Introduction to Cyprus Registration Guide
In the dynamic landscape of international business, Cyprus continues to stand out as a strategic location for entrepreneurs and large organizations looking to establish their companies. With its favorable tax environment, robust legal framework, and strategic geographical position, Cyprus offers a myriad of opportunities for both local and international businesses. In this comprehensive guide, we will delve into the intricacies of Cyprus company incorporation, providing a step-by-step analysis of the process, the key officers involved, timelines, an overview of the tax landscape, post-incorporation considerations, and essential details on bank account opening and audit requirements.
Understanding Cyprus as a Business Hub
Before delving into the specifics of company registration/incorporation, it’s crucial to understand why Cyprus is an attractive destination for entrepreneurs. Positioned at the crossroads of Europe, Asia, and Africa, Cyprus boasts a stable political and economic environment, making it an ideal location for international business operations. The country’s membership in the European Union further enhances its appeal, offering businesses access to a single market and a skilled workforce.
Overview of Cyprus Tax Landscape for Companies
- Corporate Income tax is currently set at 12,5%.
- Generally dividend income is exempt from tax.
- Cyprus does not levy any withholding taxes on dividends, interest and royalties paid to non-residents of Cyprus except in the case of dividends paid to a company tax resident of an EU ‘blacklisted’ jurisdiction, and in the case of royalties earned on rights used within Cyprus.
- Disposal of securities are tax exempted (e.g., shares, bonds, debentures).
- No capital gains tax (except for disposal of immovable property in Cyprus).
- Beneficial IP Box Regime which can lower the effective tax rate of your company as low as 2.5%.
- There is a Notional interest deduction for investments into Cyprus companies.
- A wide network of Double Tax Treaties covering approximately 60 countries.
- 50% income tax exemption for individuals earning more than €55.000 subject to certain conditions been met.
- Tax losses can be carried forward and be utilized for the next five years.
- Value Added Tax (VAT): Businesses in Cyprus may be subject to VAT, with the standard rate currently set at 19%. It is essential for companies to understand their VAT obligations and ensure compliance with local regulations.
Step-by-Step Guide to Cyprus Company Incorporation
There are certain steps during the Cyprus registration/incorporation process as follows:
a. Business Structure: Selecting the right business structure is the foundational step in the incorporation process. Entrepreneurs can choose from various structures, such as a private limited company, public limited company, partnership, or sole proprietorship. Each structure has its advantages and implications, and the choice should align with the business goals and requirements. Most of our clients proceed with the choice of private limited company, limited by shares.
b. Reserve company name: After you decide on the business structure the next step involves choosing and reserving a unique company name. The name must comply with the regulations set by the Registrar of Companies in Cyprus. This process ensures that the chosen name is not already in use and aligns with legal requirements.
c. Officers: For the incorporation to be able to take place, we will need to report through special forms who the Director(s), Corporate Secretary and Registered Office Address of the Company will be. Directors and shareholders can be local or foreign individuals or entities, offering flexibility to businesses. We do suggest the majority of Directors to be Cyprus Tax Residents, as this strengthens the case of tax residency of the Company in Cyprus. You can ready more about Cyprus Tax Residency in our article here.
d. Capital Requirements: Cyprus does not impose minimum capital requirements for private companies. However, it is essential to define the authorized and issued share capital in the Memorandum of Association.
e. Memorandum and Articles of Association: Drafting and submitting the Memorandum and Articles of Association is a crucial step. These documents outline the company’s constitution, structure, and rules governing its operation. They must comply with Cyprus law and be filed with the Registrar of Companies. These documents are also signed by the first subscribers (shareholders) of the Company’s Memorandum. Scanned copies would suffice (in wet ink) and there is no need to visit Cyprus to execute this, it can be done remotely.
f. Registration with the Registrar of Companies: Once all necessary documents are prepared and officers appointed, the next step is to register the company with the Cyprus Registrar of Companies. This involves submitting the required documents, paying the registration fees, and obtaining a certificate of incorporation, steps which we all take care of.
