Company Registration in Cyprus
Not your expected offshore. But. Your thrustworthy. Tax efficient European Company.
We create your Cyprus company within 15 days
12.5% FLAT corporate tax – 0% Dividend tax – 0% Capital gain tax – Banking stability – Stable monetary policy
Our team of expert will call you back during office time (UTC+1) Monday to Friday from 9am to 5pm.
Our team of experts will call you back during office time (UTC+1) Monday to Friday from 9am to 5pm.
Cyprus: the 40 years European financial center winner
EU membership, partnered by relatively low rates of corporate tax (12.5%);
- incoming and outgoing dividend payments are both free from tax;
- no capital gains tax;
- royalty-type income enjoys an 80% tax discount (meaning that the real rate of tax in such cases is 2.5%);
- liberal accounting regulations, creative calculation of expenses;
- numerous valid agreements for the avoidance of double taxation are in place.
- profit tax in Cyprus 12.5% 12.5%
- Dividend tax 0% 0%
Why should you register your company in Cyprus?
- 100% legal solution
- Company + bank account + EU VAT number in the same country.
- EU member state in compliance with all EU and OECD directives.
- Hard to discriminate against EU members states
- EU VAT number can be easily obtained.
- One of the lowest rates of Corporate Income Tax in the EU.
- Very efficient legal, accounting, and banking services.
- Residents who are not domiciled are exempt from paying SDC Tax.
- Double Tax Treaty agreements with more than 60 countries.
- Salaries paid to non-resident individuals are tax-free in Cyprus.
- It does not sound offshore
- Bad reputation because of the financial hair-cut of deposits in Bank of Cyprus, and the bankruptcy of LAIKI Bank.
- Low internet speed.
Frequently asked questions about Cyprus companies
Find here detailed answers about the company registration in Cyprus, Cyprus tax system, and VAT regulation. If you have more questions, feel free to reach our team through the contact page or request a free call back.
Company registration - Cypriot companies
- The incorporation procedure
The shareholders of the company must sign the Memorandum and Articles of Association in front of witnesses, and this document can then be filed with the Registrar of Companies, in order to register the company. Following registration, the Registrar issues the Certificate of Incorporation, together with separate documents confirming the details of the company’s secretary and director, registered address and shareholders. The original documents incorporating the company must be filed in Greek, but the certificates issued by the Registrar, can be in either Greek or English, according to the client’s request.
- Company type
Private limited company by shares.
- Source of corporate legislation
Company Law, Cap 113 as amended.
- Time required for registration:
Approximately 2-3 weeks
- Can shelf companies be registered?
Yes, it is possible to register shelf companies.
- Possible suffixes to company name
Limited or Ltd.
- Restrictions on company names
All company names must be checked with, and receive the prior approval of the Registrar of Companies. Approval from the Registrar requires a minimum of 4 working days. The procedure is particularly strict in Cyprus, as approval will not be granted for names which already exist, or are conspicuously similar to existing company names. It is not possible to include in the name the words European, Euro, Royal, National, Global,Imperial, Cooperative, Investment, Financial, Trust, Insurance, Bank, Building Society, Municipal, Chamber of Commerce, or University, or any other word, syllable or prefix which the Registrar considers unsuitable. The use of certain expressions is only possible with strictly defined requirements on the basic capital. The expression “International”, for example, may only appear in a company name if the company has actual paid up capital of at least 500000 CYP (1 January 2008 irrecovable fix rate: CYP 0.585274 per EUR 1.00).
- Is it necessary to disclose the identity of the beneficial owners in advance?
No, as of September 2004 it is no longer necessary to disclose the details of the true beneficial owners to the Central Bank.
- Company activities
The company may, from the date of incorporation, do any of the things set down in the Memorandum & Articles of Association. The standard company Memorandum & Articles generally includes a very wide variety of activities. Therefore, the company being incorporated can carry out any trading, service, consultancy, investment or intermediary activities. Banking and insurance activities, however, together with related financial services, are subject to restrictions. Cyprus companies may only pursue.
these activities if they are in possession of a special licence.
- Minimum and maximum number of shareholders
The minimum number of shareholders in a private limited company by shares is 1, while the maximum number is 50. The shareholders of a Cyprus company may be both companies and private individuals alike.
