If you are looking to register a company in Cyprus, here is a comprehensive guide that will certainly assist you. Of course, all countries have their own way of doing things, and Cyprus is no different. However, the country benefits from EU standards, and registering a business in Cyprus is a relatively straightforward process as long as you follow these guidelines.
Cyprus is a beautiful island on the Eastern side of the Mediterranean Sea. It is 200 miles to the West of Syria and just about 100 miles South of Turkey. Cyprus is more populated than most Mediterranean islands and has a thriving economy that benefits from low corporate taxes. High incomes offer foreign investors great investment opportunities.
Many see Cyprus as a paradise tourist destination. However, it has much more to offer. The government adopted economic policies that have seen substantial economic development and diversification of the island. As a result, Cyprus met the criteria for EU membership. It joined in 2008, thus enabling foreign investors to set up a business in Cyprus with confidence.
Experts see Cyprus as an ideal location for business development and a great entry point into the European Single Market. If you are considering registering a company in Cyprus, this guide will help you through the process.
The infrastructure in the country is excellent. It is relatively densely populated, with 1.2 million inhabitants. However, the population is well served, with a total road and highway length of around 20,000 km. With road deaths at 5.7 per 100,000 population, it is considered one of the safest countries in the world. This figure compares favorably with 12.2 in the USA and 17.1 worldwide. Like in the UK, traffic drives on the left.
The country has no internal waterways or railroads. However, with over 1,000 commercial harbors, it is well-serviced. As a result, Cyprus is highly rated for international shipping.
Cyprus has a welcoming attitude to people wishing to relocate here. As a member of the EU, European citizens do not need a visa. Citizens of Switzerland, Iceland, Liechtenstein, and Norway are also visa exempt. British citizens can travel for up to 90 days in any 180-day period without a visa. This applies to tourism, visiting family or friends, attending business meetings, cultural or sports events, and even short-term studies or training.
You can apply for long-term work visas if you have a Cyprus work permit. However, you will also require; A certificate of medical clearance, a police clearance certificate, proof of financial means, travel health insurance, and a work contract with the Department of Labour seal.
All non-EU nationals can stay for one year on a long-stay visa. After that, they must apply for a residency permit issued by the Ministry of the Interior at €60.
It is essential that everyone gets adequate medical insurance. It is not a legal requirement, but often people go for the cheapest option and find themselves compromised when the worst happens.
As regards accommodation, there is an abundance of properties for rent or sale, with a huge variety of styles and costs.
It is easy to open a bank account in Cyprus, even for expats. Most banks will require you to open an account in person at one of their branches. The local currency is the Euro, Cyprus having dropped the Cypriot pound in 2008.
There are many advantages for people thinking of setting up a company in Cyprus. In general, Cyprus has low taxation. Firstly, there is no withholding tax. In addition, the corporate tax on their international income is only 12,50%. There is also no tax on the transfer of shares. Amazingly, Cyprus accepts invoices from offshore companies, which is very rare in the EU.
For entrepreneurs taking out a company registration, Cyprus offers much lower administrative and operational costs than most other EU countries. With the exception of some regulated sectors like banking, financial services, and media, foreign-owned businesses can invest freely in all areas without restrictions or challenging licensing requirements.
Cypriot business laws are very investor friendly. All investors can apply for Cypriot citizenship with all the benefits of EU membership. In addition, investors may retain anonymity and keep property under an international trust. They also qualify for a 100% tax exemption on both outward and inward dividends.
Keen to attract talented professionals from all over the world, Cyprus introduced new taxation incentives in 2022.
It is relatively straightforward to work out how to register a company in Cyprus, providing you approach the process methodically. Follow these easy steps:
1: Find a lawyer
Do your homework, ask around and check credentials. Then, when you are confident, make an introductory appointment with a lawyer to discuss your business. There are many reputable law firms on the island.
2: Select a company type
Once you understand your business goals, consult with your lawyers to determine the exact type of entity to suit your business.
A Cyprus Limited Liability Company is the most common with foreigners looking at how to open a company in Cyprus. Limited Liability companies offer protection from liabilities incurred by the company.
A Branch Office Is a good way for companies that already have good standing in other jurisdictions and wish to enter Cyprus.
International Trusts are mainly used by non-residents and beneficiaries for tax purposes.
3. Reserve a business name
The registration of a business name is a legal requirement when you register a company in Cyprus. Therefore, choose your company name and register it accordingly with the Registrar of Companies Cyprus.
