Company Registration in Cyprus
Cyprus officially called the Republic of Cyprus, is an island nation in the eastern Mediterranean Sea. It is the third-largest and third most populous island in the Mediterranean, and is located south of Turkey; west of Syria; northwest of Lebanon, Israel and the Gaza Strip; north of Egypt; and southeast of Greece.
The Republic of Cyprus has de jure sovereignty over the entire island, including its territorial waters and exclusive economic zone, with the exception of the Sovereign Base Areas of Akrotiri and Dhekelia, which remain under the UK's control according to the London and Zürich Agreements. However, the Republic of Cyprus is de facto partitioned into two main parts: the area under the effective control of the Republic, located in the south and west and comprising about 59% of the island's area, and the north, administered by the self-declared Turkish Republic of Northern Cyprus, covering about 36% of the island's area. Another nearly 4% of the island's area is covered by the UN buffer zone. The international community considers the northern part of the island to be the territory of the Republic of Cyprus occupied by Turkish forces. The occupation is viewed as illegal under international law and amounting to illegal occupation of EU territory since Cyprus became a member of the European Union.
Cyprus is a major tourist destination in the Mediterranean. With an advanced, high-income economy and a very high Human Development Index, the Republic of Cyprus has been a member of the Commonwealth since 1961 and was a founding member of the Non-Aligned Movement until it joined the European Union on 1 May 2004. On 1 January 2008, the Republic of Cyprus joined the Eurozone.
Cyprus is one of the most important business centers in Europe thanks to its taxation system, its stable economy, and the legislation which favors foreign investors seeking to establish companies here. The company formation procedure in Cyprus is basically the same for all business entities, having a simple and straightforward structure.
Cyprus has one of the lowest corporate tax rates across the European Union (12.5%). Due to its favorable tax regime, Cyprus is the gateway to the European common market chosen by many non-EU companies and a portal for investment from the West into Russia, Middle-east, Asia, and South America. It is also a shipping hub; the Cypriot-registered vessel fleet is the fourth largest in the world.
In addition, dividends received by Cyprus companies are exempt from all taxes, with the exception of foreign-source dividends that are deductible for tax purposes for the paying company, being an interesting option for holding companies. Cyprus companies are also commonly used for international trading and for the provision of investment business services.
Why should you register a company in Cyprus?
When we talk about register a company in Cyprus, many people think it is just a natural step of opening up a shop and start selling. It may be true someplace because the laws of lands differ.
Things are different in Cyprus. Even though opportunities are immense, one must understand the best way to tap in. Cyprus as a full member of the European Union remains a safe and popular destination for investment due to the significant tax benefits that Cyprus is offering.
Registering a company in Cyprus is relatively easy and faster than in many European countries. Cyprus Company registration itself begins with an application for registering a company, to be submitted to the Registrar of Companies. Generally, the company will be registered within one week.
Types of companies described by our Cyprus company formation experts
- - Limited liability company - in Cyprus this type of company, also called an LTD, can either be public or private, depending on the types of shares and the size of the corporation. In terms of share capital requirements, the private limited liability company is not imposed with a minimum amount of money, however, in the case of a public company, the minimum share capital is approximately 25,650 euros.
- - Foreign companies are welcome to create branch and representative offices, as well as subsidiaries which will operate as extensions of the parent companies in Cyprus. Each structure has its own requirements that have to be met by the founders. Our Cypriot company formation specialists can help you set up one of the business forms presented above.
- - Partnerships in Cyprus. There are two types of partnerships available for registration in Cyprus – the general and the limited partnership. These are not considered separate business entities from their owners. Both types of partnerships require a minimum number of two participants and a maximum number of 20 participants.
- - Sole proprietorships in Cyprus. This is the simplest business form available for those who want to operate on their own. There are no share capital requirements in the case of sole traders.
Incorporating a Private Company Limited by Shares (LTD) in Cyprus
This is the most common type of company used in Cyprus and it is founded by one or more partners - up to 50. Other important requirements for setting up a private limited liability company are a local address and a secretary. The shareholders subscribe to shares, monetary or non-monetary, which are given a nominal value and cannot be transferred. The members of a private company limited by shares are liable to the company's debts and obligations only to the extent of the nominal value of their shares. In a private company limited by shares, there is no minimum required capital. If you need assistance in opening this type of company, you can rely on our Cypriot company formation agents.
Registering a Public Company Limited by Shares (PLC) in Cyprus
The public company limited by shares functions the same as a private company limited by shares, except that shares are freely transferable and there is no restriction as to the maximum number of partners. It must also have at least 7 shareholders. The minimum share capital of a public company limited by shares is 25,650 euros.
Setting up a subsidiary, branch, and representative office in Cyprus
These legal forms are available for any foreign company interested in entering the Cypriot market. These can be set up as separate entities from the parent company (Cypriot companies having the foreign company as shareholder) or extensions of the parent company in Cyprus. Also, subsidiaries are a popular option for entering the Cypriot market.
