Company Formation and Registration in Cyprus
Cyprus is a small island in the south of the Mediterranean Sea. This country is known not only as a tourist location but as a global business center. Cyprus is a member of the European Union and the Schengen area. The country has an international law system and one of Europe’s most favorable tax rates. For example, the corporate tax is only 12.5%.
In addition, the country is not offshore, so it is not possible to set up an offshore company in Cyprus. The country has signed numeral treaties to avoid double taxation. Local firms can easily open a corporate account with any European bank. You can fly to Nicosia and Limassol (major cities) from anywhere in Europe, Africa, the CIS, or the UAE. Convenient geographical location and loyal tax regime make the country attractive for investors and business people worldwide.
What are the reasons for setting up a business in Cyprus?
Company registration in Cyprus provides a business owner with many benefits. The country has a developed economic and banking sector, and many services are available online. One can manage an enterprise without a personal visit to the island. You can resolve many issues remotely. In addition to registering a new enterprise, an existing business from another jurisdiction can be redomiciled to the Republic of Cyprus.
The country is not contained in the OECD blacklist. Your business will operate in a respected jurisdiction legally. The tax policy in this jurisdiction is one of the most loyal in Europe. Local authorities create a comfortable environment for entrepreneurs. For example, 0% taxation on the financial gain from securities transactions, re-registration of real estate, dividends from subsidiaries and foreign branches.
Having an account in a local bank allows you to use your funds anywhere in the world. The Internet banking service will make it possible to conduct almost any operation remotely. You can start your own business on the island even as a foreign citizen.
Also, it is convenient not only to work in Cyprus but also to live as an expatriate. The English spoken language is in use in all spheres. There is a large international diaspora, foreign schools for children, and modern real estate of a wide variety of classes for any budget.
Basic facts about Cypriot companies
Establishments in the state are often used to optimize taxation. However, they are not offshore institutions. Even though the country has one of the lowest levels of taxation in the European Union, there are still some taxes. Let’s have a look at the key facts to consider before opening a company:
Cyprus is not an offshore zone, so Cyprus offshore company formation is not possible.
Personal presence is not required to incorporate a firm. One can register a company in Cyprus online.
All resident businesses are obliged to pay income tax (12.5%). And also VAT if the Cypriot enterprise makes a profit from the residents of the European Union. If services or goods are sold outside the EU, then the establishment is exempt from VAT.
All enterprises must maintain accounting records and submit annual reports and income tax returns to the tax authorities.
Local legislation allows beneficial owners to maintain a high level of confidentiality through the participation of nominee directors and shareowners. They can be either individuals or legal entities. Nationality and residency do not matter.
Cyprus enterprise title must end in Limited or Ltd and essential to be unique. Using some words (i.e., bank, government is prohibited).
Any legal type of business is permitted. For some activities, it is necessary to get an appropriate license. For example, banks, trusts, insurance firms.
The conditions of substance require it is necessary to have a physical office and a corporate secretary in the country. The secretary can be a lawful entity or an individual.
The authorized capital is demanded, and the minimum amount is 1,000 euros. This capital can be divided into shares with a par value of 1 euro (1,000 shares at 1 euro). No par shares and bearer shares are prohibited.
Meetings of shareholders and directors can be held anywhere in the world. Keeping documents of a Cypriot enterprise is also allowed anywhere in the world.
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Why should you choose Fintech Harbor Consulting for firm registration in Cyprus?
The Cypriot legislation is quite loyal. The procedure of Cyprus company formation is simple. But it still requires knowledge of certain nuances. Fintech Harbor lawyers have registered hundreds of firms. They have opened corporate accounts in Cypriot banks for many entrepreneurs. We know the procedures from A to Z and will help you go through the entire registration process as soon as possible. We will collect a full package of documents, including all information about directors and the origin of funds, go through all KYC procedures and due diligence for the bank, help open an account for your enterprise and obtain the necessary licenses. By contacting us, you will receive a package of documents to get started in less than two weeks. We will also gladly advise you on all the taxation aspects of doing business with a Cyprus firm.
Requirements for registration of a Cypriot company
It is usually quick and easy to open a company in Cyprus. But there are still some requirements that must be met:
- Have a share capital of at least 1,000 euros. If the company is public and performs certain activities, this amount increases to 25,630 euros.
