with the companies law of Northern Cyprus. In practice it is also referred to as a "Cyprus free zone company" or a "Northern Cyprus free zone company"; all of these names describe the same structure.
The Free Port and Zone is treated as lying outside the state customs line. Under the rules published by the Free Port and Zone Directorate, income from trade, production and services directed outside Northern Cyprus by a company registered here is exempt from income and corporate tax. The company is still a limited company in law; the difference comes from where it is registered and the tax regime it falls under.
Is an office in the Famagusta Free Port required?
No. The company must have a registered address and a legal representative in Northern Cyprus; a company that only sells services is not required to have physical operations or a warehouse in Famagusta. This requirement is met either by the company renting its own address and employing staff, or by an address and legal representation agreement. In formations carried out by Ortac Global, the address and representation service is included in the price, and the process is managed from the office in Nicosia.
What is the difference between a Free Port company and a local Northern Cyprus company?
Both are limited companies formed in Northern Cyprus; the distinction rests on who the sale is made to. A local company is formed to operate in the Northern Cyprus domestic market and falls under the general tax regime of Northern Cyprus. A Free Port company is formed for activity directed outside Northern Cyprus and pays no tax on that activity. Which structure is suitable is determined by where your customers are located.
| Item | Free Port company | Local limited company |
|---|---|---|
| Intended for sales to | Outside Northern Cyprus and inside the Free Port | The Northern Cyprus domestic market |
| Corporate tax | Not applied to this activity | 10% |
| Northern Cyprus tax on profit distribution | None | 15% income tax |
| VAT | The company is not a VAT taxpayer | General rate 16% |
| Sales within Northern Cyprus | General tax rules: customs, VAT, corporate tax | Ordinary activity |
| Approval | Free Port administration and the Council of Ministers | The ministry responsible for the economy |
| Number of shareholders | At least 2 | At least 2 |
| Minimum capital with a foreign shareholder | EUR 25,000 | The equivalent of EUR 25,000 in Turkish lira |
The rates for the local company are based on Corporate Tax Law No. 41/1976 and Income Tax Law No. 24/1982. The approval and capital rows for the local company apply to a company with a foreign shareholder.
In a local company, corporate tax and the income tax on profit distribution together create a burden of 23.5 per cent; the calculation is shown step by step in our article on Northern Cyprus tax. Ortac Global carries out the formation of both structures in Northern Cyprus: the Free Port and Zone company and the local limited company. The timeline and cost given in this article relate to the Free Port company.
Is a Northern Cyprus company the same as a company in the south of the island?
No. South Cyprus is a separate country and a member of the European Union; its law, tax regime and company register are separate. Northern Cyprus is not an EU member. Most of the information presented online under the heading "Cyprus company" relates to the south: a company registered in the EU, an EU VAT number, and the "Cyprus" line in the country lists of payment providers all refer to South Cyprus.
In practice this distinction matters in two respects. A Northern Cyprus company cannot be used in marketplace, platform or customer contracts that require a company registered in the EU. Nor is a Northern Cyprus company treated as established in the EU for registrations such as the EORI number that EU customs looks for.
How does tax work for a Northern Cyprus Free Port company?
A Northern Cyprus Free Port company pays no corporate or income tax on its activity directed at companies outside Northern Cyprus and companies inside the Free Port, and it is not a VAT taxpayer. Transfers of profit and capital are free and are not taxed in Northern Cyprus. The only condition for the exemption is the direction of the activity: two different customers of the same company lead to two different tax outcomes.
| Where is the customer? | Corporate and income tax | VAT and customs |
|---|---|---|
| Outside Northern Cyprus | None | None |
| Another company inside the Free Port | None | None |
| A local company in Northern Cyprus | General rules | Applied in full |
A sale to a company inside the Free Port is treated as a sale before customs clearance and therefore remains within the exemption.
The absence of tax does not remove the obligation to keep records: the company prepares its accounts and files its return every year. Which activities fall within the exemption is explained with examples on the Northern Cyprus tax page.
Who is a Northern Cyprus Free Port company suitable for?
A Northern Cyprus Free Port company is suitable for businesses whose customers are outside Northern Cyprus and which can collect payment by bank transfer or through a local virtual POS. The three most common situations are as follows:
- Transit trade and export: where goods are sent abroad from the Free Port, the income is exempt from tax and the goods are exempt from customs duty.
- Services provided abroad: where services such as software, consultancy or design are provided to customers outside Northern Cyprus, the company is formed as a Free Port company.
- A need for a Turkish lira account: where the company needs both a Turkish lira and a foreign currency account, both can be opened with a Northern Cyprus bank, and Turkish lira payments from Turkey can be accepted.
If you are also considering living in Cyprus, information on daily life, rent and work permits is set out in our article on living in Northern Cyprus.
How is a free zone company formed in Cyprus, and how long does it take?
