Company Incorporation in Cyprus- An Overview
Cyprus is an island nation which is located in the Mediterranean Sea. There are prominent investment opportunities in the country that attract different investors. There are different types of businesses that can be established in Cyprus. It is quite straightforward to incorporate a company in Cyprus, as the government offers different forms of incentives and support options.
For an investor, the process of company incorporation in Cyprus is less expensive. Out of all the countries in the Mediterranean region, incorporating a company in Cyprus is quite straightforward. Cyprus has been recognised by the OECD for effectively tackling tax evasion and money laundering activities.
The shareholders and directors of a company in Cyprus can be of any nationality. Hence there is no requirement for the company to appoint shareholders and directors who are Cyprian nationals. Cyprus has different forms of Double Taxation Agreements (DTAAs) with countries such as the UK, the USA, India and China. Hence an investor would not be taxed twice while carrying out the formalities related to company registration.
Cyprus is a part of the European Union (EU), hence it enjoys the four freedoms which includes the transfer of goods, services, capital and people. Hence an investor going for the process of company incorporation in Cyprus would get all these benefits. Cyprus is considered as a free economy when it comes to foreign investment opportunities in the country. This boost’s the amount of economic activity throughout Cyprus.
Benefits of Company Incorporation in Cyprus
The following are the benefits of company incorporation in Cyprus:
- Ease of Doing Business
Doing business in Cyprus is quite straightforward and inexpensive. There is adequate government support for companies incorporated in Cyprus. The minimum capital which is required for company registration in Cyprus is EUR 1. This would be applicable for an LLC which is incorporated in Cyprus.
- Double Taxation Agreements
Cyprus has different forms of Double Taxation Agreements (DTAAs) with countries such as the UK, the USA, India and China. Hence an investor would not be taxed twice while carrying out the formalities related to company registration.
In terms of tax treatment, Cyprus has been listed as White by the OECD in tackling money laundering and tax evasion. Hence all businesses formed in Cyprus would comply with the requirements of tax law.
- Low Operating Costs
It is not costly to run a company in Cyprus. The corporate tax levied at a rate of 12.5%. This would be the tax applicable on local income. There is no form of tax charged on worldwide income. Hence investors can also benefit from this. In terms of leased out spaces, offices are quite cheap when compared to other countries in the EU.
- Tariff Free Economy
As Cyprus is a part of the EU, it gets access to the four freedoms in the EU. Apart from this, it is also exempted from tariffs in the EU.
- Proper Regulatory Structure
All forms of investment in this country are protected by regulatory measures. There is no form of restrictions when it comes to repatriation of investment back to the home country. Apart from this, foreign trade and investment activities are thriving in the country.
Eligible Business Structures for Company Incorporation in Cyprus
An applicant going for company incorporation in Cyprus can choose a relevant business structure based on the need. The following business structures can be utilised:
An LLC is also known as a Limited Liability Company or a Limited Liability Corporation. The liability of the shareholders and directors is limited to a specific amount of paid up capital. The minimum capital which is required for forming this type of entity is only EUR 1. The applicable corporate tax for this entity is 12.5%. However, there is no form of minimum investment required to form this type of entity.
- Investment Holding LLC
The main purposes of going for company incorporation in Cyprus is for different types of investment opportunities. However, an investor going for this type of entity is to invest in a particular vehicle. This type of entity is usually used for securing the EU passport. There is limited liability for the shareholders and directors of the company. The minimum capital which is required for forming this type of entity is only EUR 1. The applicable corporate tax for this entity is 12.5%. However, an investor considering this type of business entity must have EUR 2 Million.
- Representative Office
A foreign company can establish a representative office in Cyprus. Usually only promotional activities would be carried out by the representative office. It is considered as a non-operational branch of the parent company. There is no form of limited liability for the shareholders and directors of this type of company. Only marketing and other forms of research activities can be carried out by this entity. The applicable corporate tax for this entity is 12.5%. There is no form of minimum capital required for this type of entity.
