These are some basic facts to consider before proceeding with a Cyprus company formation.
Cyprus is the third largest island in the Mediterranean. It has a population of approximately 900,000 of mainly Greek origin, with a smaller Turkish community and some other minorities.
The capital is Nicosia and local time is 1 hour ahead of Central European Time. Official languages are Greek and Turkish but Greek and English are the most common.
Cyprus has been a member of the European Union since 1 May 2004 and adopted the Euro as its currency on 1 January 2008. The legal system is based on English Common Law.
Cyprus company formation is possible for any legal activity which does not require specific licensing, such as banking, insurance, financial activities or collective investment schemes. Depending on the company’s nature of business, it may require a licence to operate from the Central Bank of Cyprus, the Cyprus Securities and Exchange Commission (CYSEC) or other regulatory bodies.
You should allow 2 weeks for the Cyprus company formation. Alternatively, if you urgently need a company, we can provide a shelf company, which will be available for immediate use.
A Cyprus company may continue as a company registered in another jurisdiction if its articles of association allow this. Similarly, a foreign company may register and continue in Cyprus if its own governing legislation permits this.
At the time of the Cyprus company formation, the Registrar of Companies collects certain information, which then becomes available to the public. This includes the company’s memorandum and articles of association, along with details of its issued capital, shareholders, directors, secretary and registered office address.
In addition, the company must file a copy of its financial statements each year and information relating to any mortgages and charges. This information becomes public.
The Registrar of Companies also keeps a record of the company’s beneficial owners. However, this information is confidential and not available to the public. The only persons who may access it are those permitted by the Prevention and Suppression of Money Laundering and Terrorist Financing Law.
The company may choose a name in any language, provided it is expressed in Roman or Greek characters. It must indicate its limited liability status by using the word “Limited” or its abbreviation “Ltd” or the Greek equivalents “Λίμιτεδ” and “Λτδ” of these terms.
It is usual practice to denominate the share capital in Euros (€) but this can also be any other currency. At the time of the Cyprus company formation, it will be necessary to issue at least one share.
The legislation does not allow bearer shares.
The minimum number of shareholders is one. This can be a natural person or a body corporate.
Nominee shareholders may be used if privacy is required.
At least one director must be appointed at the time of the Cyprus company formation, who may be either a natural person or another company. The directors may be resident anywhere in the world.
If the company intends to claim double tax treaty benefits, then it will need to be managed and controlled in Cyprus. In this regard, it will be helpful if its directors are resident in Cyprus.
The same person may be a sole director and sole shareholder provided another party acts as secretary
The shareholders and directors may hold meetings anywhere in the world, either in person or using electronic means.
An annual general meeting (AGM) of the shareholders must be held in each calendar year, with successive meetings not more than 15 months apart. The first AGM must take place within 18 months of the company’ s incorporation.
It is a legal requirement for the company to maintain a registered office in Cyprus. This is the company’s official address, where it keeps its statutory registers and records, as well as its official seal. It is also the address where the company may receive official notices and correspondence.
The company is required to appoint a secretary at the time of the Cyprus company formation. This can be a natural person or a company. The secretary should preferably be based in Cyprus and have a good knowledge of Cyprus company law and the duties and responsibilities which this position carries. Knowledge of the Greek language will make the secretary’s job easier.
The company secretary is responsible for carrying out most of the company’s statutory obligations and needs to interact with a number of government departments, including the Registrar of Companies.
The same person may act as the company’s sole director and secretary provided a second party acts as shareholder. Likewise, a sole shareholder and secretary is possible if another party takes the office of director.
All Cyprus companies are required to prepare annual financial statements, which must be audited by a Cyprus-resident auditor.
Starting with the year ended on 31 December 2022, smaller companies may elect to have their financial statements reviewed by an auditor instead of undergoing a full audit. In order to qualify for a review, a company’s revenue may not exceed €200,000 and its assets may not exceed €500,000, both conditions to be met for two consecutive years.
In the case of a group of companies, provided the group is exempt from preparing consolidated accounts, then it may have its accounts reviewed instead of audited if the group’s consolidated revenue and assets meet the above conditions.
The company must file an annual return, accompanied by its financial statements, with the Registrar of Companies. The late submission of an annual return carries a fine of up to €500.
An annual tax return also needs to be submitted to the Commissioner of Taxation.
The standard corporate tax rate is 12.5% levied on the company’s worldwide income.
Companies which conduct research and development activities, resulting in the generation of income from intellectual property, can qualify for an exemption from corporate income tax of up to 80% of their profit. This results in an effective tax rate of only 2.5%. Qualifying assets include patents, copyrighted software programs and other intangible assets but not trademarks or copyrights.
In the case of an investment holding company, dividend income and any profit on the sale of shares are exempt of tax.
There is no capital gains tax unless the gains arise from the sale of real estate property located in Cyprus.
Dividends paid to non-resident shareholders are not subject to withholding tax.
Cyprus tax resident companies can benefit from over 30 double tax treaties which have been concluded by Cyprus, notably with a number of countries in Central and Eastern Europe, the Middle East, Russia, India, South Africa and numerous others.
Depending on the nature of its business activities, a Cyprus company may be required to register for VAT or allowed to do so voluntarily. The maximum rate of VAT is 19%.