Recent developments in the banking sector has affected the account opening of Cyprus Companies with the Bank Institutions licensed under the Central Bank of Cyprus. In real terms the most important amendment is the declining of bank account opening of "shell" Companies.
A person wishing to incorporate a Cyprus Company needs to understand that in order to be eligible to open a bank account in Cyprus he/she must be able to demonstrate to the banking institution full substance of his/ her business operations within the Country of Cyprus.
Ideally a checklist of how substance is defined would be a useful tool for all Company applicants. In practice, applicant Companies need to understand that substance and conditions as set by each bank institution varies.
Our team has summarized below a list of common conditions needed to be met when applying for a bank account opening in Cyprus:
- Has the Company office premises in Cyprus?
- Has the Company employees registered with the Social Insurance in Cyprus?
- Are there adequate staff for key positions within the Company situated in the Cyprus premises?
- Are the Company employees only administrative staff?
- Are the operations of the Company managed and controlled from the Cyprus offices?
- Are there adequate business related expenses occurring in Cyprus proving that actual business activities are performed in Cyprus?
- Are all managerial personnel/ key personnel leaving abroad or in Cyprus?
It should be noted that for any other Company incorporated in a jurisdiction other than Cyprus where audited Financial Statements are not required to be submitted to the corresponding authorities the Cyprus Bank Institutions will consider the foresaid as a "shell" Company.
From the questions raised above it's clearly understood that virtual offices are not useful in applying for a bank account opening in Cyprus. As a service they have their own use for call/ mail/ postage receiving/ forwarding on client behalf.
Opening a Cyprus Company cannot guarantee the bank account opening in a Cyprus Bank Institution anymore. The new developments on Anti-Money Laundering and Tax evasion guidelines have abolished the "shell" Company usefulness and businessmen need to understand that operations cannot be of a "cloud" perspective. Companies must be and be seen as true solid organizations within their field of operations and within the country of incorporation.
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.