- Trust Entity
Usually trusts would be started off as off shore units to manage different forms of investments. These trusts are set up to manage family assets and investments from HNI individuals. There is no form of corporate tax on this type of entity. The minimum capital which is required for forming this type of entity is only EUR 1.
- Free Zone LLC
This type of entity would be a free zone company which is formed in Larnaca. This type of entity there is no form of restrictions in areas related to foreign investment. The corporate tax rate applicable to these entities is 12.5%.
Procedure for company incorporation in Cyprus
The following procedure has to be considered for company incorporation in Cyprus:
- Go Online
The applicant would have to first visit the companies registry of Cyprus. The following link would direct the applicant to the Registrar of Companies.
Then the applicant would have to select the type of business to establish. For this the applicant would have to take several considerations such as the name of the business, services provided by the business and other activities which would be covered by the business.
- Name Approval
After choosing the type of business, the applicant would require choosing and reserving the name of the company. Once the name has been selected, the applicant would have to check the registrar for similar names. If there is a similar name which is already taken then the applicant would have to consider making another application for reserving the name of the company. There are particular requirements related to reserving the name. The following compliances have to be followed:
• An applicant going for the process of company registration in Cyprus has to choose a name which is unique.
• The name of the company must not mislead any consumers or individuals.
• If the name has already been taken by a company, then such consent from the company must be secured for utilising the name.
• The name can be rejected by the Comptroller, if he feels that the name has breached international trademark regulation. Hence a name search must be conducted internationally.
• The name of the company must have LTD or Limited. If the company is a public limited company then the words public limited must be present.
The name approval process can be carried out online through website or it can be submitted in person.
If the name utilised is already used by another company then a permission or consent would be required. Along with this a fee of EUR 10 must be submitted. If you want to speed up the process then EUR 20 has to be paid.
This name which is reserved by the entity would be valid for a period of 6 months.
- Registering the Company
In the next step, the applicant would have to carry out the formalities related to registering the company. An applicant going for the process of company incorporation in Cyprus can either carry this process online or through the offline method.
The following documents have to be submitted through electronic form or through hand:
• Institution of Declaration of Conformity (Form HE1). This must be signed by a lawyer.
• Foundation and the articles of association must be in Greek ( Must be according to Table A of the First Annex of the Companies Law).
• Translation of the documents by a certified translator.
• Name approval consent.
• EUR 165 or EUR 250 – companies with share capital and without share capital.
• Form HE5- For a public limited company by paying additional EUR 20.
- Certificate of Recommendation
If the registrar of companies in Cyprus feels that all the documents confirm with the above requirements, then the registration would be published in the official gazette. After this the certificate of incorporation would be issued. This is evidence that the company is legally formed. The certificate of recommendation can be received at workplace or through electronic means. After this the certified copies of the following would be provided:
• Certificate of Membership;
• Certificate of Directors and Secretary;
• Registered Office Management Certificate;
• Certified copy of the Founding and Articles of Association of the Company; and
• Certified copy of the Certificate of Recommendation.
The certificates would be valid for a period of 90 days for their authenticity.
Post Compliance requirements for Company Incorporation in Cyprus
The following post compliances have to be met by the applicant:
- Registration for Tax- This must be carried out within 60 days. A tax identification number would be provided.
- Register for VAT- taxable transactions of goods for the last 12 months exceeds more than EUR 15,600.
- Social Insurance- An employer must register for social insurance.
- Register all Trade Marks.
- Corporate Compliances- Any changes must be notified to the Registrar of Companies. Annual fee of EUR 350 must be paid by June 30 each year.
The following documents are required for Company Incorporation in Cyprus:
- Institution of Declaration of Conformity (Form HE1). This must be signed by a lawyer.
- Foundation and the articles of association must be in Greek ( Must be according to Table A of the First Annex of the Companies Law)
- Translation of the documents by a certified translator
- Name approval consent
- EUR 165 or EUR 250 – companies with share capital and without share capital
- Form HE5- For a public limited company by paying additional EUR 20.