When setting up in a foreign jurisdiction a critical point to avoid any regulatory issues is to understand accounting and filing requirements. Below we provide you with important information on Cyprus Accounting, Tax and filing requirements.
Accounting – Books and Records:
Companies incorporated in Cyprus are required to keep proper books of accounts either at the company’s registered office or at any place designated by the directors.
The books and records of a company are not open to inspection by anyone other than the directors and auditors. The Inland Revenue, as well as the VAT authorities can, however, request the production of any records while examining accounts for Tax or VAT purposes.
The Cyprus Accounting records must show all sums of money received and expensed, all sales and purchases, assets and liabilities. The accounting is to be prepared under International Financial Reporting Standards (IFRS) and financial statements are to be audited or reviewed by a Cyprus licensed audit firm as described below.
Submission Requirements
The Cyprus Companies Law Cap. 113, prescribes that all Cyprus Companies need to submit audited Financial Statements to the Cyprus Registrar of Companies, once per calendar year alongside the Annual Company Return of the Company (HE32). The first submission can be as long as 18 months after incorporation, but thereafter needs to be once per calendar year. More information on the Annual Company Return requirement can be found below.
Period and Language:
The Financial Period does not need to end 31/12, however, is preferable to have the financial year ending 31/12, so that it coincides with the Tax Authorities period (i.e. Tax year ends 31/12).
Financial Statements can be prepared either in Greek or English.
Are audits required?
The FS need to be audited by one of the licensed audit firms in Cyprus (we can recommend one of the licensed reputable audit firms we cooperate with). Audit firms are licensed by the Institute of Certified Public Accountants of Cyprus of which Asterisk Corporate Services is also a member and regulated by.
Update: Further to recent updates in local legislation companies which meet the following criteria can elect not to perform a full audit of their FS but instead have a review of their financial statements from a licensed Cyprus Auditor. The criteria are as follows:
- The Company must be a private limited liability company and
- not to be required to prepare consolidated financial statements and
- but its net turnover and total gross assets should not exceed or should cease to exceed the criteria of EUR200.000 and EUR500.000 respectively in two consecutive financial years.
Additional guidance will be released as the legislation unravels.
Preparation of Accounting records abroad:
Accounting records can be prepared outside of Cyprus (although its recommended to be prepared in Cyprus, as it helps strengthen substance requirements, and to ensure correctness of tax calculations and submissions). If prepared abroad, the Companies Law prescribes that such accounting records (i.e. ones prepared abroad), need to be sent to the Registered Office of the Cyprus Company at least every six months.
Financial Reporting Framework:
Cyprus Accounting & Financial Statements should be prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and International Financial Reporting Standards as issued by the IASB and should comply with the Companies Law, Cap. 113.
Annual Company Return (HE32):
As mentioned above, each Cyprus Company, needs to submit to the Registrar of Companies, 18 months after incorporation or once per calendar year, its annual company return. This is a pretty simple return and it includes details of the company’s directors, shareholders, registered office address, secretary etc and its submitted electronically to the Registrar. This process is usually performed by your service provider / corporate secretary in Cyprus and we can assist with such.
You can read more about the Annual Company Return in our dedicated article here.
You can also refer to the Annual Return Date Calculator, which is a tool released by the Registrar of Companies and can give you exact dates by when you need to submit the Annual Return depending on the year of incorporation of your company and/or previous submissions. Penalties apply for late submissions as can be seen in our article linked above.
Consolidated Financial Statements:
If your Cyprus Company will be holding subsidiaries it will be required to prepare consolidated financial statements, unless such consolidated FS are prepared by the ultimate parent company of the group, or unless the group does qualify for the small group exemption.
Contact us for more information on whether your group qualifies for such exemption.
Annual Income Tax Return:
Every calendar year the Cyprus Company will need to submit to the Tax Authorities its Annual Income Tax Return (TD4), based on the audited FS of the Company.
The Income Tax Return is currently due 15 months after the tax year end (for example, for financials years which ended 31.12.2023 the TD4 is currently due on 31.03.2025).
The TD4 includes details of the income/expenses of the Cyprus Company on its worldwide income arriving at the taxable income/loss and its submitted to the authorities based on the audited financial statements of the Company.
Conclusion:
In general, Cyprus has requirements for the submission of Financial Statements and Tax Returns and we strongly recommend to engage an accounting firm, such as Asterisk Corporate Services to assist you with such submissions. Our specialized teams are in place to assist with such work at all times. You can click here to learn more about our Accounting Services & Tax Services.
How Asterisk Corporate Services can assist
Asterisk Cyprus is a regulated ASP & Accounting Firm, licensed by the Institute of Certified Public Accountants of Cyprus. Our specialized teams are in place and ready to assist you with the accounting and filing requirements of your Cyprus Company, providing a responsive cost-effective service offering.
You can contact us at contact@asterisk.cy for more information.
The above article is aimed to give you a good understanding on the statutory compliance requirements for Financial Statements but does not constitute advise of any kind. For more information contact us.
