Cyprus Company Incorporation Process

Cyprus is a former British Colony, and the legal system of Cyprus is based on English Common Law. Cyprus is considered to be a modernized legal system which enables the introduction of new civil law principles and Common law principles. Cyprus has a growing economy in terms of legal and financial aspects are concerned. Here we are discussing the Cyprus Company Incorporation Process in details.

Market Opportunities

The entrepreneurial environment and other facilities are favorable in Cyprus since it consists of one of the best – established centers in the world. It is thus considered to be a primary offshore and international business area. Cyprus is considered to be a leading financial center with a low tax rate in comparison to other European Union countries. It also has an advantage of offering excellent professional services, transportation regulatory environment and more. The investors are often captivated by the professional atmosphere in Cyprus. Thus, Cyprus Company incorporation is quite easy and straightforward. However, there lies a requirement of professional advice in respect of company incorporation procedure, the opening of bank account, general advice on running of the business, tax planning and also the tax advantages. Thus the corporate culture in Cyprus is considered to be very well structured one. There is numerous kind of business that will find it advantageous to operate through Cyprus including the common sectors of international trading and property, investment holding, employment, shipping, e-business, etc.

Advantages(Cyprus Company Incorporation)

There are certain advantages which make Cyprus one of the most popular country to form a Company, such as:

Friendly Tax System:  Cyprus is a great attraction as a business location because of the friendly tax system which offers many advantages to the Companies located here. The basic key benefit provided to a resident corporation is that it provides a uniform 12.5% corporate tax rate which is considered to be one of the lowest in Europe. Also, it is under the whitelist of OECD.

Benefits of creating a Holding Company: the creation of the Holding company or any other type of company is considered is supposed to be taxed to the resident of Cyprus if the business is controlled and managed in Cyprus. The Cyprus Law provides multiple tax benefits with zero percent tax on income, dividend income, profits, bonds with the exception of capital gains related to immovable property.

Types of Companies

There are major two types of Companies in Cyprus such as:

• Private Limited Company: This is considered to be the most popular type of company that is used in Cyprus. A private Limited Company requires its subscribers to have a signed Memorandum of Association which should contain the objects for which the company has been formed. The memorandum then needs to be registered with the Registrar of Companies of Cyprus. Also adoption and registration of Articles of Association to the Registrar, clearly defining the regulations need to be done.
• Limited Liability Company: limited liability Company as the name suggests is a type of company which contains the following clauses in its Articles of Association: such as
• Restriction on the transfer of its shares
• Restriction on the number of members to maximum 50.
• Restriction on an invitation to the public subscription of Shares or debentures.
• A company limited by shares needs to have one director and also a Secretary and a registered office in Cyprus.
• There lies no minimum share capital requirement and can be formed with a sole member having at least one Company Secretary. In this case, the sole director and the Secretary can be the same person.
• The liability of the members is limited to the amount of the share capital that is subscribed. These types of corporations are used for carrying out the business by large organizations which are interested in a particular type of business or investment activities.
• Public Limited Companies: this is another type of Business formation in Cyprus. The main characteristics of this type of organization are:
• There need to be at least 7 (seven) shareholders.
• The minimum capital requirement of Public Limited Company in Cyprus is Euro 25,629.
• The public limited companies have the ability to invite public subscription to its shares.
• There is a restriction of having at least 2 directors.

Incorporation Process

The incorporation process usually takes about 10-12 working days. There is certain information along with the due diligence documents that are required in order to proceed with the incorporation.

These are:

• The proposed name of the company
• Main objects/description of the activities
• Name of the proposed shareholders
• Name of the proposed Directors
• Name of the Company Secretary (if needed by Company)
• Name of the bank Signatory.

There are few due diligence documents also needed on behalf of each officer of the Company and the beneficial owner:

• Notarized copy of passport
• The notarized document containing residential proof (address) with a copy of a utility bill (electricity or water).
• Original bank reference for the shareholders
• Occupation if any
• Economic profile of the shareholder

Taxes in Cyprus

Cyprus enjoys one of the lowest corporate taxes within the European Union with a flat rate of only 12.5% of the net profits. If we compare other European Union country members such as the UK, France, Sweden, Greece, etc, we shall find it advantageous to invest in Cyprus offshore company. Furthermore, a beneficial owner is expected to receive his dividends tax-free and is not liable to any extra taxation apart from 12.5% flat tax rate of Cyprus Company.

Mandatory Requirements

There are a few minimum requirements in order to operate in Cyprus such as:

• Name Application: the proposed company’s name needs to be given to the Cyprus Registrar of Companies for the approval. The proposed name should not be too general, misleading, and similar or the same from the existing company.
• Share Capital: The customary practice for private Companies is to have the authorized and issued share capital to be 1,000 Euros. However, there is no minimum paid up share capital requirement in general.
• Shareholder: there is a requirement of having at least one registered shareholder. This can be another Company, individual resident of Cyprus or any foreign national.
• Directors: there is a requirement of at least one registered Director who can either be a resident of Cyprus or any foreign national. Although it is highly recommended to have the majority of Directors who are Cyprus Resident as it can be used to determine Cyprus residency for tax purposes.
• Registered Office: the office should be situated in Cyprus only and it should be the one where the official company documentation is served.
• Secretary: Wherever mandatory, a Company Secretary needs to be appointed to implement the Director’s instructions and ensure that the Company’s compliance along with the statutory and regulatory compliances is carried on in an efficient manner.

Conclusion

With the increase in the competitive business market, companies must strive to maximize their chances of success. The most important factor in regard to this is the financial considerations which are quite pertinent than before. With this point of view, the companies are turning and opting for the new ways of conducting business in order to come up to this competitive atmosphere. Because of the beneficial tax system in Cyprus Company Incorporation, it helps in providing itself to be one of the most popular jurisdictions for holding, trading, intermediary companies to conduct overseas business.