Quick property search

Our newsletter

Get the weekly highlights by e-mail. Just subscribe to our newsletter!

Stay in touch

Website search

Formation of Companies

 

 

Foreign citizens no longer need the Central Bank of Cyprus’ permission to hold shares in Cypriot companies. Any national can start his or her business in Cyprus, should it be a citizen of Cyprus, of other EU countries, or a citizen of any other non-EU country. All are treated equally, and the registration process has become much easier. The procedure of opening a business in Cyprus does not require the presence of the shareholder on the island.

All the differences that once existed between the so-called off-shore and local companies are no longer applicable in Cyprus. In the past the offshore companies enjoyed the reduced level of the corporate tax rate of 4.25%. Today all companies pay the same corporate tax of 10%. Regardless of the tax increase to today’s 10%, Cyprus continues holding its leading position with the lowest corporate tax in Europe, let alone other advantages that attract many foreign investors. Cyprus is recognized as having prestigious jurisdiction with low taxes, which is not accompanied by an atmosphere of suspicion that usually surrounds all the offshore jurisdictions.

A company registered in Cyprus, finds recognition, when it is used as part of a well-planned international tax system. Following Cyprus’ accession into the EU in May 2004, all restrictions on monetary control were abolished. Now investors can easily transfer money to and from Cyprus without any restrictions. Another important fact to note is that having a company registered in Cyprus opens doors to all the advantages a European company has when trading with other companies registered anywhere in the EU.

Interests of real shareholders are protected by a contract of trust to nominal shareholder in relation to the real one. Where so-called nominal shareholders are used, the details related to real shareholders or company directors will never become available or released to the public.
Directors of companies will never meet with any difficulty while opening corporate bank accounts and will be obliged to indicate names of real shareholders. At the same time, the information disclosed the bank will not lead to its availability to the public. Banks do not have the right to disclose information about your company, except when it is requested by the court of Cyprus. Such cases are very rare and always relate to suspicion of money laundering or belonging to terrorist organizations.

Registering a company

There are two basic ways to register a company: expedite and normal. Cyprus legislation does not imply any time frame for the registration process to be completed. Please, do not believe any promises about existence of a certain registration period. Time spent on registration process, depends both on the existing workload of the Registration Chamber, and on whether you have paid a certain fee for the speedy registration. Given the additional cost for using the speedy method is more or less insignificant, we will talk about it only further on.
To register a company from a cratch takes about 10-18 working days. The first step in any registration process is choosing a company name. The name or names must be confirmed by the Registration Chamber. This can take anywhere from 5 to 10 working days. Once the confirmation is received, it will be possible to move to the next step, which is, in fact, the company registration per se. The registration process takes 5-8 following working days.

Required documents and data

All the required documents and data are related to the shareholders and officials of the company. These days the corporate legislation of Cyprus allows ownership of all the shares of the company by one person only. Shareholders can be both physical and legal persons.
Where shareholders are private individuals, the following documents and information will be requested about each one of them:

• A Passport copy, preferably scanned, showing the photograph, personal details and signature of the individual.
• Residence address of the shareholder. PO Box address will not be considered as valid.
Where shareholders are legal persons, each one of them must submit the following documents and information:
• A copy of the Charter.
• A copy of the founding documents.
• A copy of the certificate of registration in the State Register.
• A Copy of protocol of appointment of Directors and Chief Accountant.
All documents must be in English and notarized, ones not available in English, should be translated and notarized.

Company staff.

A company must have at least one Director and one Corporate Secretary. Information about both positions should be available to the public. Director may be both physical and legal person. The following documents must be provided about each official of the company:

• A Passport copy, preferably scanned, showing the photograph, personal details and signature of the individual.
• Residence address of the official. PO Box address will not be considered as valid.
About Directors only
• Information about his/her profession.
• Information about whether he/she is still Director of any company (a simple answer: "yes" or "no").
When any of the officials of the company is a legal entity, the following documents must be provided:
• A copy of the Charter.
• A copy of the founding documents.
• A copy of the certificate of registration in the State Register.
• A Copy of protocol of appointment of Directors and Chief Accountant.
All documents must be in English and notarized, ones not available in English, should be translated and notarized.

Taxation issues

• The corporate tax currently stands at 10%.
• Dividends received are exempt from income tax of the shareholder, as well, if the recipient of dividends is not a Cyprus resident paying all taxes, dividends are also exempt from tax on defense, which is currently 15%.
• Interest on investment received by an individual or a company is not taxed. Nevertheless, if the interest derives not from ordinary activities of the company or activities related to it, then only 50% of this income is not taxable.
• If the company does business, which is subject to VAT, it must register with the Department of VAT and report about its activities each quarter of the year. Currently, there are three levels of tax 0%, 5% and 15%. If a company registered in Cyprus is trading with another company, registered in another EU country and both companies are subject to VAT, no VAT is required for transactions between them.
There is no requirement for products bought in another EU country to be delivered to Cyprus. These goods could be delivered directly to the end customers thus avoiding the additional costs related to transportation and payment of VAT, since a Cyprus company received an invoice for it.

Opening a Corporate Bank Account

To open an account, all banks require proper documentation. In addition to the documents listed above now every bank will require proof of residence of the shareholder and any professional or banking reference.
Additional costs that you may encounter while setting up a company, other than those listed above, are not included in the service package. These are minor expenses such as purchasing a stamp for the company and professional fees required for registration of the company at the Tax

Office and the VAT Department.

Residency and work permit
There is no requirement of residency in Cyprus to register the company there. Nevertheless, whether the owner would like to control his/her business from inside Cyprus, he or she will need to obtain a permission to live and work in Cyprus. Obtaining a temporary residence and work permit for the citizens of the EU is a mere formality. Citizens of the countries outside the EU have to meet certain conditions for obtaining such permission. The rules and requirements are formulated so that they attract serious business to the island.

Reporting requirements

• When a company is obliged to register with the VAT Department, it has to maintain all original documents and submit quarterly reports to the VAT Department.
• A company has to keep the books and prepare annual financial reports, which must be verified by a professional auditor.
• A company is obliged to submit all financial statements, together with reports on profit to the Registration Chamber annually.
• When a company has full-time employees who receive salary, then it  must take into account the income tax, social insurance and other monthly deductions from the wages of workers in compliance with legislation.

 



Ask the expert a question . Your query will be examined in the duration of a few hours.
Contact us by telephone +357 99206950 +357 24 650 384
Skype:investia.cyprus