Cyprus is currently one of the top jurisdictions for business registration. It has long been established as a reliable centre for international companies due to its favourable tax regime, ease of business administration and access to the EU market.
The popularity of Cyprus for company registration is also confirmed by the choice of our clients, who recognise this jurisdiction as an effective location for optimising business processes, minimising the tax burden and accessing international markets. The primary benefits of Cyprus as a business location include a favourable corporate tax rate, a comprehensive network of double taxation treaties, and efficient registration processes.
This article will provide step-by-step instructions on how to register a company in Cyprus, the key aspects of choosing a corporate structure, and important points to consider when planning your business activities.
Key Features of the Jurisdiction
The process of company registration in Cyprus is a streamlined one, with the entire process taking approximately one month. This allows businesses to commence commercial activities in a timely manner. The final cost of incorporation will depend on the chosen corporate structure and any additional services requested, such as engaging a nominee director or opening a bank account.
Company registration can be conducted online, which greatly facilitates the registration process for entrepreneurs who are outside the country.
There are no residency restrictions for company shareholders in Cyprus, meaning that your company can consist entirely of shares held by non-resident shareholders. Shareholders can be both individuals and legal entities, providing flexibility in building the ownership structure.
A local director is a prerequisite for registration. This is a prerequisite for maintaining the company's tax residency in Cyprus, thereby avoiding the risk of being recognised as a tax resident of another country. The role of the director is largely nominal.
Cyprus offers a favourable corporate income tax rate of 12.5%, which is one of the lowest rates in the European Union. Furthermore, dividend payments to founders are not subject to withholding tax. However, it should be noted that dividends will be taxed at the level of the country of tax residence of the founders, in accordance with local rules. It is also important to consider other taxes that could affect the company's tax liability, such as VAT at a standard rate of 19%.
It is possible to open a corporate bank account online, however this process requires careful preparation of documents, including confirmation of sources of income, KYC procedures by the founders and justification of the legality of business activities.
5 Steps for Successful Set up
Selecting a business structure. The initial and most pivotal step is to select the legal form of the company. There are several types of business structures in Cyprus, including a private limited liability company by shares, a public limited liability company by shares, a limited liability company by guarantee, a partnership, etc.
Of these, the most common form for small and medium-sized businesses is a private limited liability company by shares. This structure is well-suited to both operating and holding activities, as it ensures the liability of shareholders is limited to the value of their investments. A key feature of this structure is the exclusion of the possibility of public sale of shares.
Choosing a company name. The next step is to select and check the uniqueness of the company name. The name must comply with the requirements of the Cyprus Companies Registry: it must be unique, not misleading and not contain prohibited words, such as ‘bank’ or ‘insurance company’, etc. without obtaining a special permit. Therefore, you first need to check whether there are any similar company names in the register, which is available via the following link, and then the name must be submitted for approval. This process usually takes several days, and once approved, it can be reserved for further company registration.
Necessary documents preparation. It`s one of the most important stages. The company must develop a Memorandum & Articles of Association that will define the types of activities, rights and obligations of shareholders and the company's governance. It is also necessary to collect information about the shareholders and directors, including their personal data and addresses.
It is crucial to note that there are no restrictions on the residency of shareholders in Cyprus, meaning that the company can be comprised entirely of non-residents, including both individuals and legal entities. However, to mitigate tax risks, the company's director must be a resident of Cyprus. Every company in Cyprus is required to appoint a secretary, who can be an individual or a legal entity. The secretary plays an important role in ensuring the company's compliance with legal requirements and in maintaining official records. The company must also have a registered office address in Cyprus, which will be used for official notices and correspondence.
Submission of documents for registration. When all the documents are prepared, the next step is to submit an application to the Registrar of Companies of Cyprus.
The application must include: - HE1 - a declaration of compliance with the legal requirements (it is important that it must be signed and sworn by the entrusted lawyer at the court); - HE2 - details of the company's registered office address; - HE3 - details of the directors and company secretary; - Memorandum and Articles of Association. The cost of company incorporation depends on the type of company chosen: EUR 165 for a standard company with share capital, and EUR 235 for a company without share capital. There is an additional fee of EUR 100 for expediting the registration process. If you are registering a public company, you will also need to submit the HE5 form and pay an additional EUR 20. Online company registration greatly simplifies and speeds up the entire process, usually taking about 5-7 business days, provided that all documents are prepared correctly and in accordance with the requirements of the Cyprus legislation.
Obtaining a tax number. Every company incorporated in Cyprus is required to submit an application for tax registration to the Tax Department within 60 days of its incorporation. Following a thorough review of the application, the company will be issued with a tax number, which is mandatory for any business activity. If you are planning to employ staff, you may also need to register with the Social Insurance Service. To register, you should submit the relevant employer registration form.
Conclusion
To conclude, registering a company in Cyprus can therefore be a beneficial move for businesses, due to the country's favourable tax climate, strategic location, simple procedures and access to European and international markets. However, this process requires an understanding of the legal nuances and preparation of the necessary documentation. If you find the registration process confusing, or eager to ensure that everything is done correctly, our professional team is ready to help and answer any questions of yours! A proactive approach to registration will help reduce risks, optimise costs and ensure the stable development of the company in one of the most attractive jurisdictions in Europe.
Comments