- Minimum requirements on capitalisation
There are no minimum basic capital requirements for a private limited company by shares. It is a general practice to incorporate companies with 1000 shares capital.
- Is it possible to issue bearer shares?
No. A private limited company by shares may only issue registered shares.
- Requirements with regard to directors
The directors of the company may be legal or private persons of any nationality, without restriction.
- Minimum and maximum number of directors
Every company must have at least one director, and may not have more than thirty.
- Are corporate directors permitted?
Yes, but in practice it is more usual to have private individuals.
- Directors’ rights:
The directors are the people originally entrusted with the management of the company, and are appointed by the company’s shareholders. The rights and obligations of the directors are contained in the Memorandum and Articles of Association, and include among other things the following:
- Rights of attorneys:
The directors may issue powers of attorney for concrete transactions, or for certain areas of the company’s activities, and the rights of the attorneys will be set down clearly in the power of attorney document. These activities may include, for example,some legal business of the company abroad (such as opening an office abroad, purchasing a foreign company etc.), trading transactions (such as purchase of real estate), and the opening and management of company bank accounts. In general, if a Cyprus company has Cypriot directors, they will no longer issue so-calledgeneral powers of attorney due to changes in the laws regarding the responsibilities of directors, and the place of management and control
- Contract-signing rights:The right to sign contracts is entrusted to the directors, though they may, through powers of attorney, further delegate this right, thus authorising an attorney to sign contracts.
- The appointment and replacement of directors:
The first director is appointed by the founder of the company. Subsequently, the shareholders have the right to remove (replace) the director, or, in the case of the death or resignation of a director, to appoint a new one. The Memorandum and Articles of Association may stipulate that a certain group of shareholders have responsibility for the appointment of directors (for example, shareholders with or without voting rights
- Rights of attorneys:
- Company residency
A Cyprus company is considered resident for taxation purposes if the company’s place of management and control is in Cyprus. If the most important decisions regarding the company’s operation are taken in Cyprus, then the company’s place of management will be considered to be Cyprus. Registration of the country is not decisive.
- Company secretary
According to the Law, the company must have at all times during its existence, without interruption, a company secretary. The secretary is responsible for preparing and signing the annual return, and for filing it with the tax authorities.
- Registered office
The company must have at all times during its existence a registered office on the island. This office may not be a P.O. BOX.
- Exchange control
There is temporary restrictive measures on transactions, were introduced by the Central Bank of Cyprus to control the export of capital form the country.
Opening of bank accounts
Cyprus companies are free to open bank accounts in any bank in any country, including Cyprus.
- Company seal
In keeping with Anglo-Saxon tradition, use of a dry seal is typical. At the discretion of the directors, a stamp may also be used just as freely.
Information publicly available on the company register
In addition to the company name, headquarters, and date and number of incorporation, the details of the directors, company secretary and shareholders are publicly available on the company register. The details of the true beneficial owners, however, can not be obtained from the Registrar of Companies, as this type of information is not held by this body.
Cyprus Tax System
- Tax resident companies
A company is considered resident in Cyprus for tax purposes if themanagement and control of the company take place in Cyprus. From this point of view, then, a company which is registered inCyprus will not be resident in Cyprus for tax purposes if the management takes place outside Cyprus.
At the same time, the management and control criteria also apply to companies not registered in Cyprus; that is, if the management and control of a company take place in Cyprus, then the company is considered resident in Cyprus for tax purposes, even if the company itself wasn’t registered there.
The question of the tax residency test has taken on even greater significance following accession to the European Union on May 1st 2004. On the one hand, whether or not a company is considered resident for tax purposes is extremely important from the point of view of Cyprus taxation, as this will decide whether or not the company can be taxed in Cyprus. On the other hand, it is important because this will decide whether or not the company is able to benefit from the advantages offered by the agreements signed by Cyprus for the avoidance of double taxation. As these agreements only apply to companies resident for tax purposes, only these companies can take advantage of the international treaties, and receive the so-called Certificate of Tax Residence issued by the Taxation Department of the Foreign Ministry.