Documents needed for Cyprus company registration, in case of a natural person:
- Our Natural Person application form, filled and signed by the beneficial owner(s).
- Certified copy of a valid international passport or ID.
Certified copy or original recent (not older than 3 months) proof of address, bearing the full residential address (including postal code) and the full name of the person as stated in the passport. The following types of documents are accepted as proof of address:
-Utility bills (electricity, gas, water, fixed phone bills, or municipality service bills)
-Confirmations of Residence issued by Office for Registration of Residents.
- Original bank reference letter dated within the last 3 months (standard text, does not need to state account balances).
- CV showing a professional career, preferably in English.
Documents needed for Cyprus company registration, in case the shareholder is a legal entity:
- Our Corporate person form, filled and signed by the beneficial owner(s).
- Certified and apostilled recent core documents evidencing the company's existence and incorporation number.
- Certified and apostilled recent core documents evidencing the company's directors, secretary, shareholding, and registered office (registry extract, trade register, etc.)
- Certified and apostilled copy of the Memorandum and articles of incorporation.
- Certified copy of passport and certified copy of a recent, not older than 3 months' utility bill of the shareholders, directors, secretary, nominees, and other individuals involved.
Company formation steps in Cyprus
No matter the chosen business form, the following steps must be completed upon the incorporation of a company in Cyprus:
- choosing and reserving the company name with the Companies Register - this name must be unique, therefore we advise you to verify at least 3 names before making the reservation;
- preparing and notarizing the company’s statutory documents which are made of the Articles of Association;
- filing all the documents and information mentioned above with the Trade Register and obtain their approval and the company's Certificate of Registration;
- registering for taxation, obtaining the VAT number and registering for social security purposes with the tax authorities;
- applying for various special licenses or authorizations, depending on the industry the Cypriot business will operate in.
How long does it take to register a company in Cyprus?
Another important aspect related to opening a Cyprus company is the time spent on each procedure. It can be divided into:
- - 1 day for the company name reservation;
- - 1 or 2 days for preparing the company’s statutory documents;
- - the filing and review of the company’s incorporation documents with the Trade Register will take another 2 days;
- - the registration for taxation and social security will be completed in 1 day.
The main advantage is that all the paperwork can be filed electronically with the Cyprus Trade Register
Taxes
Tax residency – A company is a tax resident in Cyprus, if it is controlled and managed from Cyprus.
Basis – All companies that are tax residents of Cyprus are taxed on their income accrued or derived from all sources in Cyprus and abroad. A non-Cyprus tax resident company is taxed on income accrued or derived from a business activity that is carried out through a permanent establishment (PE) in Cyprus and on certain other income arising from sources in Cyprus.
Tax rate – Corporate tax standard rate is 12.5%.
Capital gains – Capital Gains from disposals of shares, bonds, debentures, and other titles of companies or other legal persons incorporated in Cyprus or abroad, and options thereon are exempt.
There is a capital gains tax of 20% levied on gains arising from the disposal of immovable property situated in Cyprus or the disposal of shares in companies that own Cyprus-situated immovable property. Shares listed on any recognized stock exchange are excluded from capital gains tax.
Dividends - Dividends received by Cyprus companies are exempt from all taxes, with the exception of foreign-source dividends that are deductible for tax purposes for the paying company.
Interests - Interest received by companies in the ordinary course of their business is taxed at the standard rate of 12.5%.
Interest income considered passive income (not related to the ordinary course of the business) is subject to the Special Defense Contribution at the rate of 30%. Such passive nature interest is, however, exempt from corporate income tax.
Royalties – Royalty income is subject to income tax.
Foreign-source income – Companies ordinarily residents and domiciled in Cyprus are taxed on their worldwide income. However, foreign P.E. income, as well as foreign-source dividends and capital gains may be exempt from taxation.
Frequently Asked Questions about Company Formation in Cyprus
1. Can a foreigner open a company in Cyprus?
Yes. Cyprus welcomes foreign investors in various business fields. The legislation for investments allows foreigners to open the same types of legal entities as national investors.
2. What are the types of companies that can be incorporated in Cyprus?
The types of companies in Cyprus are private and public limited companies, partnerships, sole proprietorships, or branches of foreign companies. Our Cypriot company formation experts can help you understand the particularities of each business type.
3. Does the company need to have an office in Cyprus?
Yes. A local registered office is needed for a company incorporated in Cyprus. The incorporation documents must be kept at this address. Our Cypriot company formation advisers can offer to businessmen special virtual office packages which include a local address.
4. What are the steps for company incorporation in Cyprus?
Choosing the right type of company and an available business name, drawing up the company documents, and submitting them to the Cypriot Trade Register. After the company is registered, the business owner can start applying for other permits and licenses and register the company for VAT purposes.
5. What are the requirements for opening a bank account in Cyprus?
Banks in Cyprus will generally require the company to present its incorporation documents. A bank account can be opened at any bank in Cyprus.