Cyprus: The Benefits Of Establishing A Branch In Cyprus

Last Updated: 21 November 2016
Article by Antonis Paschalides

The worth of establishing a branch in Cyprus

Do you want to increase your company's flexibility and do business in Cyprus in a fast, flexible and easy way? A foreign branch registered in Cyprus can enjoy all the advantages extended to all Cyprus legal entities. The procedure is easy, straight forward and shall contribute towards the growth and development of your company. The corporate environment is ideal and you shall take advantage of E.U Directives and Regulations along with one of the lowest tax rates in the E.U. As long as your company's subsidiary in Cyprus is managed and controlled in Cyprus the advantages shall apply. The many benefits your company shall gain are briefly developed hereunder.

Sections 347 to 353 of the Cyprus Company Law Act apply to:

  1. to all overseas companies, meaning companies incorporated outside Cyprus, which after the commencement of the abovementioned provisions, establish a place of business within Cyprus; and
  2. Companies that have been incorporated outside Cyprus which established a place of business within Cyprus before the commencement of the abovementioned provisions, and continue to have an established place of business within Cyprus at the commencement of these provisions.

It should be emphasized that the establishment of a branch does not amount to the creation of a new legal entity in Cyprus; the entity incorporated abroad simply has a branch and may operate through it for some of its international activities. Even though each branch may have its own managers, the directors of the parent company are ultimately responsible for the activities of its branches.

Advantageous Cyprus corporate tax rates : one of the lowest in the E.U

Any overseas companies have so much to gain from establishing such a company in Cyprus.

  • As long as the management and control of the branch takes place in Cyprus then the profits of the branch are subject to the Cyprus corporate tax rate (12.5 %).
  • The overseas company shall enjoy same tax benefits as Cyprus companies
  • If the management and control of the branch is not in Cyprus, then the profits of the branch are exempted from taxation in Cyprus.
  • Dividends received by a Cypriot holding company are generally exempted from the corporate income tax and in most cases are also exempt from the special defense contribution
  • An ideal business environment with flexible company law regulations

The Cyprus branch as a solution after the Brexit

International companies, which currently maintain their seat in the U.K have during the previous years done so, in order to enjoy the benefits and flexibilities provided by the E.U legislation and/or to have access to the E.U are now considering to relocate to other European countries due to the Brexit. After the exit of the U.K from the European Union such companies will lose this benefit. An interesting option for these companies would be to establish branches of such companies in Cyprus in order to be monitored and controlled in Cyprus and therefore be taxed accordingly and enjoy all the benefits the E.U entails.

Branch can hold property in Cyprus:

An overseas company shall have the same power to hold immovable property in Cyprus as if it were a company incorporated under the Cyprus Company Law Act. In order to enjoy this benefit, it must comply with the obligation to deliver to the Registrar of Companies the documents and particulars mentioned above, in Section 347 of the Law. An overseas company that has gone through alterations of its charter, memorandum and articles or statutes shall, within the prescribed time, deliver to the registrar for the registration a return containing the prescribed particulars of the alteration.

The procedure to establish a branch in Cyprus is relatively easy.

Overseas companies may establish a branch in Cyprus by filing with the Registrar of Companies in Cyprus the following according to s.347:

  1. Written report which provides: (i) name and legal form of the overseas company, as well as the name of the branch, if that is different from the name of the company; (ii) head office and address (postal or other) of the overseas company, as well as the address (postal or other) of the place of business; (iii) purpose and objects of the overseas company; (iv) where applicable, the register abroad of the overseas company, where its basic data has been entered; (v) its subscribed capital where this exists; (vi) where applicable, information in relation to the winding-up of the overseas company, the appointment of liquidators, etc; (vii) in the case of an overseas company of a non-member state of the European Union, the law of the state, governing the company. (vii)In the case of an overseas company of a non-member state of the European Union, the law of the state, governing the company.
  2. Certificate of incorporation of the company (certified) and a certified copy of the memorandum and articles of the company or other instrument constituting or defining the constitution of the company as well as every amendment to the said documents
  3. List of directors and secretary of the company as well as of all the persons which are authorised to represent the company. d. Name and address of one or more persons resident in the Republic authorized to accept on behalf of the company service of process and any notices required to be served on the company.

All the aforementioned documents should be legalized and apostilled in the country of issue and translated into Greek.

Benefit from the exemption from Financial Reporting obligations Under s.350.

Section 350 (1) (a) provides that Every overseas company, which has a branch in the Republic, shall deliver in each financial year to the registrar of companies, copies of: (i) the financial statements; (ii)the directors' report; (iii)and the auditors' report presented at its last general meeting. Fortunately E.U companies shall be exempted from this obligation, by virtue of their status as E.U Member States. "(b) Every company of a member state of the European Union, which, in accordance with the laws of the said state and in harmonisation with the provisions of Directives of the European Union No. 78/660/EEC, 83/349/EEC and 84/253/EEC is exempt, in whole or in part of the above- mentioned obligations, shall be exempt from the aforementioned obligation". Such exempted companies must deliver to the Registrar a certificate signed by a director and the secretary of the Company stating that it is an exempt company and the law that provides for such exemption. Furthermore a statement from the relevant authority of the home state providing that the said company is exempted pursuant to the provisions of the said law will also be required. If any overseas company fails to comply with any of the foregoing provisions of this Part the company, and every officer or agent of the company who knowingly and wilfully authorises or permits the default, shall be liable to a fine not exceeding four 127 euros, or, in the case of a continuing offence, 85 euros for every day during which the default continues.

Considering the above an overseas company whether registered in the E.U or in any other country in the world can only benefit, from deciding to follow the route of establishing an overseas branch in Cyprus. The high quality of corporate and legal services, the low corporate tax rate and favorable legislative foundations for such a move are some of the many advantages your company shall gain.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.