The company formation procedure in Cyprus is similar for all business entities, having a simple and straightforward structure. The procedure of company formation in this country includes drafting the articles of association and other documents required for the incorporation of a Cypriot company, such as signatures, passport copies, forms etc.
|Types of companies||Private limited liability company, Public limited company, Cyprus partnership, Compaby liability by shares, Club, Non profitable company|
|Minimum share capital for LTD Company||1 share of €1|
|Minimum number of shareholders for Limited Company||1|
|Time frame for the incorporation||about 5 working days|
|Corporate tax rate||12.5% on worldwide net profits|
|Dividend tax rate||0%|
|Any Tax incentives||
There are many tax incentives:
– 12.5% corporate tax on its net profits;
– 0% tax on any revenues from trading in securities such as shares etc.;
– 0% tax for all profits from the sale of real estate abroad;
– 0% tax on dividends paid out to the shareholders, as frequently as you like;
– 0% tax on any dividends paid to it by any other company in which it holds shares;
– 0% stamp duty in many occasions;
– 0% tax on profits of permanent establishments abroad, such as hotels, casinos, restaurants, factories etc.;
– 0% tax on any income from selling its own shares;
– 2.5% tax on IP rights, revenue or rights;
– Cyprus has a network of more than 65 Double Taxation Avoidance Treaties with as many countries of which you can benefit.
|Are Shelf Companies Available?||Yes|
|Do you supply a Registered Address/Virtual Office?||Yes|
|Local Director Required||Yes|
|Annual Meeting Required||Yes|
|Is Accounting/Annual Return Required?||Yes|
|Any Tax incentives||Yes|
New owners will also need a Public Notary , find an office for their company and set up a bank account. A Cypriot accountant will also be required after the new Cyprus company is formed.
We are members of many International Organizations
E.R. Team Global Consultants (OpenCompanyCyprus.com) is a trusted member of BridgeWest. They are also part of important organizations, among which the Expat Briefing web portal and of the HG.org legal website. The CEO of our company, Evgenios Erotokritou has been a member of the Cyprus Bar Association since 1980 and of the Honorable Society of the Middle Temple.
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 25,629 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, apart 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 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 experts in company formation in Cyprus.
Registering a Public Company Limited by Shares (PLC) in Cyprus
Businessmen who want to open a business in Cyprus as a public company limited by shares should know that this company functions the same as a private company limited by shares, except those 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 25,629 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 subsidiaries having the foreign company as shareholder) or extensions of the parent-company in Cyprus (Branches).
Documents related to the Cyprus company formation procedure
Both local and foreign investors who want to open companies in Cyprus must prepare the following documents and submit the following information with the Trade Register:
- name application for approval of name;
- HE1 Form stamped at the Court
- HE2 form – declaration of Registered address
- HE3 Form – declaration of Director and Secretary
- M&A signed by Shareholder and Lawyer.
Our experts in company formation in Cyprus can assist with the preparation of the Memorandum and Articles of Association.
The offshore company in Cyprus
The so-called “Offshore” Companies in Cyprus are not in any way differentiated from a regular Cyprus company (same incorporation procedures and same taxes to pay).
The Cyprus offshore company has many benefits among which:
- it will benefit from reduced tax rates and will be subject to one of the lowest corporate taxes in Europe;
- it can be created as a holding company with the main activity related to the control of assets in other Cypriot companies;
- it offers enhanced protection to its shareholders from a privacy point of view.
Our incorporation advisors in Cyprus can help foreign investors who want to set up offshore companies in this country. We also invite you to see a short version of the process of company formation in Cyprus in the scheme below:
Company formation steps in Cyprus
Cypriot private companies limited by shares must have a registered office in Cyprus and are managed by a management board. Foreign investors must appoint a specialized local agent to handle the company formation process in Cyprus. It will be, however, necessary to come in person to open the bank account in order to sign some papers and provide the registration certificate and identification documents of the managers.
VAT registration is only compulsory for the companies that perform activities that are subject to the Value Added Tax, such as trading. In case you need to register your company for VAT, our specialists in company registration in Cyprus can help you.
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.
Investors who would like to open a business in Cyprus can receive specialized assistance from our team of incorporation agents. In case you need company formation assistance in another jurisdiction, for example in Singapore, we recommend our partners – OpenCompanySingapore.com.
Costs related to starting a business in Cyprus
One of the main aspects related to company registration in Cyprus is related to the costs associated with its setup. From this point of view, we must mention that the costs of registering a company depend on its type and the industry it will operate in. The following procedures should be considered when speaking about the costs related to opening a company in Cyprus:
- the company name reservation is completed with the Trade Register and is subject to a fee of approximately 30 euros;
- the costs related to the drafting and notarization of the incorporation documents will depend on the public notary;
- the future business owner must also take into account the company registration fee;
- there are no costs related to tax, VAT and social security registration.
The company formation costs of a business in Cyprus are as follows:
- the company registration fee imposed by the Cyprus Companies Registrar is 650 EUR;
- the registered address is set at approximately 350 EUR per year with us and it represents one of the cheapest and fastest solutions for a registered office in this country;
- the minimum share capital of a private limited liability company in Cyprus is set at 1 EUR, however, the investor chooses the amount of money necessary for the business;
- the company registration cost of our local specialists is around 600 EUR and it is one of the lowest setup fees in Cyprus;
- the accounting fees imposed by our local accountants start at around 100 EUR/month and depend on the services sought by clients.
Businessmen interested in starting a business in Cyprus should also take into consideration the costs related to the opening of the corporate bank account which will vary depending on the bank and the services attached to the account.
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:
- 4-5 days for the company name approval;
- 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 5 working days;
- the registration for taxation is about 2 working days;
- social security registration is about 1 week.
