Setting up a Company in Cyprus: What You Need to Know

Deciding to set up a company in an overseas jurisdiction is not a decision that any entrepreneur or business owner should take lightly. It’s important to conduct thorough research into the advantages and disadvantages of your prospective destination, while also acknowledging that without the correct professional guidance, the process itself can be complex and needlessly costly.

However, when completed in the right manner – and in the right location – the benefits to your newly-formed company can be massive. For many organisations, the Mediterranean island of Cyprus ticks many boxes in this regard, especially given its low corporate tax rate, enviable lifestyle and conduciveness to doing business.

Therefore, for those who are interested in registering a company in Cyprus, we’ve compiled an in-depth, comprehensive breakdown of what exactly the process entails – and why it could be the best decision your business has ever made.

This is everything you need to know about setting up a company in Cyprus.

Company Formation in Cyprus

Located in the eastern Mediterranean and home to a population of just over a million, Cyprus is a fully-fledged member of the European Union (EU) and the Eurozone. It boasts a significantly low corporate tax rate of just 12.5%, charges 0% taxation on dividends for holding companies (although exceptions to this rule exist), and has double taxation agreements (DTAs) in place with over 60 countries worldwide.

A Cypriot limited company is an ideal solution for an EU-based intermediary or holding company, as well as serving as a regional headquarters. Indeed, numerous successful multinationals currently base their European or EMEA operations on the island, including:

• ASBIS (Technology)
• eToro (Fintech)
• Wargaming (Gaming)
• FirePro Systems (Industrial)
• Wisebits (IT)
• Mindgeek (IT)
• FxPro (Finance)
• XM (Finance)
• The Soul Publishing (Media)

In general, the process of registration normally between two to three weeks, although it is possible in some cases to apply for and acquire a priority claim.

The Registrar of Companies and Official Receiver

In Cyprus, company formations and registrations are officially handled by the Department of the Registrar of Companies and Official Receiver. This government body is responsible for the administration and management of all the primary aspects of your registration, and where you will need to submit the majority of your documents.

In terms of naming your business, limited companies in Cyprus must end in the suffix “Limited” or "Ltd." (no other suffix is allowed) and must be approved by this body. This procedure usually takes around two to four business days. It’s also where you need to submit your memorandum and articles of association (which must be prepared beforehand by a licensed law practitioner).

You will also need to acquire a registered office in Cyprus and submit this address to the registrar, although there is no requirement to be physically based on the island. Company meetings need not necessarily be held in-country, either, although given the location’s enviable weather climate, highly-skilled labour force, and established transport links, many organisations do decide to set up shop there, especially in the larger cities of Limassol and Nicosia.

Payment of Annual Fee

All companies registered with the registrar in Cyprus must pay an annual fee of €350 no later than the 30^th of June each year, irrespective of the date that the company was registered. Failure to do so means that your company will be subjected to additional monetary charges. The purpose of this payment is to ensure that your company name is retained on the body’s register, as well as acting as a statement of good faith on the part of your business.

Shareholders and Share Capital

In a Cypriot limited company, the number of shareholders should be between one and 50. These shareholders can either be physical people, or legal entities (of any nationality). It’s worth noting that, as part of Cypriot business legislation, the details of shareholders – including names, addresses and nationalities – are considered part of the public record; however, the appointment of a nominee shareholder can negate this.

In terms of share capital, there is no minimum or maximum amount for a private limited company. For practical purposes, though, it is generally recommended that companies are incorporated with a minimum share capital of at least €1,000.

Directorship and Secretariat

Your company must have at least one director, although there is no restriction on nationality, and the directors in question can be either physical or legal persons. However, it’s worth noting that your directorship can have a significant effect on the tax status of your company and, so, it is customary in many cases for the majority of a company’s directors to be Cypriot residents. This ensures that the company is regarded by the government as resident in Cyprus for tax purposes.

Again, the details of your company directors are considered part of the public record, but, again, it is possible to appoint a nominee director.

Your company secretary, meanwhile, can also be either a physical individual or a legal person, and is responsible for all administrative matters concerning your company.

Taxation and Accounting in Cyprus

As mentioned, companies are considered to be Cypriot tax residents if the organisation’s management and control – its directors – are in Cyprus. In such an instance, your company will be taxed at 12.5% on profit. However, according to the island’s tax laws, non-resident companies are not subject to taxation in Cyprus, provided that the company’s management and control are exercised outside the country and that you do not derive any income in Cyprus. It should be noted that in such cases, you may not take advantage of the country’s DTA network.

DTA Agreements

As of June 2020, Cyprus has DTAs in place with the following countries:

Accounting

18 months after the date of your company’s incorporation – and every year thereafter – you must submit a complete set of your audited financial statements (conducted by a Cypriot auditor) to the Cypriot Tax Department and the registrar. Chapter 113 of the Cypriot Companies Law dictates that these records should be maintained in accordance with International Accounting Standards (IAS).

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As with any foreign investment, registering a company in Cyprus may sound daunting at first. However, with the right information to hand and a thorough understanding of the local processes and customs involved, your interaction can be conducted smoothly, efficiently, and without issue.

If you are seriously considering a company formation in Cyprus, then be sure to consult with the Starting Business team, who can act on your behalf and leverage our corporate expertise to your benefit. We have decades of experience navigating the process locally, meaning that all you have to do is fill out the relevant forms, sit back, and focus on managing your business!

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