The Doctors Limited Liability Company (Ι.Ε.Π.Ε. / DLC) in Cyprus

A legal and tax blueprint for physicians under Law 73(I)/2013 and the 2026 tax regime

Introduction: from sole practitioner to regulated corporate practice

For decades, private medical practice in Cyprus was conducted almost exclusively through the sole practitioner model, with doctors operating as natural persons. Under this approach, the physician contracted personally with patients, clinics, hospitals and, where applicable, the General Healthcare System (GeSY). All professional income was taxed at the level of the individual, and the doctor carried unlimited personal exposure to business risks.

This position changed fundamentally with the enactment of the Registration of Doctors (Amending) Law of 2013 (Law 73(I)/2013). The amendment introduced a dedicated statutory framework permitting doctors to practise through regulated professional entities known as Doctors’ Companies, including the Doctors’ Limited Company (DLC), or Ιατρική Εταιρεία Περιορισμένης Ευθύνης (Ι.Ε.Π.Ε.) in Greek.

In parallel, the 2026 Cyprus tax reform reshaped the fiscal environment by increasing the corporate tax rate, reforming dividend taxation, abolishing deemed dividend distribution for post-2025 profits, and adjusting personal income tax thresholds. As a result, the Ι.Ε.Π.Ε. has moved from being a niche structuring option to a central planning tool for physicians seeking lawful tax efficiency, asset protection and long-term practice continuity.

This article examines the legal foundation of the Ι.Ε.Π.Ε., the regulatory obligations imposed on medical companies, and the practical tax consequences of operating as a sole practitioner versus through a Doctors’ Limited Company.

1. The legal framework governing Doctors’ Limited Companies

1.1 What an Ι.Ε.Π.Ε. is (and what it is not)

An Ι.Ε.Π.Ε. is not a conventional private company limited by shares used for ordinary commercial activities. It is a profession-specific corporate vehicle governed by a dual legal framework:

• Companies Law, Cap. 113, which regulates incorporation, directors’ duties, accounting, audits, filings and corporate governance; and

• The Registration of Doctors legislative framework (Cap. 250 as amended), which imposes mandatory professional eligibility requirements and continuing oversight by the Cyprus Medical Council.

Accordingly, compliance with corporate law alone is insufficient. A Doctors’ Limited Company must continuously satisfy professional criteria, failing which its status as a lawful medical practice vehicle may be challenged.

1.2 Permitted forms of Doctors’ Companies

Law 73(I)/2013 allows doctors to practise through the following forms:

• a Doctors’ Limited Company (Ι.Ε.Π.Ε. / DLC);

• a general partnership; or

• a limited partnership.

In practice, the Ι.Ε.Π.Ε. is overwhelmingly preferred due to its scalability, clearer governance structure, limited liability features and compatibility with modern clinic and group practice models.

2. Mandatory regulatory requirements and Medical Council oversight

2.1 Prior approval by the Cyprus Medical Council

A defining feature of the regime is that incorporation is not purely administrative.

• First, the proposed Doctors’ Company must obtain prior approval from the Cyprus Medical Council.

• Only then may registration proceed with the Registrar of Companies.

This prior approval acts as a statutory gatekeeper and ensures that the company’s objects, ownership and governance are compatible with professional standards.

2.2 Restricted ownership and control (the doctor-only rule)

The cornerstone of compliance is the restriction on ownership and management:

• Shareholders must all be registered doctors in Cyprus.

• Directors must all be registered doctors in Cyprus.

This effectively prohibits non-medical equity participation, including spouses, family members or external investors, and preserves professional independence.

2.3 Ongoing compliance and share transfers

Compliance does not end at incorporation. Any change in shareholding or board composition must preserve the doctor-only rule. Share transfers must therefore be carefully managed, particularly in group practices or succession scenarios.

2.4 Continuity protection and the 12-month regularisation window

Where shares pass to a non-doctor due to inheritance, or where a shareholder or director ceases to hold a practising licence, the law provides a grace period of up to 12 months to regularise the position. This prevents abrupt operational disruption while requiring restoration of compliance within a defined timeframe.

3. Naming conventions and professional transparency

Doctors’ Limited Companies must clearly identify themselves as such:

• Greek: Ι.Ε.Π.Ε. (Ιατρική Εταιρεία Περιορισμένης Ευθύνης)

• English: DLC (Doctors’ Limited Company)

This is a statutory transparency measure, not branding discretion, and signals to patients, counterparties and regulators that the entity operates under the Doctors’ Company regime.

4. Tax architecture under the 2026 regime

4.1 The core planning principle

The fundamental distinction between a sole practitioner and an Ι.Ε.Π.Ε. lies in who earns the income.

• As a sole practitioner, the doctor earns all professional income personally.

• Under an Ι.Ε.Π.Ε., the company earns the practice revenue, and the doctor extracts value through:

  • salary, and

  • dividends, where appropriate.

The effectiveness of this model depends on genuine substance, correct payroll implementation, and proper alignment between contracts, accounting and tax reporting.