The formation of a Northern Cyprus Free Port company is subject to two approvals: first the Free Port administration, then the Council of Ministers. Once the documents are complete, the timeline is approximately 30-40 working days. In formations carried out by Ortac Global, the process consists of the following steps:
- Company name: two or three alternatives are determined and the availability of the name is checked. Typical duration is 3 working days.
- Documents and signature: the formation documents are prepared; you need to travel to Northern Cyprus once to sign. Typical duration is 3 working days.
- Capital account: on the same visit, the company's capital account is opened at the bank.
- Free Port approval: the application is assessed and forwarded to the Council of Ministers. Typical duration is 10 working days.
- Council of Ministers approval and registration: typical duration is 14 working days. At this stage the capital corresponding to the foreign shareholder's share is blocked.
- The address and legal representation agreement is signed.
- The registration documents are issued, the block is lifted and the bank account is opened for use.
The steps add up to at least 30 working days and may extend to 40 working days depending on the calendars of the approving authorities. Documents are not signed by courier; the signature must be given in Northern Cyprus. A copy of each shareholder's passport or identity document, a proof of residence and a criminal record certificate are requested; the full list is on the company formation page for Northern Cyprus.
How much capital does a Northern Cyprus Free Port company need, and is it blocked?
If even one of the shareholders is not a Northern Cyprus citizen, the minimum capital is EUR 25,000. Anyone who is not a Northern Cyprus citizen counts as a foreign shareholder. The portion of the capital corresponding to the foreign shareholder's share is blocked at a bank in Northern Cyprus during registration.
Example: if both shareholders are foreign, the whole of EUR 25,000 is blocked. If one shareholder is a Northern Cyprus citizen and the shares are equal, the blocked amount is EUR 12,500. This amount is not paid to any authority and is not a fee: once the bank is approached with the company's registration documents, the block is lifted and the amount can be used in the company account.
How much does it cost to form a Northern Cyprus Free Port company?
At Ortac Global, formation plus the first year of a Northern Cyprus Free Port company totals EUR 9,920. This is Ortac Global's own price and does not represent a market average. All items are mandatory; the application fee (USD 2,000) and the registration fee (USD 2,500) paid to the Free Port are included in this amount.
| Item | Amount | When |
|---|---|---|
| Company formation (application and registration fees included) | EUR 4,900 | Once |
| Free Zone annual activity fee | EUR 2,700 | Every year |
| Registered address and legal representation | EUR 2,000 | Every year |
| VAT on address and representation (16%) | EUR 320 | Every year |
| Total | EUR 9,920 | Formation and first year |
Accounting and capital are not included in this total. Capital is not an expense but the company's own asset.
This is the highest formation cost among the three countries in which Ortac Global operates. Where budget is decisive, it is advisable to also review the figures on the UK and Dubai pages; the figures for all three countries are presented together in the country comparison.
What obligations apply every year after formation?
Even though a Northern Cyprus Free Port company pays no tax, it fulfils three obligations every year: it pays the activity fee, it maintains its registered address and legal representative, and it prepares its annual accounts and files its return. The activity fee and the address and representation fee are renewed at the same amounts from the second year. The annual accounts and return are filed in April. An auditor's report is not mandatory; if requested, it is prepared for an additional fee.
| Item | Amount | Note |
|---|---|---|
| Free Zone annual activity fee | EUR 2,700 | Annual permit to operate |
| Address and legal representation | EUR 2,320 | EUR 2,000 plus 16% VAT |
| Accounting · active company | EUR 270 / month | From the month the bank account is opened |
| Accounting · dormant company | EUR 900 / year | Annual accounts and return |
The amounts are Ortac Global prices as of 10 October 2026.
Until the bank account is opened, the company is treated as dormant; the month in which the account is opened is the first month of monthly accounting. The bookkeeping arrangement and annual calendar are explained on the Northern Cyprus accounting page, and transactions such as a change of shareholder or director on the Northern Cyprus corporate advisory page.
How do the bank account and collecting payments work for a Northern Cyprus company?
The company account is opened at a local bank in Northern Cyprus, in Turkish lira and in foreign currency. After registration, the account is generally opened within 2-4 weeks; the decision depends on the bank's own review and account opening cannot be guaranteed. The bank reviews the company's activity, its customers and suppliers, its contracts and invoices, and the source of funds. The reason for this review is explained on the Northern Cyprus AML and compliance page.
Can Stripe or PayPal be used with a Northern Cyprus company?
No. Stripe and PayPal do not support Northern Cyprus companies; the "Cyprus" line in their country lists refers to the south. Card payments are collected through a local virtual POS, and the proceeds are transferred to the company account in Northern Cyprus. Other payments are received by bank transfer. Account opening and the collection channels available are set out on the Northern Cyprus bank account page.
