Cyprus is the third largest island in the Mediterranean, situated in the Eastern Mediterranean Basin. The population is approximately 850.000. The capital is Nicosia.
Cyprus joined the EU in 2004 and has adopted the Euro as currency ever since 2008.
Greek and Turkish are the official languages of Cyprus but English is widely used in the public sector and the business community.
Cyprus is a common law jurisdiction, the legal system being a remnant of the island’s British colonial heritage. Cypriot law is reliant on precedent extracted from the English common law for stability and finality. Cyprus companies are governed by the Companies’ Law Cap. 113.
The Cyprus corporate tax is currently at 12.5% but taxation rate depends on whether a company is considered tax resident. An International Business Company (“IBC”) is a tax resident in Cyprus if it is managed and controlled in Cyprus. Cyprus resident companies benefit fully of the advantageous Cyprus double-tax treaty agreements.
Requirements to incorporate a Company
|Minimum number of Directors / Local Directors||1 / No requirement for local directors, however it is recommended for the IBC to have a majority of Cyprus-resident directors, in order for the company to be managed and controlled in Cyprus and thus, be considered a Cyprus tax resident|
|Minimum and maximum authorized share capital||There is no maximum authorized share capital. The usual authorised share capital of a Cyprus IBC is €1000 and the minimum issued capital is €1,00.|
|Share capital to be paid||100% It is not obligatory to pay the share capital upon incorporation.|
|Company Secretary required / local||Yes / Yes|
|Restrictions on Names||Any word that the Registrar of Companies considers undesirable.Any name that is identical or similar to an existing company or sounds similar.Any name that implies illegal activity or implies royal or government patronage.|
|Min Number of Shareholders||1|
|Disclosure of Beneficial Owner||Not publicly accessible|
|Time needed for incorporation||5 working days|
Rules and Regulations
- Company names may be expressed in Greek or any language using the Latin alphabet if the Registrar is in receipt of a Greek or English translation and the name is not considered undesirable. Suffixes to express limited liability such as ‘Limited’ or ‘Ltd’.
- There must be at least one director
- Board of Directors meetings shall take place in Cyprus for the purposes of tax residency.
- There must be at least 1 local company secretary.
- There must be at least 1 shareholder, and the shareholder, secretary and director may be the same person.
- Shareholders may be individuals or a corporate body and they do not need to be locals or residents.
- A Cyprus company can engage freely in business with Cyprus residents but cannot undertake to the business of banking, insurance or the rendering of financial services to the public unless special permission is granted.
- A Government Levy of €350 is charged on an annual basis.
- Maintenance or submission of yearly audited financial statements.
Cyprus Tax Legislation
Taxation does not depend on where the Company is registered, but where it is considered tax resident. A company is tax resident in Cyprus if it is managed and controlled in Cyprus. Management and control is usually determined by the residency of the majority of the directors and the place where board meetings are held. Cyprus resident companies benefit fully of the advantageous Cyprus double-tax treaty agreements with currently 49 countries.
Cyprus has currently one of the lowest tax regimes in Europe. A single corporate tax rate is applicable for all companies. Cyprus clearly stands as a prestigious tax – incentive EU country.
- A Cyprus Company will pay a tax of 12.50% in Cyprus on its net profits derived world-wide if it is considered as Cyprus resident.
- A Company will pay zero tax in Cyprus if it is non-resident in Cyprus (management and control is outside Cyprus).
- Cyprus has currently 49 Double Tax agreements which can be utilized to minimize tax.
- A non-resident IBC will not be able to obtain a Cyprus Tax residence certificate and cannot enjoy the extensive double-tax treaty network.
- There is no withholding tax on payment of dividends, interest and royalties by an IBC to non-resident individuals or companies.
- Dividend income received in Cyprus by an IBC may be under certain conditions wholly exempt from tax in Cyprus.
- Tax losses can be carried forward indefinitely and set-off against future profits.
- Mergers and acquisitions, reorganizations of companies are implemented without tax implications.
- No capital gains tax (except on sale of immoveable property situated in Cyprus). Profits from the sale of shares are not taxable for all Cyprus tax residents.
- Cyprus has no exchange control restrictions – an IBC can open a bank account in any currency in Cyprus and abroad.
Types of Cyprus Companies
The Companies Law in Cyprus recognizes the following classifications of Companies:
- Limited by shares
The liability of the shareholders is limited to the nominal value of the shares they have taken up.
- Limited by guarantee
The liability of the members is limited to the amount so agreed and stipulated as a clause to its memorandum to be contributed in the event the company goes into liquidation.
These companies are usually incorporated as non-profit organizations with or without share capital.
- Private Companies
A Private Company is a Company which by its Articles of Association:
– Restricts the right to transfer of its shares, and
– Limits the number of its shareholders to 50, and
– Prohibits invitation to the public to subscribe for its shares or debentures
Any person may incorporate and register a private company and subscribe for all its shares and a single shareholder may become a director and secretary of such a company.
- Public Companies
– At least 7 shareholders
– At least 2 directors
– Obtained a trading certificate by the Registrar of Companies
– Issued a prospectus or a statement in lieu of prospectus before issuing any shares or debentures to the public
– Minimum share capital offered for subscription is €25.000, which must be present at the time that a trading certificate is requested by the Registrar.
- European Public Limited Companies or Societas Europaea (SE).
A SE company is a company that must have its registered office and its head office in the same Member State of the European Union.
The SE company must have at least a minimum share capital of €120.000 and it is regulated by the provisions of the Regulation 2157/2001.