Considering expanding your business or relocating to a favorable country in terms of taxes? A company registration in Cyprus is an excellent option.
Cyprus has quickly become one of the most popular destinations for entrepreneurs and investors from around the globe. Because of its strategic location that bridges Europe, Asia, and Africa, Cyprus offers unparalleled access to many markets. And if you’re European, you’re never too far away from home.
In this guide, we’ll go through this process step by step, highlight the key benefits, and give valuable insights to make this smooth and successful. Make sure to read until the end, as we cover many details you’ll need throughout the Cyprus company registration.
Company Registration in Cyprus – Overview
First and foremost, let’s go through the essentials that you should know if you’re considering a business set up in Cyprus, from the benefits to the income tax rate and more.
Why Choose a Company Registration Cyprus?
Choosing Cyprus for your company registration gives you a strategic advantage in expanding internationally. The island is the bridge between Europe, Asia, and Africa, with pretty much unlimited market access.
While many people choose to form a company in Dubai or the UAE, Cyprus has a robust legal system based on English common law and a safe and transparent business environment. Plus, it has one of the lowest corporate tax rates in the European Union, and that’s probably the biggest benefit.
All in all, with a high standard of living, excellent infrastructure, and a business-friendly government, Cyprus is the perfect place for entrepreneurs and established companies.
Key Benefits of Setting Up a Business in Cyprus
There are many benefits to register a business in Cyprus, but these are the most advantageous:
- Low Corporate Tax: 12.5%, one of the lowest in the EU.
- Strategic Location: Access to Europe, the Middle East and Africa.
- EU Membership: EU regulatory framework.
- Robust Legal Framework: English common law system, transparent, and reliable.
- Multilingual Workforce: Access to a highly educated and multilingual staff (and cheaper than in other countries).
How Easy is it to Register a Company in Cyprus?
Registering a company in Cyprus is a simple process designed to facilitate business growth. Needless to say, that’s exactly what you want as a business owner.
The process involves choosing a unique company name, preparing the Memorandum and Articles of Association, and submitting the required documents to the Department of Registrar of Companies.
With online submission and fast-track procedures, the whole process can be done in 10-15 working days. No local shareholders or directors are required, as full foreign ownership is allowed, and that’s a massive bonus.
At Wanderers Wealth, we help our clients set up businesses in Cyprus, so if you want to make your life easier and accelerate the overall process, get in touch today.
How Much is the Income Tax Rate in Cyprus?
Cyprus has a corporate income tax rate of 12.5%, one of the lowest in the EU. The country also has a network of double taxation treaties with over 60 nations, reducing the tax on international income.
Personal income tax rates are progressive from 0% to 35% with various allowances and deductions. If you earn less than €19,500 a year, you won’t pay income tax. However, if you earn income above €60,000 or more, the income tax rate is 35%.
However, Cyprus offers a special non-domicile tax status to foreigners that grants significant tax benefits, including tax exemptions from dividends and interest income, making it highly attractive for online entrepreneurs.
Types of Business Entities in Cyprus
When setting up a business in Cyprus, choosing the right structure is key. Cyprus offers various business entities to suit different needs and objectives:
- Private Limited Company (Ltd): The most common type of business in Cyprus, suitable for small to medium-sized companies. It has to have at least one shareholder and up to 50 shareholders. Shareholders’ liability is limited to their share capital contribution. This is the most commonly chosen entity for our (online) entrepreneurs.
- Public Limited Company (PLC): This is for larger companies that want to issue shares to the public or be listed on a stock exchange. A PLC must have at least 7 shareholders and a minimum share capital of €25,630.
- General Partnership: Two or more partners who share unlimited liability for the company’s debts and obligations. Based on trust, it is generally less common due to the risk involved.
- Limited Partnership: A limited partnership combines general partners with unlimited liability and limited partners whose liability is limited to their capital investment. Allows for investment without active management involvement.
- Sole Proprietorship: Owned and operated by one individual who has full control but also bears unlimited personal liability for business debts. Easy to set up, but no separation between personal and business assets.
- Branch of a Foreign Company: Allows an existing foreign company to do business in Cyprus without forming a separate legal entity. The parent company is liable for the branch’s obligations.
- Societas Europaea (SE): A European public company that enables companies to operate across EU member states under one legal framework. The minimum capital is €120,000.
