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Types of Cypriot Companies

Types of Cypriot Companies

Opening a company in Cyprus is quite simple, and one of the first steps to take implies choosing a legal entity under which the local business will operate. From this point of view, the Cyprus Company Law offers various choices to foreign investors interested in setting up commercial operations here.

Below, our company formation specialists in Cyprus offer detailed information on the types of companies which can be incorporated in this country and the requirements related to the registration process. We specialize in offering customized company registration solutions to local and foreign investors in Cyprus.

Types of companies presented by our Cypriot company formation agents

When a foreign investor decides to set up a company in Cyprus, he must at first make up his mind upon the type of company that best suits his interests. The companies accepted by the Cyprus Companies Law.

 Quick Facts  
  Applicable legislation Cypriot Company Act 

 Availability of sole proprietorships (YES/NO)

 Yes, the sole proprietorship is available for registration in Cyprus.

 Availability of partnerships (YES/NO)

 Yes, general and limited partnerships can be created.

 Availability of limited liability companies (YES/NO)

– private limited liability company,

– public company

 Options for foreign companies

– subsidiaries,

– branches,

– liaison offices

 Share capital requirements

 For public companies, the minimum share capital required is €25.629.

 Particularities of sole traders

– one-person business,

– the owner is fully liable for the business,

– it may require special qualifications/degrees/specialization

 Requirements to create partnerships

 Any type of partnership requires at least 2 members who enter a partnership deed.

 Limited liability companies registration requirements

 Companies must be registered with the Companies House.

 Taxation of sole traders  personal income tax (20 – 35%)
 Taxation of partnerships

 personal income tax (20 – 35%) applied to each partner

Taxation of limited liability companies 

– corporate tax (12.5%),

– no dividend tax for non-residents

 Business registration timeframe

  Approx. 2 weeks

Special requirements for foreign investors/entrepreneurs 

 Foreign investors must apply for residence permits if they are non-EU citizens and want to live in Cyprus.

 Company formation services availability (YES/NO)  Yes, we can help you open a new company or buy a shelf company in Cyprus, based on your needs.

The following types of companies are available for registration in Cyprus:

  • – the sole trader or proprietorship is the simplest business form available in Cyprus;
  • – the companies with limited liability which are divided into three categories are the most popular in Cyprus;
  • – the general and limited partnership are also business forms which can be registered in Cyprus;
  • – foreign companies can register branch offices, subsidiaries, and representative offices here;
  • – those interested in enhanced asset protection and tax minimization tools can set up trusts in Cyprus.

It is also possible to start a business by purchasing a ready-made entity. The shelf company in Cyprus has no signed contracts and no bank account. In some situations, ready-made businesses may be the best tools for conducting business. A shelf business is just a regular limited company that has already been registered for your advantage. You can purchase one from specialized service providers that are active on the Cypriot market.

Our Cyprus company formation experts have prepared a video about the main types of legal entities:

The Cyprus private and public companies limited by shares

This type of company is the most popular in Cyprus. There is no minimum share capital required. It is necessary that one to 50 shareholders set up an LTD in Cyprus. They subscribe nontransferable shares and are liable to the company’s obligations only to the extent of their contribution. A private company which is entirely owned by foreign investors is also known as an offshore company or an International Business Company. Our experts incompany formation in Cypruscan give you more details about the LTD.

The private limited liability company is the most employed type of company in Cyprus because it can be used for various purposes. Among these, we remind the following:

  1. it can be used as a holding company and benefit from many tax advantages;
  2. it can also be used as a trading company and undertake a wide variety of commercial activities;
  3. it can be used as a financial company and investors can set up private banking institutions under it;
  4. it can also be registered as a company ready to be sold, also known as a shelf company.

Private companies can also be registered as exempt private companies and unlimited companies in Cyprus. Our specialists in company registration in Cyprus can offer detailed information on the characteristics of each type of limited liability company and can help you invest in Cyprus.

A public company limited by shares in Cyprus is quite similar to a private company limited by shares. However, the difference is that the shares are freely transferable and there can be as many shareholders as wished. Among the requirements of a public company is having at least 7 shareholders. The incorporation of a public company limited by shares requires approximately 26,000 euros as initial capital.

The Cypruscompany limited by guarantee

A company limited by shares has a similar structure to the one for limited companies, but it is usually a type of company established for non-profit purposes and charitable actions. Our Cyprus company formation agents can help businessmen open this type of company.

The Cyprus partnership

A general partnership in Cyprus can be formed by two to twenty individuals. The registration of the partners with the Registrar of Partnerships is mandatory. No capital is required. Partners are fully liable for this partnership to the extent of their private assets.

The difference between a general partnership and a limited partnership is that the latter must have a general partner who is fully liable for the company’s obligations and at least one limited partner who is liable to the extent of his contribution. Just like the general partnership, a limited partnership requires at least two partners who must register with the Registrar of Partnerships.

The Cypriot sole proprietorship

The main characteristic of a sole proprietorship in Cyprus is that the company is run by a single member with full liability. It is a simple and informal type of business, but still has to register with the Registrar of Partnerships.

