Do I Need a Local Entity to Hire in Cyprus?

In Cyprus, a "local entity" typically refers to a business structure like a subsidiary or branch office that allows you to be recognized as an employer locally. This setup is essential for managing payroll, tax obligations, and employee rights under Cypriot law.

Without a local entity, you can't effectively register as an employer, run compliant payroll, or issue employment contracts that meet local legal standards. An alternative to establishing a local entity is to use an Employer of Record (EOR), which can handle these responsibilities on your behalf.

What is Required to Employ Someone in Cyprus?

• Local employing entity required to directly employ? Yes (you need a local entity to manage payroll and compliance)
• Payroll registration required? Yes (mandatory registration with the Social Insurance Services)
• Withholding/tax remittance required? Yes (employers must withhold income tax and social contributions)
• Social contributions required? Yes (employers must contribute to social insurance funds)
• Local employment agreement required? Yes (written contracts are mandatory under Cypriot law)
• Mandatory benefits to budget? Yes (statutory leave, social security, and other entitlements)
• Works council/collective agreements considerations? Often (certain sectors may have applicable collective agreements)

Best Options If You're Hiring in Cyprus

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but you should be cautious about the nature of the work relationship.

While hiring contractors in Cyprus can be a straightforward option, it’s essential to ensure that the relationship doesn’t resemble employment. Misclassification can lead to significant legal risks, especially if the contractor is integrated into your business operations.

• Make sure the contractor has autonomy over their work.
• Avoid controlling their hours or work methods.
• Ensure the contractor is not performing core business functions that would typically require an employee.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Cyprus, depending on the type of entity and necessary registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated €300–€600 per month ($320–$640)
• Payroll provider: Estimated €20–€50 per employee per month ($21–$53)
• Employer registrations and recurring compliance: Estimated €1,000–€2,000 per year ($1,070–$2,140)
• Corporate tax filings and annual reporting: Estimated €1,500–€3,000 per year ($1,600–$3,200)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 per month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions, typically around 7.8% of gross salary)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Cyprus

Hiring in Cyprus can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Cyprus quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s managed payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.