1. What are the potential uses of a Cyprus Company?
- It can be a holding company, trading company, consulting company, IT co, etc.,
- The most commonly used company is a private limited liability company,
- Ideal to trade with many countries such as the EU and most countries worldwide,
- Beneficial for a Startup especially in the Tech industry due to the beneficial Cyprus IP regime,
- Most attractive tax regime in the EU,
- Can open up the possibility of residency in Cyprus, a country at the crossroads of Europe, Asia, and Africa which has;
– Affordable cost of living
– Low crime rate & safe environment
– Good health care and educational system
– Stable economy and growth
– Beautiful beaches and mountain ranges (top tourist destination).
2. What are the tax benefits of incorporating a Cyprus Company?
- Corporate income tax is one of the lowest in the EU – 12.5 %,
- Gains from sale of securities are exempt of taxation (subject to conditions),
- IP Box Regime – 80% tax exemption on qualified IP profits,
- No inheritance & gift taxes,
- No withholding tax applicable to dividends distributed to a non-resident shareholder,
- Nondomiciled tax residents are exempt from Special Defence Contribution (SDC) for up to 17 years,
- An exemption of 50% of remuneration from employment in Cyprus for the first 10 years. It applies to individuals who were not tax residents of Cyprus prior to employment and whose annual remuneration is over €100.000, and
- Tax-free income up to 19,500 Euros for personal income tax purposes.
3. Do I need a lawyer to incorporate a Cyprus Company?
Yes, you do.
According to Cyprus Law, only Cyprus Bar Association Licensed Lawyers are allowed to prepare and sign the HE1 form (incorporation form), and the Articles of Association of a Company.
4. What are the steps of incorporating a Cyprus Company?
- Name Application:
The first step is to choose a suitable company name and apply for name approval to the Department of Registrar of Companies and Intellectual Property.
The Registrar of Companies may refuse names identical or similar to the names of existing companies or suggest illegal activities. Names containing certain terms like insurance, banking, etc., need approval from the respective authority before registration.
The name approval generally takes three (3) to five (5) working days.
- Preparation and submission of all related documents to the Department of Registrar of Companies and Intellectual Property for incorporation:
Memorandum and Articles of Association: It sets out the structure such as the name, type, objects (activities) of the company, amount and number of shares, the shareholders, and the regulations for the company’s operation. It must be signed by the members (shareholders). The Articles need to be prepared and signed by a licenced Cypriot Advocate.
Shareholders: The private limited liability company must have at least one (1) shareholder and a maximum of fifty (50) and the shares cannot be publicly subscribed.
The shareholders can be individuals, corporations, or nominees. The shareholders can also be non-Cypriot residents.
The most common share capital used is €1000.
The share capital of the company does not have to be fully paid at the time of incorporation.
Director(s): The company must have at least one (1) director.
The director, under the principle of management and control, determines the tax residency of the Cyprus company. Thus, the director should be a tax resident of Cyprus. In the case of many directors, the majority of them need to be Cyprus tax residents.
Secretary: The company must have a secretary.
The secretary of the company performs corporate administration matters for the company. The company secretary should ideally be a lawyer with experience in the Companies Law of Cyprus thus ensuring the proper operation of the company.
Registered Office: It must be located in Cyprus.
Once all the documents are filed with the Department of Registrar of Companies and Intellectual Property for incorporation, following the examination and approval, the Registrar of Companies issues a Certificate of Incorporation, which includes the company’s name, the incorporation date, and its reference number (HE).
5. What are the compliance requirements for a Cyprus Company?
- All Cypriot companies must keep accurate accounting books and records and prepare audited financial statements in compliance with IFRS, except for dormant companies, therefore the statutory audit is required by all companies.
- It must register with the tax authorities and have a Tax Identification Number.
- The audited financial statements serve as the foundation for tax computations. Accordingly, the corporate income tax return filing must be submitted to the tax authorities certified by a registered auditor or tax professional.
- An annual return filing, which specifies the details of the share capital, shareholders, directors, and secretary, accompanied by the previous year’s financial statements must be submitted to the Department of Registrar of Companies and Intellectual Property.
- To employ people the company must register with the Department of Social Insurance Services, and it must submit on an annual basis the employer’s total payroll return.
The bank account opening process can, in some instances, be demanding, as all necessary documentation requested by the bank must be provided.
Opening an account with a local bank or payment institution is ideal. However, it could also be possible to open an account with foreign banks or even payment institutions.
1. How long does it take to open a bank account for a Cyprus Company?
It can take anywhere from two (2) weeks to two (2) months. It all depends on complying with requests from the bank.
2. Do I need a professional to help me open a bank account for my Cyprus Company?
It is ideal to use a professional to assist you in the account opening process, matters will be much more efficient.