The subsidiary company will operate as an extension of a foreign company in Cyprus, however, it will have full autonomy in running its operations. The subsidiary company is registered as any other domestic company in Cyprus.
Below, our Cyprus company formation specialists explain how to register a subsidiary here. We can help you through every step of the business registration procedure.
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The main features of subsidiaries in Cyprus
Cyprus has a modern offshore legislation, a stable jurisdiction and the lowest corporate tax rate in Europe (10%). With these advantageous conditions, one of the business opportunities in Cyprus are the subsidiary companies, which represent entities that are owned and managed by a parent company that owns more than 50 % of the shares.
| Quick Facts | |
|---|---|
| Applicable legislation (home country/foreign country) | Foreign country’s legislation (Cypriot Company Act) |
|
Best used for |
– Trading activities; – commercial operations; – e-commerce activities, etc. |
|
Minimum share capital (YES/NO) |
Approx. EUR 25.630 when registered as a public company |
| Time frame for the incorporation (approx.) | Approx. 20 business days |
| Documents to be filed by parent company |
– Information about the foreign company; – Articles of Association of the subsidiary; – proof of Cyprus-based legal address; – bank account reference; – details of company director(s). |
| Management (Local/Foreign) |
The subsidiary can have a foreign manager who must hold a residence permit if he or she is a non-EU citizen |
| Legal representative required (YES/NO) |
Yes, a local representative is required for a Cypriot subsidiary |
| Local bank account (YES/NO) |
Yes, a subsidiary company must have a local bank account |
| Independence from the parent company |
The subsidiary is an independent business form |
| Liability of the parent company | The parent company is exempt from any obligations incurred by its subsidiary |
| Corporate tax rate |
12.5% |
| Annual accounts filing requirements |
Annual returns must be filed no later than 28 days from the date of their creation |
| Possibility of hiring local staff (YES/NO) |
Yes, a subsidiary can hire local workers |
| Travel requirements for incorporating branch/subsidiary (YES/NO) |
No, there is no need to travel to Cyprus in order to set up a subsidiary |
| Double tax treaty access (YES/NO) | YES, Cyprus has more than 50 double tax agreements in place. |
Those who want to set up subsidiary companies in Cyprus must know that this business structure falls under the Company Law which means it has to respect the same incorporation conditions, requirements in terms licensing, management and accounting like local companies.
The Cyprus subsidiary can be characterized by:
- the fact that its main shareholder will be a foreign or local company (it can also have a partner and be registered as a joint venture);
- it is an independent company and does not need to obtain permission from the parent company in respect to the operation it can complete;
- it can complete the activities of the parent company, however, additional undertakings can also be completed;
- in terms of licensing, the subsidiary needs to obtain its own business licenses, as it cannot operate under those of the parent company
- the subsidiary company will need to appoint a secretary, just like in the case of local businesses;
- from a taxation point of view, the subsidiary will be treated as any other Cypriot company;
- the Cyprus subsidiary must have a registered address and bank account in this country.
Often, the subsidiary is compared to the branch office and the representatives of foreign companies interested in operating in Cyprus can obtain complete information on both structures from our local consultants.
Setting up a subsidiary – a process described by our experts in company formation in Cyprus
Opening a subsidiary in Cyprus can be the choice of a foreign investor, considering the benefits he can obtain from the Cyprus policies regarding his protection as a creditor and the taxes system. A Cyprussubsidiary is regarded as a legal entity and must keep its own accounts. The financial accounts and an annual audit report is required by the Companies Act, and have to be submitted to the local Tax Authorities and Cyprus Company Register.
Our experts in company formation in Cyprus created the simple scheme below presenting the main advantages of a subsidiary.
In Cyprus the forms under which a subsidiary can be organized are: private company limited by shares (LTD) and public company limited by shares (PLC). In the first case, the number of shareholders can be between 1 and 50 while for public limited companies there are no restrictions regarding the number of shareholders. Another difference between these two types of Cyprus companies is related to the required capital: for public companies the minimum share capital is 15.000 CYP, while for private entities there aren’t any minimum requirements for the share capital.
The registration of a subsidiary company in Cyprus can take from 10 to 18 working days and the first step of the process is to choose a name for the company and submit it to the Registrar of Companies to be approved. After you obtain the approval (the answer can take between 3 to 6 working days) the registration process can be continued. The next step is to submit the documents regarding the shareholder’s information and also about board members, the company name and address and its activity, along with a lawyer’s conformity declaration. Our Cyprus company formation experts can help you during the entire process of registering a subsidiary in the country. Would you like to open a company elsewhere, for example in Jersey? Our partners from CompanyFormationJersey.com are at your disposal.
