Incorporation of companies in Cyprus

Cypern

Incorporation of companies in Cyprus

KGN specializes in establishing companies in Cyprus.

The company incorporation procedure in Cyprus is the same for all business entities, having a simple and straightforward structure. The company formation procedure in this country includes the preparation of articles of association and other documents required for the formation of a Cypriot company , such as signatures, passport copies, forms, etc.

Fast facts
Types of companies Limited company, Limited company, Cyprus partnership, Corporate liability by shares, Club, Non-profitable company
Minimum share capital for LTD Company 1 share of €1
Minimum number of shareholders for limited liability company 1
Time frame for the incorporation about 5 working days
Corporate tax rate 12.5% ​​on worldwide net profit
Dividend tax 0 %
VAT rate 19 %
Any tax incentives There are many tax incentives:– 12.5% ​​corporation tax on its net profit;

– 0% tax on any income from trading in securities such as shares, etc.;

– 0% tax for all profits from the sale of real estate abroad;

– 0% tax on dividends paid to shareholders as often as you like;

– 0% tax on dividends paid to it by any other company in which it owns shares;

– 0% stamp duty in many cases;

– 0% tax on profits from permanent establishments abroad, such as hotels, casinos, restaurants, factories, etc.

– 0% tax on any income from the sale of own shares;

– 2.5% tax on IP rights, income or rights;

– Cyprus has a network of more than 65 double taxation treaties with as many countries that you can benefit from.

Are drawer companies available? Yes
Do you provide a registered address/virtual office? Yes
Local director required Yes
Annual meeting required Yes
Resettlement permitted Yes
Electronic signature Yes
Is bookkeeping/annual return required? Yes
Foreign ownership allowed Yes
Any tax incentives Yes
Current legislation Cyprus company law
Legal forms available for foreign companies – subsidiary,- department,

– representative office

Special registration requirements for foreign investors (YES/NO) No, there are no specific requirements that foreign investors must meet.
Documents required to start a business in Cyprus – name reservation form,– the company’s statutory documents,

– proof of legal address in Cyprus,

– account statement for the share capital,

– information about the company’s managers and shareholders

Minimum number of directors – 1 for the private company,– 2 for the public company
Availability of online business registration (YES/NO) Yes, online business registration is available in Cyprus.
Availability of local representative services (YES/NO) Yes, you can also find such services from our company incorporation agents in Cyprus.
Local address requirements Yes
Business Incorporation Steps – reservation of trade name,– archiving of documents,

– creating a bank account,

– tax and VAT registration,

– employment registration

Business license requirements (if any) Yes, depending on the activity sector
Option to hire local employees (YES/NO) Yes
Registration for employment requirements Yes, both employer and employees must be registered with social security.
Preparation of company documents (YES/NO) Yes, we offer such services.
Support for bank account opening (YES/NO) Yes, this is one of our main services.
Company formation services (YES/NO) Yes, you can trust us for company formation in Cyprus.

New owners must also use a notary public, find an office for their business and set up a bank account . A Cypriot accountant will also be required after the new Cyprus company is incorporated.

Types of companies described by our experts in establishing companies in Cyprus

  • Limited liability company – in Cyprus this type of company, also called an LTD , be either public or private, depending on the types of shares and the size of the company. With regard to share capital requirements, the limited company is not required to have a minimum amount, however the minimum share capital in the case of a public company is approximately 25,629 euros.
  • Foreign companies are welcome to set up branches and representative offices as well as subsidiaries , which will act as an extension of the parent companies in Cyprus. Each structure has its own requirements that founders must meet. Our experts can help you create one of the above business forms.
  • Partnerships in Cyprus . There are two types of partnerships available for registration in Cyprus – the general and the limited partnership. These are not considered separate business units apart from their owners. Both types of partnerships require a minimum number of two participants and a maximum of 20 participants.
  • Sole proprietorships in Cyprus . This is the simplest form of business available to those who wish to operate on their own. There are no share capital requirements for sole proprietorships.