4.2 Corporate income tax from 2026

From 1 January 2026, corporate profits are subject to 15 percent corporate income tax. While higher than the historical Cyprus rate, it remains materially below the top personal income tax rate of 35 percent, and enables profits to be retained for reinvestment without immediate personal taxation.

4.3 Abolition of deemed dividend distribution

A critical reform is the abolition of deemed dividend distribution for profits generated after 1 January 2026. This allows Doctors’ Limited Companies to retain earnings for expansion, equipment acquisition or contingency planning without triggering notional dividend taxation, subject to careful tracking of pre-2026 reserves.

5. Personal income tax and salary planning

From 2026, the personal income tax-free threshold is €22,000, with progressive bands applying thereafter. This significantly improves the efficiency of a structured salary component within an Ι.Ε.Π.Ε., provided it reflects commercial reality and contribution obligations.

6. Social insurance and GeSY: the decisive layer

6.1 Why headline tax rates are misleading

A meaningful comparison must include:

• personal income tax,

• social insurance contributions,

• GeSY contributions,

• corporate tax, and

• dividend taxation.

In many cases, contributions materially affect the net outcome and must be modelled before deciding on structure.

6.2 Employment reality and payroll discipline

Where the doctor is employed by their own Ι.Ε.Π.Ε., the relationship must be real and documented through:

• a written employment contract,

• payroll processing,

• social insurance and GeSY registrations, and

• consistent accounting and board documentation.

7. Dividends, SDC and non-dom considerations

7.1 Dividend taxation after 2026

• For Cyprus-domiciled tax residents, SDC on dividends from post-2026 profits is reduced to 5 percent.

• For non-domiciled tax residents, SDC on dividends is generally not imposed, though GeSY contributions may still apply.

Dividends should therefore never be described as “tax-free” without qualification.

7.2 Dividend discipline

Dividend distributions must be supported by distributable reserves, proper resolutions and profit pool tracking, particularly across the 2025 to 2026 transition.

8. Deductible expenses and operational substance

An Ι.Ε.Π.Ε. typically allows clearer and broader deductibility of genuine business costs, including premises, staff, equipment, insurance, training and medical software. Deductibility depends on evidence, proper invoicing and a clear business rationale.

9. Liability, governance and succession

9.1 Financial versus professional liability

Limited liability protects personal assets against many business debts, but it does not shield the doctor from professional malpractice exposure. Professional indemnity remains essential.

9.2 Succession planning

The statutory 12-month regularisation window is most effective when supported by shareholder agreements, transfer mechanisms and banking continuity planning.

10. Practical tax comparison: sole practitioner vs Ι.Ε.Π.Ε.

Example 1: Sole practitioner

• Net professional income: €120,000

• Taxed entirely as personal income

• Large portion taxed at 35 percent, plus full social insurance and GeSY on the individual

Indicative effective burden: high, with limited planning flexibility.

Example 2: Ι.Ε.Π.Ε. structure

• Company revenue: €120,000

• Doctor salary: €32,000

  • €22,000 tax-free

  • balance taxed at lower personal bands

• Remaining profit: €88,000

  • taxed at 15 percent corporate tax

• Post-tax profits distributed as dividends or retained

Indicative outcome: materially lower effective tax rate, improved cash-flow control, and enhanced asset protection, subject to contributions and individual circumstances.

Conclusion: a strategic imperative in the 2026 environment

Law 73(I)/2013 created a structured and regulated pathway for doctors to practise through corporate vehicles without undermining professional independence. The 2026 tax reforms have further increased the importance of correct structuring, remuneration planning and compliance discipline.

When properly implemented, an Ι.Ε.Π.Ε. / DLC can deliver:

• lawful tax efficiency through balanced salary and dividend design,

• protection of personal assets from business risks, and

• long-term practice continuity through structured governance and succession planning.

At Chambers & Co, we provide an integrated, end-to-end service for physicians establishing and operating an Ι.Ε.Π.Ε. / DLC in Cyprus, delivered in close coordination with our in-house accounting department. We advise on the appropriate structuring from both a professional-regulatory and tax perspective, prepare and submit the application for Cyprus Medical Council approval, and manage the company formation process under Cap. 113, including the drafting and filing of the Memorandum and Articles of Association and all corporate registrations. Following establishment, we support ongoing corporate governance and compliance, including board and shareholder resolutions, share transfers and succession planning within the doctor-only framework, as well as the preparation of core contractual documentation (including clinic, hospital and service arrangements where required). In parallel, our in-house accounting team provides full operational support, including bookkeeping, payroll implementation and ongoing payroll processing, tax registrations, periodic tax compliance, preparation of management accounts, year-end financial statements and audit coordination, as well as dividend planning and documentation aligned with the 2026 tax regime. This combined legal and accounting approach ensures that the structure remains fully compliant in form and substance, and that remuneration and profit extraction are implemented in a defensible, properly documented manner.

Regulatory and tax note

This article is provided for general information only and does not constitute legal or tax advice. A reliable recommendation requires a case-specific review of the physician’s practice model, GeSY participation, revenue profile, expense structure and extraction strategy.