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Company Registration in Cyprus: Guide on how to open a company in Cyprus
The Republic of Cyprus is a haven for entrepreneurs who need to set up a company, in most cases due to its dynamic relationship with global trade the favorable tax rates it offers and its strong legal framework. In connection with the above, a Cyprus company registration or relocating an existing business is the right decision.
But Cypriot company formation always has its pros and cons, which are definitely applicable in any country or jurisdiction (offshore, non-offshore, etc.)
Advantages and benefits of registering a company in Cyprus:
- The use of a nominee director and shareholder is permitted to ensure complete confidentiality and anonymity.
- The authorized capital of the company does not have to be fully paid in cash at the time of incorporation. You can pay it later at any stage.
- A legal entity, established in Cyprus is considered a company established by the European Union. Accordingly, this “belonging” is a good indicator for cooperation with serious companies around the world.
- Annual corporate expenses and maintenance costs are low compared to other countries.
- In order for the Cypriot company to make payments for services/works/goods, it is also necessary to have a bank account, which you can open anywhere in the world.
- You can receive your European Union VAT registration number within 48 hours.
- In the event that you choose to nominate nominees, you may obtain full power of attorney to carry out all or any of the Company’s operations that you desire.
- You can register a legal entity without visiting Cyprus, even if you are going to become a director yourself.
- You may have a virtual office in Cyprus as headquarters, a dedicated phone line, fax, email account, and office space to meet with clients.
- You can manage the established Cyprus offshore company remotely while doing business on the other side of the world .
- Tax benefits :
- the favorable tax legislation:one of the lowest corporate tax rates in Europe a mere of 12.5% on profits;
- exemption from participation in dividends;
- there are no taxes on the distribution of dividends or the payment of interest and patent rights (when used outside of Cyprus) to non-tax residents of Cyprus;
- there are no social security contributions for shareholders;
- dividends between Cypriot companies are tax-deductible, with tax deductions and dividends from foreign investments (according to criteria that are easy to meet);
- capital gains tax is levied only on real estate located in Cyprus or on the shares of a private company owning property in Cyprus;
- profits from the sale of securities (including shares) are not taxable;
- – business reorganization (for example, through a merger, acquisition or division) is not taxed;
- profits earned by a permanent establishment abroad (outside Cyprus) are not taxed. This fact once again testifies to the attractiveness of Cyprus for foreign investors;
- a company in Cyprus pays only 2.5% tax on all profits from owning or trading intellectual property rights such as patents, trade names, trademarks, music, sports or science rights, etc.
- The registration of a Cyprus company entitles the real owner and his family members to a long-term visa for two years (with the possibility of extension) and a work permit.
- A Cypriot company may be re-registered abroad in any other country.
- Cyprus has signed dozens of double tax treaties around the world (with more than 55 countries).
- You can also obtain a Cyprus forex license, which allows you to engage in foreign exchange activities and operate as a regulated financial institution. This license provides credibility and regulatory oversight, making it an attractive option for those involved in the forex industry. With a Cyprus forex license, you can conduct your forex business with confidence and benefit from the favorable business environment Cyprus offers.
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How to open a company in Cyprus
- Choose the right legal entity. The most important and first step during the process of organizing your business will be to determine the structure to be used. By understanding your business objectives and activities, our team of dedicated consultants will recommend the most appropriate legal entity for your business;
- Select and reserve a unique name for a future legal entity with the Companies Register;
- Determine the amount of share capital;
- Identify the future shareholders: the legislation governing the formation of a company in Cyprus provides that there must be at least one registered shareholder;
- Appoint directors: there must be at least one director – directors can be of any nationality;
- Choose a secretary: a company established in Cyprus must have a secretary;
- Have a certified copy of the passport and current utility bill of each of the owners and shareholders to meet Anti Money Laundering Requirements. This is required even if you plan to use a nominee service.
- Register your office: every legal entity, registered in Cyprus must have a registered local office;
- Define the scope of activities of the future business: this action is necessary for the Memorandum and Articles of Association of the future company;
- Based on the above information, prepare the necessary documents for the incorporation;
- Having a set of all necessary documents, the next step is to submit them to the Cyprus Registrar of Companies and further confirmation of the documents provided by you.
- Submit the relevant fees and get the result. If you provide all the required documents, information, and fees, you will most likely become the owner of a business registered in Cyprus.
- The final stage of creating a new company is registered with the Tax Department. The Cyprus legal entity also needs to obtain registration for VAT and social security contributions.
- In order to make payments, every business must have an open corporate bank account.