Establishment of a private limited company (LTD) in Cyprus

This is the most common type of company used in Cyprus , and it is founded by one or more partners – up to 50. Other important requirements for setting up a limited company are a local address and a secretary. Shareholders subscribe for shares, monetary or non-monetary, which are assigned a nominal value and are non-transferable. The members of a private limited company liable only for the company’s debts and obligations to the extent that the nominal value of their shares. In a private limited company, there are no minimum capital requirements. If you need help opening this type of business, you can rely on our experts in incorporation of companies in Cyprus.

Registration of a Public Limited Company (PLC) in Cyprus

Businessmen who wish to open a business in Cyprus as a limited company, should know that this company operates in the same way as a private limited company, except that these shares are freely transferable and there is no restriction on the maximum number of partners. It must also have at least 7 shareholders. The minimum share capital in a limited company is 25,629 euros.

Establishment of subsidiary, branch and representative office in Cyprus

These legal forms are available to any foreign company interested in entering the Cypriot market. These can be created as separate entities from the parent company (Cypriot subsidiaries with the foreign company as a shareholder) or extensions of the parent company in Cyprus (branches).

Both local and foreign investors who wish to establish companies in Cyprus must prepare the following documents and submit the following information to the commercial register:

  1. name application for approval of name;
  2. HE1 Form stamped by the Court
  3. HE2 form – declaration of registered address
  4. HE3 Form – statement from director and secretary
  5. M&A signed by shareholder and lawyer.

Our experts in setting up companies in Cyprus can help with the drafting of the Memorandum and Articles of Association.

Offshore companies in Cyprus

The so-called “offshore” companies in Cyprus do not differ in any way from a regular Cyprus company (same incorporation procedures and same taxes to be paid).

The Cypriot offshore company has many advantages, including:

  • it will benefit from reduced tax rates and will be subject to one of the lowest corporate taxes in Europe;
  • it can be established as a holding company with the main activity related to the control of assets of other Cypriot companies;
  • it provides increased protection to its shareholders from a privacy point of view.

Our experts in setting up companies in Cyprus can help foreign investors who want to set up offshore companies in this country. We also invite you to see a short version of the company formation process Cyprus in the table below:

Business Incorporation Steps in Cyprus

Cypriot private companies limited by shares must have a registered office in Cyprus and managed by a board of directors. Foreign investors must appoint a specialized local agent to handle the company formation process in Cyprus. However, it will be necessary to come in person to open the bank account to sign some papers and present the registration certificate and identification documents to the management

VAT registration is only mandatory for those companies that carry out activities subject to value added tax, such as trade. If you have to register for VAT your company , our specialists in company registration in Cyprus can help you.

Regardless of the type of company chosen, the following steps must be taken when setting up a company in Cyprus :

  1. to choose and reserve the company name in the company register – this name must be unique, therefore we advise you to verify at least 3 names before making the reservation;
  2. preparation and notarization of the company’s statutory documents, which are made by the articles of association;
  3. submission of all the above documents and information to the commercial register and obtain their approval and the company’s registration certificate;
  4. registration for taxation, obtaining a VAT number and registration for social security purposes with the tax authorities;
  5. apply for various special licenses or authorizations depending on the industry in which the Cypriot company will operate.

Investors wishing to open a company in Cypruscan receive specialized assistance from our team of incorporation agents.

One of the main aspects of company registration in Cyprus is related to the costs associated with its setup. From this point of view, we must mention that the costs of registering a company depends on its type and the industry in which it will operate. Following procedures should be considered when talking about the costs associated with opening a business in Cyprus :

  • the company name reservation is completed with the trade register and is subject to a fee of approx. 30 euros;
  • the costs associated with the preparation and notarization of the incorporation documents will depend on the notary public;
  • the prospective business owner must also take into account the company registration fee;
  • there are no costs associated with tax, VAT and social security registration.

