Company Formation Cyprus
Updated on Friday 18th January 2019
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Cyprus is considered a tax haven for foreign companies due to its flexible taxation system, pro-investment legislation, and a stable economy.
Offshore company formation in Cyprus is popular among foreign investors as the country can be used as a location from where investments can be routed within the EU or as a portal for investments outside of Europe, in the Middle East or Africa. The country’s geographical position comes as a great advantage for investors who wish to be close to the EU market as well as have easy access to Africa and the Middle East, at the same time benefiting from one of the lowest tax regimes in Europe.
There are no restrictions on foreign company ownership nor on the nationality of company directors. Foreign entrepreneurs have the same rights to open a company as local investors.
Our Bridgewest offshore incorporation agents in Cyprus can assist foreign investors interested in opening a company in Cyprus. Below, we present the main requirements for opening a business as well as the principal forms of business entities. We can provide complete company incorporation assistance for any of the business forms described in this article and we can also provide tax and double taxation counseling.
Offshore company formation in Cyprus is popular among foreign investors as the country can be used as a location from where investments can be routed within the EU or as a portal for investments outside of Europe, in the Middle East or Africa. The country’s geographical position comes as a great advantage for investors who wish to be close to the EU market as well as have easy access to Africa and the Middle East, at the same time benefiting from one of the lowest tax regimes in Europe.
There are no restrictions on foreign company ownership nor on the nationality of company directors. Foreign entrepreneurs have the same rights to open a company as local investors.
Our Bridgewest offshore incorporation agents in Cyprus can assist foreign investors interested in opening a company in Cyprus. Below, we present the main requirements for opening a business as well as the principal forms of business entities. We can provide complete company incorporation assistance for any of the business forms described in this article and we can also provide tax and double taxation counseling.
What are the requirements for company incorporation in Cyprus?
Some of the conditions that apply for opening a company in Cyprus are as follows:
- any person - no matter his or her nationality or residency - can be a director or a shareholder in a company in Cyprus;
- the shareholders of a Cypriot company can be individuals or other legal entities;
- the company must have a local registered office (BridgeWest offers this type of service);
- Cypriot companies require by law to appoint a secretary (BridgeWest can help you in that regard);
- it is possible to have nominee directors and shareholders in Cyprus.
The registration procedure for a company in Cyprus is largely the same for any type of structure. The first step to take when incorporating a company in Cyprus is to choose three names for the company and submit them for approval. The following step for company incorporation is the filling of a standard form that must contain information about the shareholding structure of the company and the business activities it will operate. Together with this form, there are other documents that must be submitted:
- copies of the identification documents of the founding members,
- recent utility bills stating the residence address of the owners of the company,
- the articles of association,
- the certificate of incorporation,
- a certificate of good standing.
The articles of association must contain data regarding the company’s name, the board of directors, the shareholders’ names and addresses, the company’s registered office and the object of activity. According to the Cypriot laws, all types of companies require a secretary; therefore the secretary must also appear in the articles of association. Our offshore company formation specialists will help you draft the company’s articles of association and related documents. Once the incorporation documents are complete, they are submitted to the Registrar of Companies in Cyprus. After the incorporation process is concluded, the founders of the Cypriot company will receive a certificate of incorporation, a certificate of shareholders, a certificate of directors and secretary and one of the registered office address.
The final step after a company has officially been registered as a legal entity is to register for tax purpose with the Tax Department belonging to the Ministry of Finance. This is needed for those companies that will also be registered for VAT and for all companies, irrespective of they are VAT taxpayers or not, it is required in order for the new business to receive a tax identification number.
What are the types of companies in Cyprus?
The Cypriot private limited company is the most common type of company and it is allowed to have at least one shareholder and a maximum of 50. Cypriot limited companies must have both a local registered office and a company secretary in order to comply with the current regulations. There is no minimum share capital required to start a limited company, but a start-up capital of 1,000 euros is recommended. The capital contributions can be made in cash or in kind and it cannot be transferred. The liability of the shareholders will be to the extent of the nominal value of their contribution. This type of company cannot be traded on a stock exchange. We recommend the next type of company for those investors who wish to publicly trade the company shares.
The private limited company is required to have a minimum of one director, however, he should not act as the secretary unless the company has only one shareholder. The director can be an individual or another legal body and there are no restrictions regarding nationality. Private companies with only one shareholder are not required to hold an annual general meeting, however, they must keep a record of the decisions taken by the company's only member.
The Cypriot public company requires a minimum share capital of approximately 25,600 euros, it has no limitation for the maximum number of shareholders but it must have a minimum of seven members. Unlike the private company, the shares can be traded on the stock exchange. For this company, at least two directors are needed and they can be natural or legal persons with no restriction on nationality. In practice, it is common for a company to have a director who is a Cypriot tax resident. This type of company is expected to hold an annual general meeting and can hold an extraordinary meeting when requested by the company members.
A company can pass certain decision only by means of approval through a special resolution. This applies when the changing of the company name is brought into question or when the objectives of the company, as included in the Articles of Association, need to change. The same applies in case of a capital reduction or when it is time to wind-up the company.
A company can pass certain decision only by means of approval through a special resolution. This applies when the changing of the company name is brought into question or when the objectives of the company, as included in the Articles of Association, need to change. The same applies in case of a capital reduction or when it is time to wind-up the company.
What are the taxation and reporting principles in Cyprus?
Cyprus is has a low-tax regime that is considered one of the most attractive in Europe. The main taxes for companies are the corporate income tax of 12.5%, the capital gains tax, with rates of 0% or 20%, the special defense contribution with three different rates of 3%, 17% and 30% that apply differently according to income and the value-added tax with a 19% standard rate with reduced rates of 9%, 5% and 0% for certain types of goods and services. There is no withholding tax on dividends or interest and the withholding tax on royalties is either 0%, 5% or 10%. In addition to the reduced income tax rates, Cyprus also has a wide range of double taxation treatments that allow companies to avoid double taxation on all types of income when they derive profits both from Cyprus and from another jurisdiction with which a double tax treaty is signed.
As far as administrative requirements are concerned, the tax year in Cyprus is the same as the calendar year and filing is performed electronically. Companies make two provisional tax payments for the current year in July and in December and any remaining balance is due in August the following year.
In some cases, an exemption from the profits tax can apply to foreign permanent establishments.
What company formation services does our team offer in Cyprus?
Our team of Cypriot offshore company formation agents can assist foreign investors who wish to open a company in the country. Some of the main services we provide are the following:
- draw up the articles of association: these can be signed through a power of attorney (Cypriot laws require power of attorney for any public notary proceedings);
- draw up the company's constitutive documents: the directors need to provide a specimen of their signature, copies of their identification papers, the filled in application form from the Company Registration Office and others.
- arranging public notary proceedings (all procedures for company incorporation are done in front of a Cypriot public notary);
- arrange for a registered office in Cyprus on demand: the registered office serves as headquarters for the company in Cyprus and it will be made public;
- open up a bank account for the company in Cyprus: BridgeWest will help you in setting up the share capital bank account, as well as a current bank account once the company is incorporated.
- recommend a Cypriot accountant, as accounting services are needed for new businesses in Cyprus.
Contact our offshore incorporation agents in Cyprus for more information about how we can assist investors with complete company registration services.