A free trade zone is a special economic area where products can be stored, handled, fabricated or redesigned and then re-exported according to precise customs regulations. Our company registration specialists in Cyprus explain in this article the different types of free trade zones in Cyprus and bring you important information on this subject.
We can also help foreign investors who want to open companies in Cyprus’ free trade zones. If you need guidance on how to open a company in Cyprus, our local advisors are at your disposal with detailed information.
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Legislation on free trade zones in Cyprus
Cypriot free trade zones are governed by the several regulations which cover various aspects related to the activities which can be completed here.
Here is what foreign investors should know about Cyprus company formation in a free economic zone:
- Cyprus free zone operate under the Community Customs Code, according to Articles 166 to 181;
- free zones must also comply with Articles 59 and 60 in the Customs Code with the amendments brought in 2004;
- free zones are also regulated by several European Commission regulations, among which one of the most important is EEC No. 2454/93;
- companies operating in Cyprus free zones are allowed to import non-Community goods into the country;
- local and foreign companiesoperating in free zones in Cyprus are also allowed to import Community goods.
Non-Community goods are considered products which have been imported under other rules than those imposed by the European Commission and cannot be sold freely or placed under other customs procedures in Cyprus.
Community goods fall under the regulations imposed by the European Commission and are usually destined for export to other EU states.
If you need detailed information about the legislation applicable in Cyprus free economic zones, our local consultants are at your disposal.
Types of free trade zones in Cyprus
In Cyprus, there are two types of free trade zones:
• Control type I free trade zone: in this type of trade zone, the controls are mainly based on the existence of a fence. Our company formation experts in Cyprus can provide you more details on this type of free trade zones;
• Control type II free trade zones: the controls are mainly founded on the formalities effectuated according to the requirements of the customs warehousing process.
In Cyprus, there are two control type II free trade zones, found on the main seaports of Limassol and Larnaca. These zones are treated as not being part of the usual EU customs territory.
Therefore, the non-EU products stored in these free trade zones in Cyprus are not subject to VAT, import duties or excise taxation.
The Department of Customs in Cyprus rules both normal zones and control type II free trade zones, being able to levy bans or restrictions on certain types of activities, conditioned by the nature of the products.
Our Cypriot company formation advisors can provide you additional information on the control type II free trade zones in Cyprus, if necessary.
What are the activities which can be completed in Cyprus free zones?
There are various types of activities which can be completed in Cyprus’ free zones, among which industrial, services and commercial activities are accepted as long as they are authorized by the Customs Authorities. It is important to note that a prior notification must be submitted with the authorities which have the right to impose certain restrictions, supervision or even prohibitions related to certain activities.
If you want to open a Cyprus company for trading activities and need guidance, our representatives can offer the assistance you need.
The Larnaca free zone in Cyprus
The Larnaca free zone is one of the oldest special economic zones in Cyprus and has a very good location which caters to the need of logistics companies operating here. Located near the Larnaca airport and seaport, but also 48 km from Nicosia, Larnaca is one of the most important transport hubs in the country.
The Larnaca free zone hosts 94 industrial sites in which various incentives are offered to those interested in setting up industrial projects. Among these incentives we mention the following:
- – one of the lowest rents for leasing land which will be used for developing industrial sites for a period of 5 years;
- – for the next five years, the rent is established at 550 EUR per 1000 square meters per year;
- – the installation of electrical power and unlimited telephone lines will be free of charge.
If you are interested in company formation in Cyprus in the Larnaca free trade zone, you can rely on our support.
Licensing and approval of stock records in the Larnaca free trade zone in Cyprus
An individual interested in starting to do business in the Larnaca free trade zone in Cyprus has forward an application in order to secure a land plot in this zone to the Ministry Of Commerce, Industry and Tourism. Then, he or she has to submit a relevant application with the Department of Customs & Excise.
Furthermore, the individual has to submit an application to the Director of the Larnaca customs office, in order to acquire the authorization to undertake business inside the free trade zone in Cyprus. Our Cypriot company formation experts can provide you further information on the procedure necessary in order to do business in this free trade zone.
The North Cyprus free zone
Another important Cypriot free trade zone is the North Cyprus free zone which was created under the provisions of the Free Port Trade Law. The North Cyprus free zone is located near the Famagusta Port which offers access to the Middle East which is why it is sought by international players in the logistics industry from Cyprus and the rest of the European Union.
Those who want to open companies in this free zone must also comply with the regulations set out by the Cyprus Company Law.
Opening a company in the North Cyprus free zone comes with many advantages, among which:
- – import and export activities which are exempt from several taxes, among which the income tax, the corporate tax, the withholding tax on dividends and the customs duty;
- – companies established in this free zone can repatriate profits to other countries free of any charge;
- – the authorities in North Cyprus free zone imposes no value added tax on the goods imported here;
- – foreign companies operating in this Cypriot free zone can also hire employees from their home countries;
- – the North Cyprus free zone offers the possibility of opening businesses in various fields, among which the most sought are gaming and cryptocurrency.
Those who want to open companies in the North Cyprus free zone need to consider that such a company requires at least two shareholders and a minimum share capital of 100,000 euros. The company will also need a manager and a secretary, however, there are no requirements in terms of their citizenship or residency.
If you need to know more about the free trade zones in Cyprus, or if you want to open a Cypriot company, we invite you to contact us.