- In addition, it is worth remembering that depending on the type of business you plan to engage in Cyprus, there may be a need to issue permits: you will need to apply for various special licenses or permits. It is the presence of such documents that will allow you to legally engage in business, the creation of which you will spend some time. In order not to be distracted by the above (but such mandatory nuances), you should contact specialists who will take into account all your wishes and Cyprus company formation without any problems!
Required documents for setting up a company in Cyprus
Investors who wish to organize their business in Cyprus must prepare the following documents and provide the following information with the Cyprus Trade Register:
- name approval consent;
- original Memorandum and Articles of Association;
- declaration form (known as HE1 form);
- declaration of registered office address Form concerning (known as HE2 form);
- form containing details on the legal entity Directors and Secretary (known as HE3 form);
- list of employees who will act as directors, in case of a public company (HE5).
At the end of the registration process, the following documents will be issued:
- Certified Memorandum and Articles of Association;
- Certificates of Incorporation;
- Certificates of Shareholders;
- Certificates of Directors and Secretary;
- Certificate of registered office address;
- Share Certificates.
To register with the tax department, the Cyprus legal entity must provide the following documents:
- Form 162 which is filled out for registration as a taxpayer with further receipt of a Tax Identification Number (TIN);
- Form 101 for registration for VAT ( filled out when the VAT limit is reached or by willful registration).
Choosing a business entity
The most important and first step in setting up your Cyprus business will be to decide the structure to use. After understanding your business goals and activities, our team of dedicated consultants will recommend the most suitable corporate entity for you to carry out your business.
The main legislative body governing the rules and policies of corporations in Cyprus is the Companies Act, Chapter 113. Depending on the type of legal entity you want to set up, you need to follow the relevant procedures and set up the most suitable company to meet your needs.
Types of companies in Cyprus
There are two types of companies falling into this category, namely Private Limited Liability (Ltd) and Public Limited Liability (PLC). The above types of Cypriot legal entities differ by the size and the number of shares they have.
For a Private Limited company there is no need for formation, there is no a required minimum amount for the capital shares. The shareholders subscribe for shares, both monetary or non-monetary, which have an appropriate nominal value and which, in turn can not be transferred. The liability for the company’s debts and obligations is appointed to each member to the extent of the nominal value of their respective shares. The maximum number of partners to such type of legal entity is up to 50.
A minimum share capital requirement for a Public Limited company is approximately €25,650. The main characteristics of this type of company are the same as those of a limited liability company, but with the difference that there is no limit to the number of partners that can register. In addition, the shares are freely tradable, and the minimum number of shareholders is 7 people.
Partnerships
There have been several amendments on the law regarding Partnerships; the most recent ones are specified in the Partnerships and Business Law, Cap. 116.
There are three types of Partnerships, namely the General Partnership, the Limited Partnership and the Limited Liability Partnership (LLP).
For the first two types of partnerships is 2 participants as a requirement, and the maximum number is 20. It is worth noting that there are no restrictions on the number of partners that can join a Limited Liability Partnership, although it is also mandatory start with at least two.
In an LLP, the limited partners can either be legal or natural persons, or both. It is required to have at least one of them as the general partner, who will hold unlimited liability for the debts and obligations of the partnership. The rest of the limited partners will have no liability for such debts and obligations, but rather, their liability will be limited to the amount of their contribution within the shares of the partnership.
Sole traders
If you are one of those people who want to manage companies and control all processes on their own, a sole trader is the most suitable choice. This is a business in its simplest form and there are no requirements for the authorized capital for sole traders, and the obligations lie solely with the owner.
International trust
International trusts are mostly used for tax planning purposes by non-resident settlors and beneficiaries since they offer full foreign ownership and no income or estate taxes. At least one of the trustees must of this international trust must be a permanently resident in Cyprus. In addition, it is worth adding that trust property can include both movable and immovable property in Cyprus and/or abroad, as well as shares in Cypriot companies.
Additional forms of doing business: branch, representative office or subsidiary
If any foreign legal entity is interested in entering the Cypriot market, then the owners can create branches, representative offices or subsidiaries that will operate in the country as a continuation of these companies. Depending on the agreement made between the shareholders, this type of additional form of economic activity can either operate as an extension of the original company or can be established as a separate legal entity where, for example, a Cypriot company has a foreign legal entity as its shareholder.
Company name
When you decide to set up a company in Cyprus, apart from choosing the form of a legal entity, one of the first and most important issues is the choice of the name of the company. When choosing a name, don’t forget about the legal requirements behind choosing a legal entity name. Any name requires the approval of the Department of Registrar of Companies and Official Receiver. Company name reservation in Cyprus is valid for six months. During the specified time period, the applicant can submit the remaining documents for company registration. Also, the Trade Register will keep the business name in its archives until the Cypriot company is dissolved and an application for removal is submitted.
