Cyprus: The Gateway to Europe
Eltoma Corporate Services has been working in Cyprus since 2004. We have advised private clients and companies on several corporate and tax matters, including immigration and real estate acquisition and investment.
Currently, we have offices and highly qualified professionals in 5 different countries around the world; we are continually expanding. Cyprus has been a cornerstone of the international development of Eltoma Corporate Services and has served as the doorway for many companies to enter the European market and to establish international business exposure.
This is an overview of the key facts that make Cyprus such an attractive jurisdiction for doing business, we hope you find this informative and we look forward to assisting you with any particular request.
Companies in Cyprus
The process of incorporating a company in Cyprus is straightforward and in our experience can take approximately 2 weeks to be completed. The applicable law in this sphere is the Companies Law, Chapter 113. The Cyprus Companies Law regulates the different forms of companies, their minimum requirements, and statutory obligations.
The primary forms of companies in Cyprus are:
- Public Limited Liability Company.
- Private Limited Liability Company.
- Or a branch of a foreign corporation.
Public Limited Liability Companies have unrestricted ability to transfer stock; can be composed of more than 50 shareholders and have the right to undertake an Initial Public Offering process. On the other hand, Private Limited Liability Companies have a maximum of 50 shareholders, restricting the transferal of shares and prohibiting the public offering of shares or debentures of the company. Lastly, a branch of a foreign corporation allows a non-resident company to operate in Cyprus and will be, generally, taxed under the same rules as a domestic company.
Certain formalities must be undertaken when incorporating a company in Cyprus. The incorporation documents to start a company are the Memorandum and Articles of Association where the name of the company, its objectives, internal regulations, and obligations will be described in detail. Fundamental elements such as the board of directors (minimum one Director), authorized share capital, company’s secretary and registered address in Cyprus are also an integral part of the incorporation process. Public companies must have a minimum share capital of EUR 25,629; whereas, a Private company has the minimum authorized share capital of at least EUR 1 (is common practice to establish a share capital of at least EUR 1,000).
Companies in Cyprus must appoint a company secretary to prepare and file the documents of the company before the regulators, among other responsibilities. Once these fundamental elements have been decided, the name of the company must be approved before the Registrar of Companies in Cyprus (Administrative regulator of companies), this process takes 2 to 5 days on average. After the name approval, the Memorandum and Articles of Association must be submitted to the Registrar for registration and the Registrar will issue a Certificate of Incorporation. Finally, a recently incorporated company is required to be registered before the Tax Authorities within 60 days from the date of incorporation.
Financial statements must be prepared and filled annually through the HE32 form along with the Minutes of the Annual General Meetings. All companies in Cyprus must prepare accounts in accordance with the International Financial Reporting Standards (IFRS) and these must be audited in accordance with the International Auditing Standards (IAS). Failure to prepare and file accounts, amounts to a criminal offense and the company, as well as its Directors may be liable to criminal prosecution accordingly. Company Directors must ensure that all records considered necessary for the preparation of the financial statements are maintained according to the Companies Law. All records must be kept at the registered office of the company and must be open for any person to review during business hours. An annual levy of EUR 350 must be paid to the Registrar of Companies; the non-payment of this Levy will carry fines and even the striking off of the company from the registry.
The Value Added Tax (“VAT”) must be reported on a quarterly basis and the VAT Information Exchange System (“VIES”), when applicable, must be filled monthly. Changes in the companies must also be notified to the Tax Authorities of any changes that may affect the records of the Inland Revenue register within 60 days from the date of the relevant change. Likewise, changes in the corporate structures must be notified to the Registrar of Companies.
Cyprus offers a competitive and transparent tax regime. With a Corporate Income Tax (“CIT”) of only 12.5%, Cyprus is among the most favorable jurisdictions for businesses in the world. CIT is collected through a self-assessment system. Companies pay provisional tax on estimated taxable profits during the year of assessment in two equal installments on July 31st and December 31st.
The final tax liability is based on the actual taxable profits of a company and is again paid through a self-assessment system on or before August 1st of the year following the year of assessment. Each company must file its tax returns through Form IR4 no later than December 31st of the year following the year of assessment. Cyprus allows carry forward of loss relief up to 5 years and double tax relief with the countries it has concluded Double Tax Avoidance Agreements (“DTAA”), currently, Cyprus has signed 56 DTAAs and is one of the 71 countries that have signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting of the Organisation for Economic Co-operation and Development (“OECD”). The VAT in Cyprus, with a rate of 19%, applies to all goods and services and, as mentioned above, must be reported on a quarterly basis.
A company is tax resident in Cyprus if it is managed and controlled in Cyprus. Certain criteria should be met in order to obtain this status officially and a procedure before the tax authorities is necessary. Is important to note that companies do not necessarily have to be incorporated in Cyprus to tax resident in Cyprus.
How can we help?
Eltoma Corporate Services has hands-on experience with corporate incorporation and maintenance in Cyprus since 2004. We provide company incorporation services; accounting and bookkeeping; company’s secretarial services; legal and tax consultancy; tax residency and immigration services.
Got a question? We’d love to hear it!
+357 25 02 50 34
+65 62 47 71 92
+7 812 458 46 22