The main advantage is that all the paperwork can be filed electronically with the Cyprus Trade Register.
Tax and VAT registration when opening a business in Cyprus
The tax registration procedure is part of the procedure of opening a business in Cyprus meaning that it will be completed together with the company incorporation process. The tax identification number will be issued together with the Certificate of Registration, however, when it comes to VAT registration, the procedure must be completed separately because it is not mandatory.
VAT registration becomes mandatory when the company involved in distance sales in Cyprus reaches the 35,000 euros distance selling threshold. Based on the VAT number, companies with trading activities within the EU can also obtain EORI numbers and thus ease the trading procedures.
Our company formation experts in Cyprus can offer more information about the procedures for obtaining VAT and EORI numbers. We can also help with these steps which are quite important when starting a business in Cyprus.
How easy is it to hire personnel in Cyprus?
An important advantage of owning a company in Cyprus is the highly educated workforce, mostly English speaking.
The minimal working age is 15 years old.
The staff can be recruited from the numerous employment agencies. Also, the Cyprus Human Resource Management Association for information and the Cyprus Chamber of Commerce and Industry (KEBE) can provide information regarding hiring personnel.
The contract of employment can be with a determined period or an undetermined period. It must state the location of the company, details regarding the job, the start and end of the activities, details regarding the salary and other benefits. A collective agreement can also be signed and has a duration of two years usually.
An employer can also hire personnel for a part-time job, for a specific period of time or working from home. The working time cannot exceed 48 h a week and at least 11 hours of rest during 24h.
A series of benefits for the employees are granted. The sickness benefits are paid for a period of 156 days. All the unemployed can receive an unemployment benefit for a period of 156 days. The maternity allowance is paid for 18 months.
There are certain conditions that companies from Cyprus should accomplish before hiring foreign staff: the company must be listed at a stock market and the direct shareholders must be registered at the Immigration Control Board and the Civil Registration Board. Furthermore, the capital sources must be transparent, the company must have an administrative office located in a proper district and financial stability proven by annual balance sheets.
A foreign employee must receive a resident permit before hiring. For this, he must submit the following documents at the Immigration Department at the local police:
– a tax for the permit;
– a CV;
– the passport;
– medical certificate and insurance;
– criminal record;
– the labor contract (must contain the duration of the contract and the salary);
– bank guarantee and two completed specific forms.
All EU citizens must be registered for taxes at the Department of Inland Revenue for receiving a taxpayer identification code. Any working dispute is regulated by the Industrial Relations Code, except for the strikes, usually mediated by the Labor Ministry.
The share capital of a Cyprus company
The first cost which is first determined by a businessman who wants to open a business in Cyprus is the share capital which can be imposed by the Company Law for certain types of structures or must be estimated for other business forms. For example, in the case of a private limited liability company there are no minimum share capital requirements, however, the investor will need to estimate the amount of money which needs to be deposited as a share capital for the business. In the case of public companies, the minimum amount of money to be deposited as a share capital is 25,629 euros.
It should be noted that a small percentage of the share capital must be paid as a registration fee with the Companies House in Cyprus.
What are the main points of interest for foreign investors in Cyprus?
Cyprus is well known for the advantages offered to the investors, especially in the transportation areas. For example, the profits from the operations of the Cypriot vessels are not taxable. Also, the dividends of the companies that own ships are exempt from tax.
Cyprus has an excellent infrastructure, with 2 international airports, 3 shipping ports (in Lemesos, Larnaca, and Vasilikos) and a modern road network. This facilitates the export and import of the goods.
International and multinational companies and banks are operating in Cyprus attracted by the small operating costs, economic freedom, and the well trained local companies, ready to counsel if necessary. You can also watch our video below:
The pleasant weather, the culture, and the Mediterranean cuisine are attracting tourists all year long.
Whenever you need legal services in other European countries, such as opening firms in Malta or forming companies in Switzerland please contact our partners in these countries and they will provide you with the best legal advice and personalized consultancy.
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, partnership, 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 specialists in company formation in Cyprus can offer to businessmen special virtual office packages which include a local address.
4. What are the steps for company registration 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 is the minimum share capital in Cyprus?
There are no mandatory requirements for a minimum share capital for a private limited liability company. Our experts in company registration in Cyprus recommend you to deposit an initial capital for your company of approximately 1,000 EUR. The public limited liability company requires no less than 25,629 EUR as minimum share capital.
6. 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.
7. Do you need special permits and licenses in Cyprus?
Yes. Special permits and licenses are needed for some activities.
8. What are the taxes for companies in Cyprus?
Cyprus has a corporate income tax of 12.5%. Dividend tax is 0. Other taxes in Cyprus include capital duty, social security contributions, stamp duty, transfer tax, real property tax. Our specialists in company formation in Cyprus can help you comply with the taxation rules available in this country.
9. What are the reasons to invest in Cyprus?
A good geographical location and advanced infrastructure are why many import and export companies base their business in Cyprus. Moreover, the country has a good tax system, a sound legal and regulatory framework and qualified workforce.
Key facts about Cyprus
- Cyprus has one of the lowest corporate tax rates in Europe: 12.5%.
- The standard VAT rate is 19%, but there are also two reduced rates of 8% and 5%. There are also some services and goods to which a zero VAT rate is applied. The minimum annual turnover that a company must reach in order to be mandatory to register for VAT is 15.600 EUR (or 10251 EUR for the acquisition of EU goods).
- There is no withholding tax on the dividends paid by a Cyprus company to its non-Cyprus resident shareholders and no withholding tax applies on dividends received from EU subsidiaries.
- Foreign investors have the possibility of setting up holding companies in Cyprus – one of the best tax minimization solutions in this country.
We invite you to contact our team of specialists in Cyprus company formation matters for more details about our services or for a personalized offer.