Company Formation in Cyprus
What the advantages of the formation of a company in Cyprus are?
- Cyprus has been a member of the European Union since 2004, and so a company registered in Cyprus enjoys all the benefits of operating in an EU country.
- Cyprus is a reliable jurisdiction that offers the stability of its financial and political system, a wide range of possibilities for efficient tax planning and optimization.
- Cyprus offers favourable tax regime,
which includes a number of tax reliefs for companies incorporated
by foreigners. For instance:
- the rate for corporation tax is the lowest in Europe, at 12.5% of the net profits;
- no withholding tax is collected from dividends originating from subsidiaries;
- dividends paid by a Cypriot company to non-Cyprus resident shareholders (individuals or corporations) are not subject to withholding tax;
- the legislation of Cyprus provides various reduced rates of VAT paid by companies and, in some cases, exemption from VAT.
- Cyprus has concluded a number of double taxation treaties with almost 60 countries, including Singapore, Russia, India, Ukraine, Canada, the USA, Ireland, etc.
- Cyprus is a proper jurisdiction for holding and investments purposes.
- The nationality or residency of the founders of a Cypriot company plays no role, as the nationals of Cyprus and another EU country, as well as the nationals of any other non-EU country have equal rights and opportunities to establish a company on the territory of Cyprus. Both individuals and legal entities can be founders of a Cypriot company.
- Cyprus is included on the Organization for Economic Cooperation and Development (OECD) White List.
- Cyprus offers a straightforward and clear procedure for formation of a company and reasonable and modest cost for the incorporation and maintenance of such a company.
What kind of companies can be incorporated in Cyprus?
The most common type of company generally incorporated in Cyprus is a limited liability company, either private or public.
As the types of companies mentioned above are the most popular in Cyprus, we will consider the basic differences between them:
|Private limited liability
(Private company limited by shares)
|Public limited liability
(Public company limited by shares)
|The shares of the company are not freely transferable||The shares of the company are freely transferable|
|The maximum number of shareholders of the company shall be 50 (excluding employees or ex-employees of the company)||The number of shareholders is not limited|
|There are no requirements as to the minimum amount of share capital||The minimum amount of share capital shall be EUR 25,630 (CYP 15,000)|
|At least one shareholder is required||At least seven shareholders are required|
|At least one secretary and at least one director (individual or legal entity) (they can coincide).||At least two directors.|
The other forms for incorporating a company provided by Cypriot legislation are a general partnership and a limited partnership, a private company, joint ventures, a trust, etc.
What is the general procedure for incorporation of a company in Cyprus?
- The first step to be taken is to select a company name. In the case of a limited liability company, the company's name must end with "LTD" or 'Limited". Using words like "BANK", "BANKING", "EUROPEAN UNION", "INSURANCE", "INVESTMENT", "INTERNATIONAL", etc., may be allowed only in exceptional circumstances. The Registrar approves the company name within a period of 1 to 3 days, provided that all the formalities have been completed.
- Collecting the necessary documents and information, preparation and submission of the standard forms to the Registrar, i.e. Articles and Memorandum of Association, the proposed registered address of the company, passport details (for individuals who are company founders) or certificate of incorporation (for legal entities which are founders), protocol of appointment of Directors and Secretary, and the application for incorporation itself and other necessary documents (collectively – the Application Package). All the documents shall be translated into English or Greek.
- Registration and incorporation of the company by the Registrar and obtaining the Company Registration Number takes from 5 to 7 (if accelerated process is applied for) or from 10 to 15 days (if non-accelerated process is applied for).
- Registration with the Tax Office of the city of the company's Registered Office address and obtaining the relevant Tax ID.
- Starting the operation of your company's business.
With respect to the question "How to start up a business in Cyprus?", our clients will definitely have a number of questions: How to start a company in Cyprus? How much does it cost to set up a company in Cyprus? What is the step-by-step procedure for offshore company formation in Cyprus? It should be noted that the above-mentioned information serves exclusively as a general overview of the procedure for company formation. An accurate list of documents and requirements in each particular case depends on the type of company that you choose to operate. Our Firm is always willing to provide you with appropriate legal and financial advice. We will assist you in complying with the requirements set out by legislation and in determining the best way to set up a business in Cyprus and to incorporate your own company.
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.