Timelines for Cyprus Company Incorporation
The timeline for registering a company in Cyprus is relatively efficient compared to many other jurisdictions. Typically, the process can be completed within a few weeks, depending on factors such as the complexity of the company structure, availability of required documents, and the responsiveness of relevant authorities. From the moment however that all the documents are submitted to the Registrar of Companies, it usually takes 4 to 6 business days for the Company to be incorporated.
a. Registrations: After the Company is incorporated it will need certain registrations depending on its activities, but the most usual ones are as follows:
- Obtain a Tax Identification Code: Complete necessary forms to the Tax Authorities to obtain a TIC number and also register with the Tax system for the online submission of tax forms. This registration is compulsory and needs to take place 60 days after incorporation.
- UBO Register submission: The Cyprus Company will also need to submit its UBO information to the Registrar of Companies 30 days after incorporation. This is a compulsory registration.
- Register for VAT: If the company will occur taxable supplies and meet the criteria for VAT registration then it needs to proceed with such registration.
- Register with Social Insurance Authorities: If the Cyprus Company will employee staff members then it will need to register with the social insurance authorities as well. This can be done through the social insurance department and we can ofcourse assist.
- Non-Dom Registration: If any individual shareholder, director, staff member etc of the Company will come to be based and work in Cyprus they will need to submit the non-dom application to confirm their non-dom status and be able to benefit from tax free dividend and interest income.
- Obtain business licenses: Depending on the nature of the business, the company may need to obtain additional business licenses from the relevant authorities.
b. Bank Account Opening: After successful incorporation, opening a bank account for the newly registered Cyprus Company is a critical step for businesses to facilitate their day-to-day operations. Cyprus offers a robust banking system with a variety of financial institutions, both local and international. Companies must provide the necessary documentation, including the corporate certificates, source of wealth, detailed nature of activities and other compliance documents to open a corporate bank account.
c. Accounting and Audit Requirements: Companies in Cyprus are required to maintain accurate accounting records and prepare financial statements in accordance with International Financial Reporting Standards (IFRS). An annual audit is mandatory for most companies, providing transparency and ensuring compliance with regulatory standards.
d. Annual Compliance and Reporting: Companies must adhere to annual compliance requirements, including filing annual returns and financial statements with the Registrar of Companies. Staying compliant with these obligations is essential for maintaining good standing and avoiding penalties.
In conclusion, embarking on the journey of Cyprus company incorporation offers entrepreneurs a strategic gateway to the European market and beyond. By following the comprehensive guide outlined above, businesses can navigate the intricacies of the incorporation process, leverage the favorable tax environment, and establish a strong foundation for success. With the right planning, adherence to regulatory requirements, and a commitment to ongoing compliance, entrepreneurs can unlock the full potential of their ventures in Cyprus. Start your business in Cyprus in 2024 with confidence, knowing that you have a roadmap to guide you through every step of the process.
How Asterisk Corporate Services Cyprus can assist
Asterisk Corporate Services consists of a team of specialized qualified professionals and lawyers who are well aware of the Cyprus incorporation process and legislation requirements and have been involved in a number of transactions both for small-medium sized businesses to large multinational organizations and are ready to assist during all steps of the process.
Other Articles on Cyprus Company incorporation:
- Cyprus Company Registration: A Comprehensive Guide
- Why Portuguese non-habitual tax residents incorporate Cyprus Companies?
- 5 Reasons Why Incorporating a Company in Cyprus Can Unlock the Potential of the EU Market for Your Business
- Cyprus Company Formation – How to start a business in Cyprus
- 15 things to know about Cyprus Company Incorporations
- Why gaming and tech companies are setting base in Cyprus
- How to choose a name for your Cyprus Company Incorporation
- Why you need a Cyprus Holding Company – Advantages & Taxation
- 3 Steps to Cyprus Company Incorporation
- 5 Things to know about Cyprus Company Incorporations
Contact us at email@example.com for more information on how we can assist you.
This article is provided for general information purposes only and is not intended to cover every aspect of the topic with which it deals. It is not intended to amount to advice on which you should rely and we recommend you to take advise from professionals before proceeding.