What should a shareholder who lives outside Northern Cyprus consider?
The exemption in Northern Cyprus concerns the company's tax in Northern Cyprus; it does not affect a shareholder's personal tax liability in their country of residence. If you are tax resident elsewhere, profit distributed to you by the company may need to be declared in that country. Where the company is actually managed from is a separate matter that also needs to be assessed. These points vary from person to person; before formation, it is advisable to assess your situation with your own tax adviser in your country of residence.
The general framework is covered in our article on Northern Cyprus tax. If you are considering changing your country of residence, our article on countries with no income tax explains how tax residency works.
Who is a Northern Cyprus Free Port company not suitable for?
A Northern Cyprus Free Port company is not suitable for every activity. If any of the following applies to you, another country needs to be considered:
- If card payments are to be collected through Stripe or PayPal: neither supports Northern Cyprus companies.
- If sales are planned through Amazon or Etsy: Northern Cyprus does not appear in their seller country lists. For e-commerce activities, the UK or Dubai is generally more suitable.
- If your customers are local companies in Northern Cyprus: the general tax rules apply to these sales and the exemption is not available.
- If a company registered in the EU is required: Northern Cyprus is not an EU member.
- If the company is to be formed with a single shareholder: at least two shareholders are required.
- If you are unable to travel: attending Northern Cyprus once to sign is mandatory.
- If a residence permit or visa is expected through the company: forming a company does not confer a right of residence, and visa services are not provided in Northern Cyprus.
Where access to international payment providers and widespread banking is needed, a company in the UK is generally the more suitable option, and if residence is also required, a company in Dubai. You can assess which structure suits your activity in a few questions with the suitability test.
Frequently Asked Questions
What is a Northern Cyprus Free Port company?
It is a limited company registered in the Free Port and Zone in Famagusta. It pays no corporate or income tax on activity directed at companies outside Northern Cyprus and companies inside the Free Port, and it is not a VAT taxpayer. The general tax rules apply to its sales within Northern Cyprus.
What is the difference between a Free Port company and a local company in Northern Cyprus?
A local company is formed for the Northern Cyprus domestic market; it pays 10 per cent corporate tax and 15 per cent income tax is charged on the profit it distributes. A Free Port company is formed for activity directed outside Northern Cyprus and does not pay these taxes on that activity; in return, it pays an activity fee every year.
How long does it take to form a company in Cyprus?
For a Northern Cyprus Free Port company, the timeline is approximately 30-40 working days once the documents are complete. The timeline is set by the approval calendars of the Free Port administration and the Council of Ministers.
Can one person form a Northern Cyprus Free Port company?
No. The company is formed with at least two shareholders. There is no restriction on shareholders' nationality; anyone who is not a Northern Cyprus citizen counts as a foreign shareholder.
Is it necessary to travel to Cyprus to form the company?
Yes, once. The formation documents are signed in Northern Cyprus, and on the same visit the company's capital account is opened at the bank. The application and follow-up process is carried out by Ortac Global.
Is the EUR 25,000 capital returned?
Capital is not a fee but the company's own asset. The portion corresponding to the foreign shareholder's share is blocked at the bank during registration; with the registration documents the block is lifted and the amount can be used in the company account.
What does a Northern Cyprus Free Port company pay every year?
At current Ortac Global prices, the annual activity fee is EUR 2,700 and the address and legal representation fee is EUR 2,320 including VAT. The accounting fee is EUR 270 a month for an active company and EUR 900 a year for a dormant company.
Is bookkeeping mandatory if no tax is due?
Yes. Even when the company is dormant, annual accounts are prepared and the return is filed in April. An auditor's report is not mandatory. Details are on the Northern Cyprus accounting page.
Can a Northern Cyprus Free Port company sell within Northern Cyprus?
It can; however, these sales fall outside the exemption, and the rules on customs, VAT and corporate tax apply. If most of the activity is within Northern Cyprus, a Free Port company is not a suitable structure.
Does a Northern Cyprus company provide a residence permit or visa?
No. Being a shareholder in a company does not in itself confer a right of residence; a foreign shareholder who will reside in Northern Cyprus and manage the company must obtain a separate business establishment permit from the Ministry of Labour and Social Security. Ortac Global does not provide visa services in Northern Cyprus.
Related serviceForming a company in Northern CyprusFormation steps, documents and price items for the Free Port company.View the ServiceThe tax exemption and formation rules are taken from the texts published by the Northern Cyprus Free Port and Zone Directorate and from Free Port and Zone Law No. 26/1983. Timelines, the capital requirement in practice and cost information are based on formations carried out by the Ortac Global office in Nicosia. The information is current as of 10 October 2026.
This article is for general information and does not constitute personal tax or legal advice. Fees, the capital requirement in practice and prices may change; for your tax position in your country of residence, please consult your own tax adviser.