Business structures available for foreign companies in Cyprus

Foreign companies interested in operating in Cyprus can set up subsidiaries, branches, and representative or liaison offices. The main differences between them reside in the types of activities they can undertake and degree of independence in relation to the parent company.

The subsidiary company will usually be registered as a limited liability company which will grant it the status of a Cyprus resident company. It is an independent type of company which can undertake other activities than the foreign parent company.

The branch office depends entirely on the parent company and its activities cannot be different from the foreign business’. The branch office is considered a Cyprus resident company

The last business form available for foreign companies is the representative office which cannot undertake any commercial activity. This type of structure is limited to completing marketing activities and acting as a contact point between the foreign company and potential clients and business partners in Cyprus.

The trust in Cyprus

The trust has become very popular in the last few years in Cyprus thanks to the tax advantages it offers to its settlor. The creation of a trust is based on drawing up the trust deed through which the settlor can protect his or her assets by leaving them to the desired beneficiaries.

A Cypriot trust is one of the safest ways of reducing the tax burden on the settlor and it represents a great tax and estate planning solution for foreigners.

All companies are also required to register for VAT in Cyprus.

How to register any type of company in Cyprus

The registration of a company in Cyprus implies the business owner’s identification papers in the case of natural persons or the company’s incorporation documents in the case of foreign businesses. To these, the application forms issued by the Trade Register in Cyprus need to be filled out and the Articles of Association of the new company need to be drafted and notarized.

Based on these documents, the new company will receive its certificate of registration and will be able to start its operations in Cyprus.

Company formation steps in Cyprus

Starting any type of company in Cyprus requires its registration with the Trade Register. Once the business form has been chosen and the investor has made sure he or she has met the requirements of the Company Law, the following steps need to be completed:

  1. the trading name reservation which is required to all legal entities except for sole traders,
  2. the preparation of the Memorandum and Articles of Association which is necessary for limited liability companies,
  3. the creation of the bank account with a local financial institution,
  4. the appointment of company directors and secretary (other officers can also be appointed),
  5. filing all required documents and application forms with the Companies House.

Once these steps are completed, the company must also register for VAT with the Cyprus Tax Office and apply for the business licenses it needs to operate.

VAT registration is usually completed at the same time with tax registration when a business owner wants to obtain the VAT number without having reached the mandatory turnover for registration. This is advisable for trading companies in order to avoid delaying the start of their operations.

Another aspect that need to be clarified when it comes to setting up any type of company in Cyprus is related to the documents they need to file with the Trade Register. There are different application forms for limited liability companies compared to the sole proprietorship which needs to file a specific form. In the case of partnerships and trusts, the partnership deed, respectively the trust deed must be drafted and notarized.

If you want to create a business in Cyprus and need advice on the registration steps, our specialists are at your service.

No matter the type of company one decides to open in Cyprus, there are three important fees to consider. These are the registration, the maintenance and the accounting fees. The first two must be paid with the Trade Register in Cyprus. The registration fee is paid once (upon the incorporation of the business), while the second one is paid on an annual basis.

When it comes to the accounting fees, these depend on the services the business uses. If you need accounting services we can put you in contact with our accountants.

The notarization of the incorporation papers in the case of limited liability companies and translations of various documents when opening branches and subsidiaries in Cyprus are also to be considered.

Each type of company has its own formation costs, however, you should know that this is not the most important aspect to consider when choosing the business form. Taxation and the size of the operations are more important aspects to consider.

If you cannot decide between two types of companies, the expertise and experience of our Cypriot company formation officers can be of help.

What to consider when choosing a Cypriot business form

Opening a company in Cyprus is not complicated no matter the legal entity selected, however, there are a few aspects to consider when choosing the business form. Among these, the activities to undertake are very important as they can determine the size of the company.

The liability of the owners is also important and, in this case, the only types of companies that offer limited liability are the private and public companies. This means that the owners will not be held accountable for the business’ debts and obligations with their personal assets.

On the other hand, there are the sole proprietorship which is intended for single entrepreneurs who specialize in certain fields, such as accountants, dentists, doctors and other similar professions and for whom this can be an appropriate business form to start.

Taxation is also important when choosing the type of entity to create in Cyprus. From this point of view, the income tax is the most important and local businesses must pay it on their worldwide income.

The following taxes and rates need to be considered in Cyprus:

  • the corporate tax rate is set at 12,5%,
  • to this tax, a Special Defense Contribution ranging between 3% and 30%,
  • the value added tax is levied at a rate of 19%, however, there are also several reduced rates available,
  • branch offices of foreign companies must also pay the 12,5% corporate income tax on the profits they earn in Cyprus,
  • subsidiaries are taxed as domestic companies on their entire profits.

If you have any questions on the taxation of companies, our company registration agents in Cyprus can offer tailored advice and personalized support.

For more information about the types of companies that can be established in Cyprus or matters regarding the taxes that must be paid by entrepreneurs, please contact our Cypriot company formation specialists. We remind foreign investors that they can rely on us for personalized company formation services in Cyprus and for specialized advice on choosing the right type of company in accordance with their needs.