When and how to apply
Obtaining approval of a proposed name for a new business will be one of the very first steps taken when starting a Cypriot company formation. The application must be filed with the Department of Registrar of Companies and Official Receiver in the prescribed form and upon payment of the prescribed fee.
What information does the Registrar require?
The application includes details of the proposed name, as well as a description of the nature of the business, the meaning of the words, and the names of the directors or partners. The company or trademark statement must also be included.
What names are allowed
In general, you have complete freedom in choosing the name of your future business. An appropriate company name in Cyprus must be unique otherwise the Trade Register will not consider the application. The purpose of choosing a legal entity name is to identify that company and (at the same time) distinguish it from other service providers, so names will be rejected if they are objectionable, for example:
- the name is similar or identical to the name of another existing registered business;
- common name;
- the name is descriptive;
- the name is misleading (for example, if it suggests a non-existent royal/national or international connection);
- the company name represents a geographic location.
In addition, certain types of businesses are only allowed to include certain terms in their name, for example, words such as «Financial Services» can only be used by companies registered as such with the Cyprus Securities and Exchange Commission. Similarly, the name «insurance» or «bank» could only be used by registered entities.
Names may be registered in any language using the Latin alphabet, provided that, in the case of a foreign language, a translation of the name is provided with the application.
Name change
If a Cyprus company formation, the name may be subsequently changed by a special decision of the company. In this case, the approval of a new name will be required. The name change will neither affect the rights or obligations of the legal entity that existed prior to the change nor will it invalidate any pending litigation.
Status
In the case of a limited liability company, the name must be followed by the words «limited or «ltd» after the name of the company. Similarly, Public Company Limited» or «P.L.C.» must follow the names of public companies. The result of this is to indicate to persons dealing with the legal entity its status.
Applying for company registration
Once your proposed name has been approved and provided that you have made the appropriate decisions regarding the formation of your company, you may proceed with the business registration application, either electronically or manually/by mail.
Online company registration:
In the case of online registration, you must receive a username and a password. They are formed within 4 business days.
Regardless of the type of legal entity, an application for registration can be submitted online through the electronic filing system, together with:
- a statutory declaration (form HE1) signed and sworn before the court by the entrusted lawyer;
– the Memorandum and Articles of Association in accordance with the proposed type of the company, duly signed in the Greek language. In case a private or public limited liability company with shares chooses to adopt, as its Articles of Association, the regulations contained in Table A of Schedule I of the Companies Law, a relevant document should be submitted which refers to the title of the regulations that are being adopted; - a solemn declaration of the witness of signatures is completed;
- a certified translation of the Memorandum and Articles of Association into a language other than Greek. A certified translation of the specified documents by an affidavit or by a sworn translator of the Republic of Cyprus is also allowed, in case you wish to create a file of translations for obtaining certified copies of the Memorandum and Articles of Association in a foreign language;
- permission, consent or prior approval of the relevant state body or the relevant body in case it is necessary for the use of certain words or phrases and/or in connection with the business activity, in case the listed documents were not submitted together with the application for approval of the name.
To accelerate the business registration process, an additional fee must be paid.
When registering a public company you also need to submit form HE5 with payment of an additional fee.
Registration of a company by hand/post:
it is possible to register a legal entity manually or by mail by sending the following:
- a statutory declaration (form HE1) signed and sworn by the entrusted lawyer before the court;
- a notification of the business’s registered office address (form HE2);
- a notification in relation to the information of the company’s first directors and secretary (form HE3);
- the memorandum and articles of association in accordance with the proposed type of legal entity duly signed in the Greek language. In case a private or public limited liability company with shares chooses to adopt as its articles of association the regulations contained in Table A of Schedule I of the Companies Law, a relevant document should be submitted which refers to the title of the regulations that are being adopted;
- a certified translation of the Memorandum and Articles of Association into a language other than Greek. A certified translation of the specified documents by an affidavit or by a sworn translator of the Republic of Cyprus is also allowed, in case you wish to create a file of translations for obtaining certified copies of the Memorandum and Articles of Association in a foreign language;
- permission, consent or prior approval of the relevant state body or the relevant body in case it is necessary for the use of certain words or phrases and/or in connection with the business activity, in case the listed documents were not submitted together with the application for approval of the name;
- the fee and an additional fee in case an accelerated procedure is required. Payments can be made, in cash, by cheque, through an account maintained with the Department of Registrar Companies, or through bank transfer;
in case a public company is incorporated, the submission of form HE5 is also required, with the payment of an additional fee.