The costs of setting up a company in Cyprus are as follows:

  1. the company registration fee charged by the Cypriot company registrar is EUR 650;
  2. the registered address is set at approximately 1350 EUR per year with us and it represents one of the cheapest and fastest solutions for a registered office in this country;
  3. the minimum share capital of a private limited company in Cyprus is set at 1 EUR, but the investor chooses the amount necessary for the company ;
  4. the company registration cost for our local specialists is around 1600 EUR , which is one of the lowest establishment fees in Cyprus;
  5. the accounting fees charged by our local accountants start at around 150 EUR/month and depend on the services requested by clients.

Businessmen interested in starting a business in Cyprus should also take into account the costs associated with opening a company bank account, which will vary depending on the bank and the services linked to the account.

How long does it take to register a company in Cyprus?

Another important aspect in connection with the establishment of the company is the time spent on each procedure. It can be divided into:

  • 4-5 days for approval of the company name;
  • 1 or 2 days to prepare the company’s statutory documents;
  • the filing and review of the company’s foundation documents for the commercial register will take another 5 working days;
  • the registration for taxation is about 2 working days;
  • social security registration is about 1 week.

The main advantage is that all the paperwork can be filed electronically with the Cyprus Commercial Register .

Tax and VAT registration when opening a business in Cyprus

The tax registration procedure is part of the procedure to open a company in Cyprus, which means that it will be completed together with the incorporation process. The tax identification number will be issued together with the registration certificate, but where applicable VAT registration , the procedure must be completed separately because it is not mandatory.

VAT registration becomes mandatory when the company involved in distance selling in Cyprus reaches the 35,000 euro distance selling threshold. Based on the VAT number, companies with trading activities within the EU can also obtain EORI numbers and thus facilitate trading procedures.

Our experts in setting up companies in Cyprus can offer more information on the procedures for obtaining VAT and EORI numbers. We can also help with these steps, which are quite important when you start a company in Cyprus .

How easy is it to hire staff in Cyprus?

A key advantage of owning a business in Cyprus is the highly educated workforce, mostly English speaking.

The minimum working age is 15 years.

The staff can be recruited from the many temp agencies. The Cyprus Human Resource Management Association for information and the Cyprus Chamber of Commerce and Industry (KEBE) can also provide information on hiring staff.

The employment contract can be for a fixed period or an indefinite period. It must state location of the company , details of the job, start and end of activities, details of salary and other benefits. A collective agreement can also be signed and usually has a duration of two years.

An employer can also hire staff for a part-time job, for a specific period of time or work from home. Working hours must not exceed 48 ha per week and at least 11 hours of rest in 24 hours.

A number of benefits are provided to employees. Sickness allowance is paid for a period of 156 days. All unemployed people can receive daily allowance for a period of 156 days. The maternity allowance is paid for 18 months.

There are certain conditions that companies in Cyprus must meet before hiring foreign staff: the company must be listed and the direct shareholders must be registered with the Immigration Control Board and the Civil Registration Board. Furthermore, the sources of capital must be transparent, the company must have an administrative office located in a proper district and financial stability documented by annual balance sheets.

A foreign employee must have a residence permit before employment. For this, he must submit the following documents to the immigration department of the local police:

– a tax for the permit;
– a CV;
– looked after;
– medical certificate and insurance;
– criminal record;
– the employment contract (must contain the duration of the contract and the salary);
– bank guarantee and two completed specific forms.

All EU citizens must be registered for tax with the Department of Inland Revenue to receive a Taxpayer Identification Code. Any industrial dispute is governed by the Industrial Relations Code, except for strikes, which are normally mediated by the Ministry of Labour.

The share capital of a Cypriot company

The first cost, which is first determined by a businessman who wants to open a business in Cyprus, is the share capital that can be imposed by the Companies Act for certain types of structures or must be estimated for other forms of business. In the case of a limited company, there is e.g. no minimum requirements for share capital, but the investor must estimate the amount to be contributed as share capital to the company. For public companies, the minimum amount to be contributed as share capital is 25,629 euros.

