Cyprus is one of the most attractive destinations for setting up a company. It has a favorable tax system, with corporate tax being 12,5% one of the lowest in Europe and Cyprus has also double tax treaties with over 65 countries. The procedure for incorporating a Cyprus company is very simple and quick as further analysed below step by step.
Type of legal entity
- Private limited liability company by shares;
- Private limited liability company by guarantee;
- Public company;
- Branch of a foreign company;
- Re-domiciliation of a foreign company;
- Limited partnership; and
- General Partnership.
The most common form of legal entity established in Cyprus is the private limited company by shares which will be the focus of this article.
Procedure of setting up a company
a. Approval of company name
The first step is the approval of the company's name by the Registrar of Companies (the "Registrar"). Name approval applications take 3-5 business days for the Registrar to examine and approve or reject the name. In general terms, the name must not pre-exist in the name of another company and must not be too general.
Company's memorandum - Objects of the company
Our firm provides a standard memorandum specifying the objects of the company. This is drafted in wide terms to cover as many objects as possible. In case where the company intends to pursue a particular object, our firm can draft a specific memorandum to cover this.
There is no minimum or maximum requirement for the share capital of a Cyprus private limited liability company. The most common form of capital of a Cyprus private limited liability company at the beginning is €1,000 divided into 1,000 shares of nominal value €1.00 each. This of course is subject to amendments in the future as per the wishes of the client. On the other hand, a public company must have a share capital of not less than €25,629.
A private company limited by shares must have at least one and a maximum of fifty shareholders, whereby each shareholder may be either a physical person or a legal entity from anywhere in the world. If you wish to keep the anonymity of the beneficial owners, the shares can be held by our nominees, either individuals or legal entities or as trustees of trust.
It is advisable that the majority of the directors to be Cyprus residents for practical reasons but also from tax planning perspective. The company must also have one secretary which again is recommended to be a Cyprus resident. Our firm can provide nominee services for these positions.
The registered office of the company must be any address located in Cyprus. Our firm can provide an address for registered office.
Articles and Association
Our firm provides a standard form of the articles of the company however, we can draft a specific one as per the client's wishes and subject to the requirements of the Cyprus law.
Compliance and Know Your Client (K.Y.C)
Cyprus firms and service providers are required to follow extensive K.Y.C. procedures to meet the local and international anti money laundering requirements. Our firm requires certain documents from its clients before being able to manage on their behalf the process of forming a company in Cyprus in order to complete a client identification procedure.
The standard documents requested for the initial stage are the following:
- Copy of passport of the ultimate beneficial owner/owners of the company.
- Recent utility bill on the name/names of the ultimate beneficial owner/owners of the company.
- Bank reference for the ultimate beneficial owner/owners of the company.
- Curriculum Vitae of the ultimate beneficial owner/owners of the company.
- Curriculum vitae for each individual.
Submission of the documents at the Registrar
When the name has been approved, the memorandum and articles of Association of the company will be submitted to the Registrar along with the necessary forms indicating the officers and the registered office of the company.
The Registrar needs about 7 - 8 business days to issue all the statutory documents of the company and provide the unique company registration number.
The statutory documents of the company include the following documents which are issued upon its registration:
- Certificate of incorporation;
- Certificate of directors and secretary;
- Certificate of shareholders;
- Certificate of registered office address;
- Memorandum and articles of association.
Also our firm arranges for the stamp of the company as well as its filing records.
Responsibilities of a company
Every Cyprus company is required to keep accounting books and to prepare financial statements. Further, the financial statements together with the annual return of the company (form HE32) must be filed annually to the Registrar. An annual levy of 350 Euros has to be paid to the Registrar of Companies every year and an income tax return must be filed annually. Also companies, depending on their activities may be required to file VAT returns on a quarterly basis.
Our firm can assist you with the following services:
- Offer advice in regards to company registration in Cyprus, the process, requirements and the different types of companies.
- Offer tax planning advice.
- Manage the process of setting up a company in Cyprus.
- Offer company secretarial services such as a registered office address, nominee director and secretary.
- Offer trustee services for the benefit of the ultimate beneficial owners and draft the relevant trust deeds.
- Offer accounting/auditing services through our external associate accountants.
- Manage the process of opening a bank account with any of the banks our firm cooperates with under its capacity as a professional intermediary.
- Assist with the day to day management of the company and drafting several documents such as resolutions, powers of attorney and agreement.
- Offer advice in relation to any legal or corporate issue.
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.