Opening a corporate bank account
In order to be able to pay for services and accept money for services already rendered or work performed, a business must have a bank account.
The opening of a corporate bank account remains mandatory when registering a Cypriot legal entity , as it is part of the incorporation procedure. At the first stage, the corporate bank account is used to deposit the share capital of the future business, and then it is used for business transactions. Foreigners and investors interested in setting up a business in Cyprus can start the opening procedure before arriving in the country – they can open a Cyprus bank account online.
If a legal entity plans to open a corporate bank account in Cyprus, it will need to provide the following documents to complete the KYC procedure:
- Memorandum and Articles of Association of the company;
- Certificate of state registration of the company;
- Certificate of shareholders of the company (if any);
- a document that confirms the positions of the director and the secretary – Certificates of Directors and Secretary;
- a document confirming the legal address of the company registration
- Certificate of the Registered Office;
- a proof of business address issued by the Group Principal Trading Offices;
- a Certificate of good standing for foreign companies if they have been opened for over 2 years;
- an application bank form (each bank has its own sample);
- website.
In order to open a bank account in Cyprus for a Partnership the following documents must be submitted:
- the Partnership agreement;
- the Certificate of Incorporation;
- a Certificate of the partners;
- a Certificate of Good Standing for foreign partnerships if they have been registered for over 2 years;
- proof of the registered office;
- an application, the form of which you can find in the bank ;
- website.
For all signatories, directors, shareholders, and ultimate beneficial owners, the following are required:
- сertified identification documents (passport, id, etc);
- proof of address (recent up to 3 months original utility or certified copy);
- information about the different trading partners of the company and the countries funds will be transferred to and received from
- in certain cases the banks might also ask additional documents such as sales contracts etc.
Banks usually require an update of the above documents and information every two years and in certain cases every one year.
The main advantages of opening a bank account in Cyprus include the following:
- fast opening process;
- documents can be submitted by fax or e-mail;
- no minimum initial deposit required;
- bank commission is low;
- provides an online banking solution.
Financial reporting and tax liabilities
Legal entities established in Cyprus should annually submit:
- tax return;
- financial statements containing a report of an independent auditor;
- an annual report containing information on shareholders, secretaries, and directors;
- a financial report compiled in Greek.
The above reports are filed with the Department of Cyprus, with the exception of the report in Greek, which is filed to the Registration Chamber.
Even in the absence of activity of the company and the absence of accrued taxes, a c Cypriot legal entity must provide reports certified by an auditor.
Annual Income Tax Return
Legal persons-resident in Cyprus are required to complete and submit to the Department of Inland Revenue an annual the company’s Income Tax Return (Form T.D.4).
The annual Tax Return for all Cypriot legal entities (including small companies) should be based on the Company’s standalone financial statements.
Cyprus Tax Laws require the TD4 to be based on the Company’s audited financial statements and be accompanied by an Auditor’s Confirmation of compliance.
The cost of register company in Cyprus
When registering a business, all payments can be divided into such types as:
Registration Fee
This fee is only payable once, and that is for setting up a legal entity. Many companies in Cyprus shell out €1200 for registration, and this amount varies depending on the service provider.
First, you must ensure that the service provider you connect with will cater to your needs even after establishing the business.
Second, check what is included in the price. Service providers ask for very low fees but charge additional payments for basic company documents that you will need.
Annual Fees
This is a regular fee that you must pay. Annual fees are for nominees, secretary, and registered office services.
The nominees are usually divided into shareholders and directors, and these are lawyers or accountants who keep clients anonymous. To calculate the annual fee, the legal entity must have a registered office in Cyprus and appoint a secretary.
Accounting and auditing fees
These fees included in registering a company in Cyprus depend on the number of transactions carried out each month or year and whether the legal entity employs an accountant from a large or small firm.
Your Cyprus business must register with the Inland Revenue Office and register for a tax number. Your company must file audited accounts and pay taxes every year. Depending on their setup, some companies may also receive a VAT number and register with the VAT Department. They must also file VAT returns every three months if they do so.
Accounting and auditing fees range from €1200 plus VAT per year and can increase depending on the needs in view of economic activity.
Annual fees payable to the Registrar of Companies
Two types of fees are paid annually to the Registrar of Companies. First, it is the Annual Return. The legal entity must file an annual return with the Registrar of Companies every year. They must submit a report on changes in the company during the year, such as changes in equity, shareholders or directors. To do this, you will need a documentary seal, which costs €100.
