Company Formation and Registration in Cyprus

As mentioned earlier, Cyprus enjoys one of the mildest tax rules in Europe. Resident companies pay 12.5% ​​corporate tax. The profit is taxed regardless of the source and origins of its formation. Non-residents pay corporate tax only on income earned within the country.

Income from the sale of securities, dividends, interest income that does not arise from the ordinary (activities of the business, income from a permanent representative office abroad (subject to certain conditions), income in the form of exchange differences (forex), except exchange differences related to foreign exchange trading or foreign exchange derivatives subject to corporate tax.

19% VAT must be paid on income received from the trade of goods and services on the territory of the European Union.

In most circumstances, it takes about three weeks to incorporate a Cypriot LLC with a client’s name. The title must be reconciled with the Registrar of companies. The standard term for approving a new business name is five business days. The certificates are issued within two or three weeks. Registration with tax authorities and obtaining VAT certificates takes another two or three days. It should be noted that there is no fixed time frame for providing public services in Cyprus. It all depends on the workload of the clerk.

Also, before registering, you should collect a package of papers about the founders and translate these documents into English. This also requires time.

A firm’s bank account is opened only after the firm enrollment process is finalized. Depending on the bank, an account can be opened from several days to several weeks. Each bank has its personal KYC and due diligence procedures and terms for registering a business account.

A certified attorney prepares a Memorandum and Articles of Association for limited liability corporations. These documents include information about shareowners, supervisors, secretaries, authorized finances, and stakes distribution.

The next documents are prepared in Greek or English and certified by a notary:

• original or authenticated copy of the Memorandum and Articles of Association;
• a statement by a lawyer that the Articles of Association of the organization are drawn up under applicable law;
• the document for appointing the director and secretary (including a copy of the director’s passport, confirmation of their actual residence, and sample signature);
• documents confirming the right or the fact of renting an office;
• the paper of registration of shareholders (for individuals: passport copies and confirmation of actual place of residence; for legal entities: a certificate of registration and a copy of a certificate indicating the head office of the firm).

To open a corporate account, the beneficiaries (owners) of the firm supply the subsequent documents in English:

• a notarized copy of passport or ID;
• proof of residence, such as current utility invoices;
• documents proving the legality of income, such as income tax returns;
• a letter of recommendation from a bank where an account has already been opened, or a recommendation from a business in the EU.

Some banks may also request additional documents. The list needs to be clarified with a financial institution.

Opening a corporate bank account is an integral part of the Cyprus company registration process. First, it is necessary to deposit the authorized capital, which can then be used to carry out the company’s activities.

To open a bank account in Cyprus you must:

• provide all required documents (you can do it online);
• decide what type of account you want: current account, savings account, merchant account, or credit card account;
• be present in person at the bank to complete the registration procedure;
• provide original documents to open a debit card.

Cyprus has a preferential taxation system for businesses that operate in the following areas:

• insurance;
• operations with the objects of intellectual property;
• film industry;
• the oil industry (for non-residents);
• maritime business.

There are also corporate tax exemptions. The following are exempt from it:

• dividends;
• income from exchange rate differences;
• sale of securities;
• fees for the protection of historic buildings;
• income from the representation of Cyprus in other countries.

A 50% corporate tax exemption is given to companies that operate in the film and music industries.