I. Why Cyprus?
Cyprus is an attractive destination for the setting up of a company. Cyprus is a developed, high-income country which is also a member of the European Union. At the same time, Cyprus is strategically located on the border between Europe, Asia and Africa.
The corporate tax at 12,5% is one of the lowest in Europe, while Cyprus has also concluded double tax treaties with more than 50 other countries. Tax planning is indeed one of the main reasons that Cyprus is the chosen place of registration for many companies. While Cyprus maintains a low-tax regime, it is well regulated, particularly after its accession to the EU. It is therefore a low-tax jurisdiction without being an ‘offshore jurisdiction’. These features have rendered Cyprus an international business centre, which attracts numerous investors and foreign companies.
II. Types of corporations existing under Cyprus law
There are several types of companies that may exist under Cyprus Law. One type of company is the private limited liability company by shares, where the maximum number of shareholders is 50 – according to Cyprus law, such companies may not address the public, beyond its members, for the purposes of acquiring shares or bonds in the company. This is the most popular legal entity in Cyprus and the majority of registered companies in Cyprus are private limited liability companies by shares.
There can also be a private limited liability by guarantee, a public company of limited liability, a branch of a foreign company, or a re-domiciliation of a foreign company. For public companies of limited liability, there is a minimum number of shareholders which is set by law to seven, in order for the company to maintain its corporate identity and veil. Anyone may buy shares or bonds in such a company.
A new type of company has been introduced by the Cyprus’ entry to the EU: the Societas Europea, a European-wide type of company which can be registered in any Member State of the EU, including Cyprus. There can also be limited and general partnerships and trusts.
III. Procedure for the Registration of a company
Firstly, an application must be made at the Registrar of Companies for the approval of the company’s name. Such applications are usually processed within 3 to 4 working days. The law sets some limitations regarding the company’s name, for example, that the name is not already in use by another company or that it should not indicate a geographical region to which it is not related.
Upon approval of the company name, then the Memorandum and Articles of Association must be submitted to the Registrar. In addition, forms should be submitted, stating the registered office address, the director as well as the secretary of the company. At the same time of submission of these forms, another application will be commonly submitted requesting a copy of the Memorandum and Articles of Association as well as the certificate of incorporation, the shareholders certificate, the certificates of the registered office address and the certificate of the director and the secretary of the company. These are the five fundamental documents that clients generally require and can be certified by apostille and sent abroad, if necessary. These procedures last from 3 to 5 working days from filing until the company is ready.
IV. Responsibilities for registered companies
Following registration, every lawfully registered company in Cyprus has certain minimum responsibilities set by law. Companies are required to keep accounting books and have financial statements. Furthermore, every year a tax return must be filed by the company. Apart from the filing of this return at the revenue authorities of the Republic, the financial statement and annual return must also be filed to the Registrar of Companies by filling out the form HE32. Further, every company must pay an annual levy of €350 to the Registrar of Companies.
*Prepared by Cyprus lawyers Danos & Associates*
36 Vyronos Avenue, Nicosia Tower, Floor 7, 1096 Nicosia, Cyprus.
Tel: +357 22 872 276 | Fax: +357 22 872 279
*Email: info@cypruslegalservices.eu*