- Provide the registrar with the prescribed list of documents. They include memorandum, articles of association, approved company name in the Cyprus trade register, forms NOT1, NOT2, NOT3, and NOT5, etc. For more details on how to fill in these forms, you can contact our lawyers.
- Maintain registers of directors, secretaries, shareholders, and dues.
- Have a registered office and keep a set of documents: memorandum, articles of association, certificate of incorporation, certificate of directors and secretary, certificate of shareholders, and office registration.
- Open a corporate bank account.
- Commit to keeping financial records in accordance with local standards.
To avoid missing any important points, to open a company in Cyprus, ask for professional help.
How much does the incorporation in Cyprus cost?
Company registration in Cyprus includes collecting documents, filing applications with the competent authorities, registering with the tax authorities, and obtaining essential certificates and licenses. The cost of incorporation of an entity in Cyprus is 2,600 Euros. The price includes the cost of incorporation, registered address and secretary services for 1 year.
Translation of documents into English and apostilled, DHL forwarding of documents and government fees are paid separately.
Opening a bank account and obtaining the basic licenses are also different services and are provided for an additional fee.
Process of company formation in Cyprus
Opening a company in Cyprus consists of several stages:
- The first step in the process of registering a business in Cyprus is choosing a title. An appropriate business firm title must be reserved and authorized by the Registrar of Companies. This usually takes no more than two days.
- The next step is the preparation of the Memorandum and Articles of Association. On the island, there is a general template for these papers, suitable for absolutely all firms, regardless of the type of activity. You will provide stockholders and managing director details, and we will provide you with a corporate secretary.
- After that, you need to register in the Registration Department by submitting a package of documents through the department’s website or in person. All documents must be translated into English and certified by an apostille. The verification of papers, as a rule, takes place within two business days.
- The final stage is registration with the taxation authorities and obtaining a VAT number. This can also be done online. The whole process takes no more than two weeks, provided that all documents are submitted correctly and in full, and completed without errors.
To start a local business in Cyprus, you need to obtain a permit. For example, a license for opening a café is issued by the local government, for a hotel – by the Cyprus Tourism Organization, for the provision of educational services – by the Ministry of Education. Obtaining a license will take 5-7 days.
The situation is more complicated in the financial sector. If a firm is planning to provide banking, brokerage services etc. an application to the governmental authority is required the procedure is rather complicated and takes more than 6 months. The licensing of financial activities is carried out by the Central Bank of Cyprus or CySEC (Cyprus Securities and Exchange Commission).
Reviews
Our goal was to register a firm in Cyprus and open an account with a European bank. Fintech Harbor lawyers helped to obtain all the documents as soon as possible, and after two weeks, we were ready to conclude the first contracts. Highly recommend it.
We have registered an international holding in Cyprus to restructure our agricultural business. Despite the complex corporate structure, the lawyers were able to understand all the nuances, prepare a package of documents, fill out applications and quickly submit them to the competent authorities. Everything went very quickly and clearly.
Fintech Harbor helped us to register a Cypriot enterprise and obtain a specific insurance license. The entire process took place remotely. The founders of the group did not have to travel anywhere, and the package of documents was delivered to our office by DHL already a few weeks after the initial inquiry. The lawyers were always in touch and answered all questions.
We contacted Fintecharbor when we already had an acting Cypriot firm. We were looking for competent lawyers in structuring taxes, auditing, and filing yearly reports. Competent consultants were qualified to advise us on complex taxation issues of cross-jurisdictional investment and successfully accompanied the necessary transactions.
FAQ
Firm registration structures in Cyprus
Every natural or legal person can form a company in Cyprus, regardless of nationality and residency. The law provides for the possibility of the subsequent types of enterprises as Partnerships (including Limited Partnerships), Public Limited Companies, Trust Companies, Clubs, or Non-profit organizations. Most often, Limited Liability Companies are opened, where each investor is liable only within the real value of the owned shares.
What are the taxes for Cyprus registered firms?
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.
How long does it take to set up a business in Cyprus?
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.
What documents should I have to incorporate a firm in Cyprus?
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.
What are the requirements for opening a bank account in Cyprus?
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.
Do I need a license or permission to set up a Cyprus company?
For company formation in Cyprus, an entrepreneur needs to obtain permission from various authorities. For example, to open a café, permission is granted by the local government, for an educational institution – by the Ministry of Education.
In finance, it is more complicated because, in many sectors, a license is required. For example, it concerns the opening of banks or insurance companies.
How to qualify for tax exemption in Cyprus?
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.
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