4. Open a bank account
There are several banks in Cyprus offering corporate bank accounts. Some of the best include; the Hellenic Bank, Bank of Cyprus, and Cyprus Development Bank. Present your business plan to them and choose the one that seems more suited to your needs. Opening the account usually takes about four weeks.
5. Appoint officers
All businesses in Cyprus must have at least one director and only one secretary. The secretary has to be different from the sole director except in the case of a limited liability company with a single shareholder. First officers are appointed at the time of incorporation. Any change must be notified to the Registrar of Companies within fourteen days of submitting the relevant form.
6. Prepare registration documents
Directors will almost always be required to provide basic Know Your Customer (KYC) documents. When preparing your documents, you must provide three alternative company names, as the one you settle on has to be unique in Cyprus. You also have to determine the primary activity of the company. In addition, you’ll need to provide the names of all directors, Certified copies of passports, proof of address, a reference letter from your bank, and proof of internal due diligence.
You can, if you wish, appoint a nominee director to protect your anonymity. Your Articles of Association need to include details of your company, its directors, the amount of share capital, the duration of the company, and information regarding your business activity. This is usually translated into either Turkish or Greek.
When the information has been prepared, it is filed for registration with the Registrar of Companies Cyprus. After approval, you will receive the Certificate of Corporation, Memorandum and Articles of Association. These will be sent to your approved address. Therefore, it would be best if you got them translated into English.
7. Tax and VAT registration
Cyprus VAT registration is straightforward. First, you must obtain a VAT number from the Tax Department and file a social Contribution form with the Ministry of Labour, Welfare, and Social Insurance. This ensures your compliance with all the Cypriot government regulations.
8. Obtain operating licenses
There are many different types of business permits and operating licenses in Cyprus. Your lawyer will help ensure that you get the right one.
Examples of these would be:
9. Consultation
Maintaining a line of communication with your lawyers throughout the process is vital. This consultation will ensure that you don't fall foul of any potential pitfalls.
Company formation in Cyprus is very similar to any other country. Therefore, it is crucial that you comply with the following requirements:
Obtain a registered office:
Any company must maintain a registered office in Cyprus. It cannot be a mailbox. Your registered office is published on the register at the Registrar of Companies.
Appoint your directors:
Under Cypriot law, A private Limited Liability Company must have at least one director and can be a single-member company. On the other hand, a public Limited Liability Company must have at least two directors and seven members.
Annual audit:
Cyprus Companies Law dictates that directors are responsible for keeping a complete set of financial statements giving a true reflection of the company accounts. In addition, the financial statement must be signed by a Cyprus-registered auditor.
Appoint individual secretary:
A company secretary is appointed by a director's written resolution. They can be replaced at any time. The company secretary must be a resident of Cyprus.
Meet minimum share capital:
There is no minimum share capital for a private Limited Liability Company. However, the minimum share capital for a public Limited Liability Company is currently approximately €25,650.
Hold an annual meeting with shareholders:
Your company must hold its first general shareholders meeting within eighteen months of incorporation. After that, an annual meeting is required by law.
There are four types of fees involved when registering a Cyprus company.
1: The registration or set-up fee
This varies widely. You will find off-the-shelf companies for between €1200 and €3000. Reputable Law firms typically charge in the region of €4000.
2: Annual fees
Annual fees may be incurred for nominee shareholders (for anonymity), directors, company secretaries, and registered office. It depends upon your unique requirements.
3: Accounting/auditing fee
These obviously vary depending on the size of the company. However, accountancy and auditing fees generally start from about €1200 plus VAT per year.
4: Annual expenses payable to the Registrar of Companies
All companies have to file annual returns with the Register of Companies. The stamp cost is about €100. There will be an additional charge for the accountant or lawyer to prepare and file the report.
There are four main challenges to anyone wishing to set up a company in Cyprus. These are:
The Cyprus Issue.
You can't simply ignore this issue and some of the problems it causes. Tensions began in the 1930s and reached their peak in the 1970s. The country split in two, Northern Cyprus and the Republic of Cyprus. Relationships have certainly improved, and there are now nine crossing points between the two countries.
The situation in Cypriot waters is somewhat tense. There are Greek and Turkish naval bases, plus others belonging to the USA, the UK, and Russia. Moreover, Turkish Cyprus is only recognized by Turkey, meaning that opening a business in that area can prove challenging.
Banking Problems.
