Following Circulars No.2011/11 and No.2011/5, this article will explain what a “dormant company” is, its symptoms and consequent requirements. The following is an extract from PART 1.7 of the “Company Income Statement” form (EP 4), whereby a definition of a dormant company is considered to be a company that meets the following conditions:

I. The company does not conduct any activity that generates income, profit or damage that is taxed or that is exempt from taxation. Excluding the income from interest yielding a bank account whose amount reflects the amount of initial capital. Additionally, the losses sustained by expenses incurred in fulfilling the reasonably necessary obligations of the company, which derive from Laws and which concern its legal status, are not considered to constitute activity.

II. The company does not own any assets other than cash (cash in the cashbox or bank account), as the condition of paragraph (iii) below. Other assets, such as immovable and movable property, accounts receivable, shares and copyrights, which are in the name of the company, constitute management by their possession and therefore the company will be considered to be active contrary to the condition of paragraph (i) above.

Possession of immovable property situated in the occupied areas of Cyprus is not considered to be activity, as de facto there is no possibility of managing the

Property in question.

III. The company does not hold any cash of higher value than the amount of the capital as formed by the initial capital and any subsequent increase occurred during the period in which the company was active, plus the interest earned on the keeping of those cash in a bank account.

IV. The Company has no obligations other than those incurred by expenses suffered within the reasonable legal obligations of the company which derive from the law and which relate to the legal status of the company.

The mandatory fields to be filled in the income statement from a dormant company are as follows:

1. Part 1

Table 1.1TIC number

1. Part 1

Table 1.3-Line 1AAuditor name/ Code/Tax ID/ ID, Registration Number

1. Part 1

Table 1.6- Line 1.6“The Company…..Republic”

1. Part 1

Table 1.7- Line 3

1. Part 2

Table 2.1-Line E.IIssued Capital

1. Part 2

Table 2.3.8Period of Account

1. Part 2

Table 2.3.8Period of account

1. Part 4

Table 4.5-Line 1Interim(Temporary) Income

1. Part 4

Table 4.5-Line 2Interim(Temporary) Tax

1. Part 5

Table 5.1.1-Line 1Increase/Decrease

1. Part 5

Table 5.1.1-Line 7Increase/Decrease

1. Part 5

Table 5.1.3Completing at least one field that articulates to 100%

1. Statement Complete

G. Poufos

Manager

Inland Revenue Department

NOTIFICATION:

1. Auditor General of the Republic.
2. General Manager of the Ministry of Finance.
3. Chairman of the Tax Board.
4. Cyprus Bar Association.
5. Link of Independent Cypriot Accountants.
6. Connected Certified Accountants of America.
7. Linked Certified Accountants of Cyprus.
8. Link of Cypriot Internal Auditors.
9. Link of Cypriot Internal Auditors.
10. Association of Administrative Services Providers.
11. Linked Qualified Certified Cypriot Accountants.
12. The Institute of Financial Accountants.

For more information about dormant companies or anything mentioned in th above article contact us, we’d be happy to answer any questions you may have.