Of course, all these business structures have different legal, tax, and administrative implications. Everything depends on the level of liability protection, capital investment, management structure, and long-term goals.
Cyprus Company Registration Step-by-Step
Registering a company in Cyprus is a relatively quick and easy process. Here’s a more detailed step-by-step guide to help you get through it smoothly:
Step 1: Choose and Reserve a Company Name
First of all, choose a unique and relevant name for your company. The name cannot be the same or very similar to existing registered names and cannot include any prohibited words or phrases that suggest illegal activities or mislead the public (rightfully so). Choose a name that reflects your brand and target audience.
Once you have decided on a name, submit it to the Department of Registrar of Companies for approval. This takes 2 to 5 working days.
Reserving your company name early not only secures it for your use but also avoids delays in the next steps.
Step 2: Memorandum and Articles of Association
The Memorandum and Articles of Association are the basic legal documents that outline the structure, objectives, and internal governance of your company.
The Memorandum contains essential information like the company name, registered office address, and scope of activities. The Articles of Association detail the rules of the company, including shareholder rights, procedure for director appointments, and rules for meetings.
These documents must comply with the Cyprus Companies Law, Cap. 113. While there are standard templates available, it’s recommended to hire a local lawyer to draft these documents to your specific business needs, so that you meet all legal requirements and avoid future disputes or compliance issues.
Step 3: Gather the Required Documentation
Step 3 is a little longer and requires more time compared to the first steps, but it’s very important. Collect all necessary documents for due diligence and anti-money laundering purposes.
These are the mandatory documents for individual directors and shareholders:
- Notarized copies of passports: Valid ID confirming nationality and identity.
- Proof of residential address: Recent utility bills or bank statements (usually within the last 3 months).
- CV: Professional background and experience may be required.
If any of the shareholders or directors are corporate entities, you will need to provide:
- Certificate of Incorporation
- Memorandum and Articles of Association
- Certificate of Good Standing
- Board resolution approving the investment in the Cyprus company.
These documents may need to be apostilled or legalized if issued outside of Cyprus, so keep that in mind.
Having all documents accurate and complete not only speeds up the registration process but also shows your transparency and compliance with international standards. Of course, this is always a plus when going through a company registration in Cyprus (or any other country, for that matter).
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Step 4: Submit the Registration Application
Fill in and submit the necessary statutory forms to the Department of Registrar of Companies:
- Form HE1 (Declaration of Compliance): A statement that all legal requirements have been fulfilled.
- Form HE2 (Registered Office Address): The official address of the company in Cyprus.
- Form HE3 (Director and Secretary): Personal details and roles of the appointed directors and company secretary.
Attach the approved company name certificate, Memorandum, and Articles of Association, and pay the registration fees, which are calculated based on the authorized share capital.
Applications can be submitted online through the Registrar’s portal or in person. The processing time is usually 7 to 10 working days, but may vary depending on the workload of the Registrar. Early and accurate submission avoids delays or rejection of your application.
Step 5: Get the Certificates and Register for Tax
After the registration, the Registrar will issue the Certificate of Incorporation, which is the legal proof of the existence of your company. You can also request additional certificates:
- Certificate of Directors
- Certificate of Shareholders
- Certificate of Registered Office
These documents are required for opening bank accounts or signing contracts. Next, register your company with the Tax Department to get a Tax Identification Number (TIN), which is mandatory for all companies operating in Cyprus.
If your company’s annual turnover is expected to exceed €15,600 or if you trade goods or services intra-EU, you must also register for Value Added Tax (VAT).
VAT registration can be done online or at your local Tax Department office and is required for tax compliance. Is it difficult? No, but it’s yet another step in the overall Cyprus company registration process.
Step 6: Open a Corporate Bank Account and Register for Social Insurance
Opening a corporate bank account in Cyprus is necessary for managing your company’s financial transactions, including capital injections, operational expenses, and revenue collection.
To open an account, you will need to provide incorporation documents such as the Certificates and Memorandum, and Articles of Association, as well as identification for directors and shareholders, including notarized passports and proof of address.
Banks will also require you to fill in questionnaires about your business activities, expected transactions, and sources of funds. When you hire an agency to help you with the process,
They may also do their own due diligence as part of anti-money laundering compliance. If you plan to hire employees, you must register as an employer with the Social Insurance Services within one month of hiring your first employee.