After that, the fees will depend on the fees that the accountant or attorney charges for preparing and filing the report.
The second fee is a Special Government Levy which requires all businesses in Cyprus to pay a fee of €350 by June 30th of each year.
For a group of companies, the total fee is limited to €20,000, which must be equally divided among the companies. Late submissions will be subject to a 10% penalty for the first two months and 30% for late submissions within five months.
Companies that fail to pay the annual fee for a certain period of time may be struck off the register of companies. If a legal entity wants to restore following the deletion from the company register, it needs to pay €500 within two years after the date of deletion from the company register. For two years, the restoration fee is €750.
If the legal entity is in liquidation and the process was started before June 30, it is no longer required to pay the annual levy.
Actual general and charges fees for your Cyprus company can vary considerably but will generally include the costs described above. The total cost of the service will depend on the management model of your business, personal tax circumstances and the requirements of the owners.
The average timeline Cyprus company registration:
It usually takes between 10 to 15 working days to complete the company formation in Cyprus: from the moment of submitting an application to the Registrar of Companies for approval of the name of the future business until issue of company’s official documentation (Certificates of Registration, Certificate of Board of Directors and Secretary, Certificate of Shareholders and Office Address, Authentication of company memorandum and Articles of association) as well as submitting applications to the Tax department for obtaining a Tax Identification Number and an application for opening a bank account in Cyprus.
The legal requirements for setting up your company in Cyprus:
- Name approval
The permission to use the name is issued by the Cuprus Registrar of Companies. The Registrar may refuse to issue a permit if a name is too similar to existing ones, or is found to be misleading or too generic. - Share capital
The standard authorized share capital is €1,000. There is no minimum paid-up capital requirement. The class of shares may include registered shares, preferred shares, redeemable shares, and shares with or without voting rights. - Shareholders
The minimum number of shareholders can be one, and they can be both individuals (Cyprus residents /non-residents) and legal entities. Trusts can also be shareholders of a Cypriot legal entity. - Registered office
Each legal entity registered in Cyprus must have a Cypriot registered office (a local registered address) where the official documents of the company will be kept. - Secretary
Cyprus companies must appoint a secretary. - Directors
The legal entity must have at least one director, and they can be either corporate or physical persons (individuals). Although there is no requirement that the director(s) are local, we recommend that the majority are Cyprus residents, so that the company is considered to be a tax resident of Cyprus. - Annual general meeting
All Cypriot corporations must hold a meeting of shareholders. The annual general meeting must be held eighteen months from the date of incorporation of the company. After the expiration of the above period, the legal entity must hold an annual general meeting of shareholders every year and no later than fifteen months after the previous one. - Accounting and audit
Cyprus companies are required to file accounts. Under the International Accounting and Auditing Standards, Cyprus businesses also must be audited annually by a firm of auditors.
Problems of starting a business in Cyprus
The problems of starting a business in Cyprus include the following points:
- all shareholders and director’s details of a Cyprus legal entity are available for public viewing on the Cyprus Departament of Registrar of Companies website, which may not be suitable for foreign investors seeking anonymity;
- setting up a legal entity with large share capital in Cyprus can be costly as the government fees for such creation are tied to the amount of authorized share capital allocated to the new company;
- since Cyprus is a member of the EU, information about the founders and shareholders of companies registered in Cyprus is publicly available;
- foreign investors looking to set up their business in Cyprus must commission the service provider or law firm must be resident in Cyprus;
- foreign and local companies looking to open a corporate bank account in Cyprus must be introduced to the specific bank by a locally registered fiduciary who must complete a thorough due diligence process with the client;
- in order for a Company to benefit from the tax benefits of several Cyprus tax treaties and the corporate tax rate of 12.5%, the legal entity must appoint at least one director, who must be resident in Cyprus;
- in order to open a corporate bank account for a foreign or local business in Cyprus, you will need the help of a local trustee who will help you pass the verification procedure with the bank;
- tax resident companies are required to annually submit to the Cyprus Inland Revenue Department all the financial accounts and file tax returns by the 31st of March following of the fiscal year;
- Regulations and procedures for government projects are carried out exclusively in Greek. International business owners should take heed to prevent any potential conflicts and misunderstandings.
Conclusion
Cyprus is one of the most favorable European environments for establishing a company or business, which is why it is called the gateway to the common European market due to its favorable tax policy, economy and other foreign investment laws. If you are planning to set up your own business from scratch or as an extension of an existing one, you are advised to register a company in Cyprus. You will find the procedures simple and fast, and the benefits are greater than in most European countries.
