Georgia or Cyprus: the difference is called the EU

The comparison is almost always run on rates and almost never on the line that actually counts. Cyprus is a member state of the European Union, Georgia is not — and German international tax law treats the two sides of that line differently.

Where the line becomes visible in the statute

Controlled-foreign-company taxation attributes certain income of a foreign company to a German-taxable shareholder as though they had earned it themselves. There is a defence against it: anyone who shows that the company pursues a substantial economic activity can avert the attribution. That defence is limited under section 8(2) AStG to companies with their seat or place of management in an EU member state or an EEA state.

What each of them speaks for

Constellation	Cyprus	Georgia
Shareholder remains taxable in Germany the substance defence is open only to EU/EEA
The person actually leaves the CFC regime then no longer applies anyway	possible, but not the core of the location
Legal framework	EU law, EU directives, euro	an independent legal system outside the EU
Reporting standard	participating state	participating state

What the reform of 1 January 2026 changed

The comparison is often argued with Cypriot figures that no longer exist. Since 1 January 2026:

• Corporate tax stands at 15% rather than 12.5%.
• The tax on actually distributed dividends falls from 17% to 5%, and the deemed dividend distribution is abolished.
• Stamp duty is abolished, and losses carry forward for seven years.
• The 60-day rule no longer fails because someone is tax resident in another state. That condition has been struck out.

The last point is sold as a relief and is one — but it opens a case the old wording had ruled out: where dual residence arises, the tie-breaker in the applicable double tax treaty decides. Anyone spending 60 days in Cyprus while keeping their centre of life in Germany can lose that test.

What the two sides cost

Item	Cyprus (limited)	Georgia
Formation, year 1 Cyprus at market rate including the first annual package	EUR 3,400–6,200	from EUR 1,200 as a sole trader, from EUR 1,890 as an LLC
Recurring per year Cyprus above EUR 300,000 turnover: EUR 6,000–12,000, because the full audit then applies	EUR 3,900–6,900	EUR 1,000–1,800
Mandatory secretary
Registered office with a third party		your own address suffices
Audited annual accounts Cyprus: an audit for every limited, below EUR 300,000 turnover and EUR 500,000 total assets as a review engagement		not in the small categories
Nominee officers, where wanted	EUR 3,000–5,000	local director EUR 1,200/year
Home held year-round Limassol: EUR 1,240–1,480 rent a month, some EUR 15,000–18,000 a year	mandatory under the 60-day rule	not required

The full breakdown over three years, with Dubai as a third jurisdiction: what a jurisdiction really costs.

The question before the country question

• Is the person being relocated, or only a company incorporated?
• Does unlimited taxation in Germany continue?
• Can a substantial economic activity at the seat be shown at all?
• Does exit taxation stand in the way — and has it been settled?

Anyone who has answered these four needs no country comparison, because the answer follows from them. On the last: exit taxation; on when Germany continues to reach across despite departure: extended limited tax liability.

Georgia and Cyprus — frequently asked

Why is EU membership the decisive point?

Because German international tax law attaches to it. The substance defence that averts controlled-foreign-company taxation is, on the wording of the statute, limited to companies in EU and EEA states. For a third-country company that route is not open in the same way.

Does that make Cyprus better?

Only for one constellation. The point bites while the shareholder is taxable in Germany. Anyone who actually leaves and is no longer subject to unlimited German taxation falls outside the regime — and the advantage falls away with it.

What speaks for Georgia then?

The case where the person is relocated and not merely a company incorporated. Georgia is a home base with territorial taxation; Cyprus is first of all a corporate location inside the EU legal framework.

Is Cypriot corporate tax still 12.5%?

No. The rate rose to 15% on 1 January 2026. In the same move the tax on actually distributed dividends falls from 17% to 5%, the deemed dividend distribution and stamp duty are abolished, and losses carry forward for seven years. A quote still working with 12.5% in 2026 is working with a figure that no longer exists.

What does a Cypriot limited cost per year?

A market rate of EUR 3,400–6,200 in the first year and then EUR 3,900–6,900 a year for a small, active company — registered office, secretary, bookkeeping, statutory accounts and the tax return included. Above roughly EUR 300,000 of turnover it is EUR 6,000–12,000, because the full audit then applies instead of the review engagement. The larger item, though, is the home the 60-day rule requires.

Can the two be combined?

Combinations are conceivable, but they increase the number of legal systems in which everything has to be right. We advise it only where there is a concrete reason, not because it looks like more protection.

This article is general information and does not constitute legal or tax advice. The Georgian, the German and — through the official references given — the Cypriot side are sourced; the Cypriot price figures are our own market survey and no commitment by third parties. As at September 2026.