This involves submitting the relevant forms and making regular contributions to social insurance, redundancy, and other related funds. It goes without saying that complying with labor laws (for instance, keeping proper employment contracts and health and safety regulations) is essential to avoid penalties and to run smoothly.
Step 7: Compliance with Ongoing Obligations
After incorporation, your company must meet ongoing statutory requirements to stay in good standing. This includes filing annual returns (HE32) with the Registrar and updating information on directors, shareholders, and the registered office.
You must keep accurate accounting records and prepare annual financial statements in accordance with International Financial Reporting Standards (IFRS). Generally, companies must have their financial statements audited by a Cyprus-licensed auditor.
Apart from that, tax compliance is also key; you must submit annual corporate tax returns, pay any taxes due, and stay informed of changes in tax laws and regulations to ensure ongoing compliance.
Being proactive with these requirements helps to build credibility with stakeholders and avoid fines or legal issues.
Last but not least, professional advisors, such as accountants and legal consultants familiar with Cyprus company law can help stay compliant, and that’s definitely what you want when opening a company in Cyprus.
Requirement for Company Registration Cyprus
To register a company in Cyprus, you need to meet the following requirements:
- Company Name Approval: Choose a unique company name and get it approved by the Department of Registrar of Companies.
- Shareholders: At least one shareholder can be an individual or a corporate entity of any nationality.
- Directors and Company Secretary: At least one director and a company secretary. Although not mandatory, having local directors is beneficial for tax residency status.
- Registered Office Address: Have a physical address in Cyprus for your company to serve as the official address.
- Memorandum and Articles of Association: Prepare these essential documents outlining the company structure, objectives, and internal rules.
Additional requirements are the submission of identification documents for due diligence purposes, like notarized copies of passports and proof of address for all directors and shareholders.
Anti-money laundering regulations also apply, meaning Know Your Customer (KYC) checks.
After incorporation, you will need to obtain a Tax Identification Number (TIN) and if applicable a VAT number. Although the process is straightforward, it is always recommended to seek legal or professional advice to help with any complexities, especially with industry-specific licenses or permits.
More Information for a Company Registration Cyprus
We went through all the different aspects of registering a business in Cyprus, but I want to cover some more details and questions that some entrepreneurs have.
How Long to Stay in Cyprus to Be a Tax Resident?
To qualify as a tax resident in Cyprus, you need to reside in the country for more than 183 days within a tax year (which runs from January 1 to December 31).
That being said, Cyprus has introduced a “60-day rule” as an alternative. Under this rule, you can become a tax resident if you spend at least 60 days in Cyprus during the tax year, provided you meet certain conditions.
You must not reside in another country for more than 183 days, you are not considered a tax resident elsewhere, and you have significant business or employment ties to Cyprus, such as being a director in a Cypriot company.
Any Benefits for Tax Residents who are considered Non-Doms?
Non-domiciled tax residents of Cyprus are those tax residents who:
- Do not have a domicile of origin or choice in Cyprus or
- Have not lived the last 17 out of 20 years before the tax year in Cyprus.
This includes most foreigners who decide to move to Cyprus.
Benefits for Non-Doms in Cyprus include exemption from paying taxes on dividends, rents and interest received.
If you’re earning income and employed in Cyprus, you might potentially qualify for a 50% discount on your income in Cyprus for ten years if your income exceeds €100.000.
And if you’re employed overseas, that income is exempt from Cyprus income tax, provided that the employment exceeds 90 days per tax year.
Can Anyone Open a Business in Cyprus?
Yes, both local and foreign entrepreneurs can register a company in Cyprus. There are no nationality restrictions on company ownership, allowing both EU and non-EU citizens to set up a business in the country.
The process involves selecting an appropriate business structure, obtaining approval for your company name, preparing the necessary documentation, and registering with the Department of Registrar of Companies.
Physical presence in Cyprus is not mandatory during the registration process, as it can be completed through an agent (which is the best and most convenient way to register a business in Cyprus).
Conclusion – Company Formation in Cyprus
Forming a company in Cyprus opens up a world of possibilities. I’ve helped many of my clients with their Cyprus company registration, so be sure to get in touch if this is something you are interested in, too!
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NOTICE: The content of this article is not to be considered as a legal opinion or tax advice. Wanderers Wealth does not hold itself out as a legal or tax advisor. If you want to receive a legal opinion or tax advice on the matter in this article please contact us directly and we will refer you to a legal practitioner.