It should be noted that a small percentage of the share capital must be paid as a registration fee at Companies House in Cyprus.

What are the main points of interest for foreign investors in Cyprus?

Cyprus is known for the benefits offered to investors , especially in the transport areas. For example, the profits from the operation of the Cypriot ships are not taxable. Dividends from the companies that own ships are also exempt from tax.

Cyprus has an excellent infrastructure with 2 international airports, 3 shipping ports (in Lemesos, Larnaca and Vasilikos) and a modern road network. This facilitates the export and import of the goods.

International and multinational companies and banks operate in Cyprus,attracted by the low operating costs, financial freedom and well-educated local companies, ready to advise if necessary.

Frequently asked questions about incorporation of companies in Cyprus

1. Can a foreigner open a company in Cyprus?

Yes. Cyprus welcomes foreign investors in various business areas. The investment legislation allows foreigners to open the same companies as national investors.

2. What types of companies can be established in Cyprus?

The types of companies in Cyprus are: private and joint-stock companies, partnerships, sole traders or branches of foreign companies. Our experts in establishing companies in Cyprus can help you with understanding the special conditions of each business type.

3. Should the company have an office in Cyprus?

Yes. A local registered office is necessary for a company registered in Cyprus. The foundation documents must be kept at this address. Our specialists in company formation in Cyprus can offer businessmen special virtual office packages which include a local address.

4. What are the steps for company registration in Cyprus?

Choosing the right type of company and an available company name, preparing company documents and submitting to the Cypriot Commercial Register. After the business is registered, the business owner can start applying for other permits and licenses and register the business for VAT.

5. What is the minimum capital in Cyprus?

There are no mandatory requirements for a minimum share capital for a limited company. Our experts in company registration in Cyprus recommends you deposit a start-up capital for your company of approximately EUR 1,000. The limited company requires no less than EUR 25,629 as minimum share capital.

6. What are the requirements to open a bank account in Cyprus?

Banks in Cyprus will generally require the company to produce its incorporation documents. A bank account can be opened in any bank in Cyprus.

7. Do you need special permits and licenses in Cyprus?

Yes. Special permits and licenses are required for some activities.

8. What are the taxes for companies in Cyprus?

Cyprus has a corporate tax rate of 12.5%. Dividend tax is 0. Other taxes in Cyprus include capital gains tax, social security contributions, stamp duty, transfer tax, property tax. Our specialists in establishing companies in Cyprus can help you comply with the tax rules that exist in this country.

9. What are the reasons to invest in Cyprus?

A good geographical location and advanced infrastructure is the reason why many import and export companies base their business in Cyprus. In addition, the country has a good tax system, a sound legal and regulatory framework and a skilled workforce.

Key facts about Cyprus

  • Cyprus has one of the lowest corporate tax rates in Europe: 12.5%.
  • The standard VAT rate is 19%, but there are also two reduced rates of 8% and 5%. There are also some services and goods where a zero VAT rate is imposed. The minimum annual turnover that a company must achieve to be obliged to register for VAT is EUR 15,600 (or EUR 10,251 for the acquisition of EU goods).
  • There is no withholding tax on dividends paid by a Cypriot company to its non- Cyprus resident shareholders, and no withholding tax on dividends received from EU subsidiaries.
  • Foreign investors have the option of setting up holding companies in Cyprus – one of the best tax minimization solutions in this country.

We invite you to contact our specialists in incorporation of companies in Cyprus for more information about our services or for a personal offer.

Contact form Cyprus

Contact us on phone +45 70231422, or email kgn@kgn.dk, or the Contact form below, and get answers to your questions about setting up companies in Cyprus. We always offer a free estimate on the incorporation of companies in Cyprus.

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