The banking crisis of 2012 left a mark here. The Bank of Cyprus, Cyprus Popular Bank, and the Hellenic Bank all required bailouts. €10 billion was given by the European Central Bank, the European Commission, and the International Monetary Fund. As a result, the Cypriot banking system recovered. Still, the country's second-largest bank, Cyprus Popular Bank, went out of business.
Due to all this turmoil, the Cypriot Banking system has become a lot stricter. As a result, more stringent conditions are now in place with regard to lending. It is, in short, tough to obtain a business loan here; Cyprus is placed 80th for ease of getting credit, according to the World Bank.
A Wholly Electricity Dependent Country.
Cyprus is the EU's most electricity-dependent country. Prior to the opening of the Aphrodite Oil Field, 95% of its electricity was imported. Therefore, Cyprus has some of the most expensive electricity prices in Europe. The EuroAsia Interconnector is planned to ease such prices but is not due for completion until 2023. Therefore, expensive electricity is expected to remain a reality for another few years yet.
The Obvious Language Issues.
On a social level, around 80% of islanders speak English. However, Greek and Turkish are still the official languages and are, therefore, the default for business transactions. This language barrier in Cyprus can incur translation costs and lead to misunderstandings.
Construction
The construction industry is very vibrant in Cyprus. There are abundant opportunities for people specializing in civil engineering, structural engineering, or other related fields. These industries received excellent government support.
Real Estate
With a terrific tourist industry and a constant supply of incoming workers, the need for rental and purchased property is endless. The real estate business is, therefore, thriving.
Internet
Like everywhere else in the world, web design and hosting are big business here. However, many older companies still do not have websites. There is, therefore, a large potential market.
Transport
The Cypriot transport sector is receptive to foreign investors. There is money to be made in either road or water transportation. Car hire companies also earn a good living here. With enough financial backing, even air transport is a possibility.
Insurance
There are more cars per head of population here than in most countries in the world. As a result, trained auto mechanics are in demand. Therefore, opening a mechanic workshop or body shop is always a possibility.
Education
Always a thriving industry, teachers and education consultants are in demand in Cyprus.
Travel
As previously stated, there is a very lively tourist scene in Cyprus. Therefore, it can be extremely lucrative for those with experience and contacts in the home nations.
It is always advisable to get your feet on the ground and spend some time here before choosing a lawyer. The best way to find good legal advice is by way of personal referrals and professional networking. The local bar association can act as a guideline, as can intern searches. But personal recommendations from people who have been through the system are best.
As with anywhere in the world, it's all about location, location, location. Cyprus offers just about everything; vibrant tourist areas, quiet sleepy villages, sea views, countryside, condos, houses, and villas. So come on holiday and spend your time looking around to get a feel for the place.
Obviously, if you are investing in a business, that will help decide where you live. Prices vary and are, therefore, also a factor. Make sure you compare like-with-like prices and delve into the local market.
View any property, not only during the day but at night as well. That quiet sleepy house might be within earshot of a noisy bar when evening falls. Make friends, find a good lawyer, but most of all, take your time.
With opportunities in a seemingly endless variety of business sectors, Cyprus is undoubtedly a great place to live and work. Fair taxation rates and a vibrant economy make a strong case for setting up here. When it comes to Cyprus tax, residency is made easy. With a glorious climate, sensational cuisine, and wonderful friendly people, make Cyprus your home and workplace. You will not be disappointed.
Answer: Yes, It is possible, but in order to enjoy the main benefits of local companies and also to avoid an additional tax burden, it is necessary to become a resident company in Cyprus.
Answer: Yes, follow the guidelines set out in this article, and you will have no problems at all.
Answer: In normal circumstances, it takes roughly 8-10 days.
Answer:
Answer: There is no minimum share capital for a private Limited Liability Company. However, the minimum share capital for a public Limited Liability Company is currently approximately €25,650.
Answer: You will find off-the-shelf companies for between €1200 and €3000. Reputable Law firms usually charge in the region of €4000.
Answer: It usually is pretty easy. Human Resources methods and regulations in Cyprus may differ from what you expect, even in other EU countries. When you are starting to build a team here, you should understand that the Cypriot job market is highly candidate-driven. Cyprus's workforce is well-educated and developed. However, the country's population is only about 1.2 million. Even accounting for a good supply of global talent, qualified professionals in some sectors can sometimes be in short supply. That being said, the government can help employers attract top talent.
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