Documents required for opening a subsidiary in Cyprus in 2023
When opening a subsidiary in Cyprus, the foreign company must prepare the Cypriot company’s Memorandum and Articles of Association, however, its statutory documents and certificate of incorporation issued by the Trade Register in its home country are also necessary.
When compared to the branch office, it is useful to know that the subsidiary does not need to run under the same name of the parent company like in the case of a Cypriot branch.
The subsidiary will also need to have a registered address in Cyprus, and for this, it must secure a rental agreement for the space used for the address. A virtual office can be used in the initial stage of the company registration procedure in Cyprus. This service can be provided by our agents in Cyprus.
Our Cyprus company formation advisors can assist with the drafting and verification of all documents which need to be prepared upon the incorporation of a subsidiary in this country.
Certificates issued after the registration of the subsidiary
As a reply to your appliance the following certificates will be issued:
- – Certificate of Incorporation,
- – Certificate of Shareholders,
- – Certificate of Directors and Secretary
- – Certificate of Registered Office Address.
The subsidiary company in Cyprus must be then registered at the following ministers: Minister of Commerce for the corporation tax (the tax on the annual profit of a company), Minister of Finance for the VAT tax and the Ministry of Labour for Social Contribution.
We also have an infographic on the subsidiary:
Taxation of a subsidiary in Cyprus
As mentioned above, the subsidiary is treated as any other Cypriot company and this also applies when it comes to taxation. Subsidiaries must register for taxation and VAT with the Cypriot authorities and pay the corporate tax on their worldwide income.
The corporate tax is levied at a 12.5% rate in Cyprus to which the Special Defence Contribution applies. Its rate is 30%.
Cypriot subsidiaries must comply with the accounting and reporting requirements imposed by the local tax authorities, however, they must also submit financial information about the parent company. Subsidiaries are also subject to the value added tax provided that VAT registration has been completed in Cyprus.
If you need information about the accounting and reporting requisites applied to foreign companies operating in this country, our agents can advise you. We can help you open a company in Cyprus, no matter if you are a single entrepreneur or the representative of a foreign company.
Our agents can offer more information on the taxation of subsidiaries in Cyprus in 2023.
Advantages of the subsidiary in Cyprus
As many companies do a lot of research before deciding for a branch or a subsidiary, our specialists in company formation in Cyprus have prepared a list with the advantages and benefits of the subsidiary. Among these are:
- – the registration costs and maintenance of a subsidiary company are quite low in Cyprus;
- – the procedure of incorporating a subsidiary here is also time-effective, as the procedure is simple;
- – Cyprus has one of the lowest corporate taxes in the EU which favors local companies, such as subsidiaries;
- – in terms of tax reliefs, a subsidiary can benefit from many such benefits, among which foreign tax reliefs;
- – the distribution of profits to non-residents is also made under very advantageous conditions;
- – subsidiaries can also take advantage of Cyprus’ agreements for avoidance of double taxation.
The Cyprus VAT registration procedure may also be assisted by our company registration agents. They can assist both domestic and foreign companies dealing with VAT-taxable supplies in getting local VAT numbers once they reach the necessary minimum turnover. For thorough details about our services, get in touch with us.
Here is also our video on the Cypriot subsidiary:
Why open a Cyprus subsidiary in 2023?
The decision of opening a subsidiary can be influenced by various factors and our company formation representatives in Cyprus can help you choose the right business form.
Among these, European companies can expand their operations through Cypriot subsidiaries in 2023, especially if they target the trading sector. The simplified company registration procedure is one of the main reasons to choose this business form.
Cyprus is one of the most prolific economies in Europe and it attracts many foreign investors who can set up various types of companies in 2023.
Starting a subsidiary in Cyprus in 2023 implies incorporating a domestic company and obtaining various licenses and permits which are easy to acquire.
The economy of Cyprus is predicted to grow by 2.5% in 2023, far more than the 0.5% average for the Euro Area. The shipping industry has been a key factor in Cyprus’s economic success in the past few years. Consumer and business confidence somewhat improved in January 2023.
Please contact our Cypriot company formation specialists for further details and personalized consultancy regarding the procedures and regulations for subsidiaries establishment in Cyprus.