Cyprus has been a full member of the European Union since May 1st 2004. Membership, however, has not changed the applicability of the agreements entered into over a number of decades. These are still valid, and the lower rates of tax stipulated can still be applied. What has changed, however, is the communication between the tax authorities of the EU member states. In particular,verification and control between the tax authorities of the individual members has become much more direct and commonplace in certain matters, thanks to the uniform EU VAT regulations.
All revenue arising from entrepreneurial activities (trading, services, manufacturing, processing, agriculture, mining etc.) counts as income, wherever it arises geographically, be it in Cyprus or elsewhere (the tax system in Cyprus generally allows for the taxation of world-wide income). At the same time, thefollowing items do not count as income:
- Revenue from the sale and purchase of stocks and shares, irrespective of whether they relate to companies in Cyprus or abroad. Except disposal of shares of companies which own immovable property in Cyprus.
- Amounts received as dividends.
- 50% of the revenue arising from interest received on the re-payment of loans.
- Profit arising from the operation of foreign premises
- Tax rates
The general rate of profit tax in Cyprus is 12,5%. This means that for these companies the following benefits do not apply:
- The Cyprus Royalty Collector Company – Maximum effectivetax rate of 2%
- That dividends do not count as taxable income. Dividends received by a Cyprus resident company are exempt from the Special Contribution for Defence (SCD) unless the divident are paid out of profits that are more than four years old.
- That amounts arising gains derived from the sales of stocks and shares are tax exempt. Capital gains tax at ta rate 20% is imposed on gains derived from the disposal of immovable property situated in Cyprus and on gains from the disposal of shares in an unlisted company that owns immovable property situated in Cyprus. Tax losses maybe carried forward for 5 years for set off against future taxable profit. The carryback of losses is not permitted.
Generally, any outlay, either in Cyprus or abroad, arising in relation to the real and concrete business activities of the company can be deducted as expenses. In addition, the following items may also be deducted as expenses:
- The full amount of charitable donations.
- Social security contributions due on employees’ salaries.
- Representation expenses, up to an amount equal to 1% of the total income, with a maximum of 10 000 EUR.
- The following items may not be deducted as expenses:
- Amounts used for the running of cars and motorbikes.
- Losses made by a Cyprus company, which can not be deducted from the income of the company for the given financial year, maybe carried forward and deducted from the following year’s income.
- Determination of the level of losses within a group of companies is also possible, as long as one of the companies is the holder of either at least 75% of the shares or 75% of the voting rights in the other company.
Fees arising from the profitability of rights held in Cyprus are taxable in Cyprus. 5% on a film royalties and 10% on other royalties. There is no withholding tax on the payment of royalties by a resident company to another resident company.
Dividends paid to a non resident are not subject to withholding tax. Dividends paid to a resident individual subject to SCD at the rate of 20% applied as a withholding tax.
No payable withholding tax on interest paid to a nonresident.
Interets paid to a resident subject to SCD 30%.
- Value Added Tax
Value Added Tax was first introduced in Cyprus in 1992. Initially, both companies and individuals paid a maximum of 5% VAT; the rate has gradually increased since then, and on January 14th 2013 reached the current rate of 19%. On May 1st 2004 Cyprus companies became subject to the European Union VAT system.
- Companies subject to VAT
The fact that a company is subject to VAT in Cyprus does not necessarily mean that the company is tax resident from the point of view of corporation tax. Therefore, if a company is registered in Cyprus, but the management takes place outside Cyprus, then the company can, or even must, be subject to the Cypriot, and automatically therefore, EU VAT systems. Foreign companies, on the other hand, can only be subject to Cyprus VAT, if they register premises (a branch) in Cyprus and apply for VAT registration.
- Tax liability
Any company registered in Cyprus – or foreign company with a branch in Cyprus – is liable for tax in Cyprus, provided that the income liable for VAT in a given financial year reaches or exceeds 9000 Cyprus pounds (1 CYP = 1,7 EUR).
- EU VAT number
Any company registered in Cyprus – or foreign company with a branch in Cyprus – may obtain an EU VAT number in Cyprus. The application for a VAT number takes a few working days (it is usually the company’s accountant in Cyprus who files the application with the tax authorities).
- VAT returns
Companies subject to the VAT system are required to prepare quarterly VAT returns and file them with the competent tax authority. If the amount of VAT payable is higher than the amount being reclaimed, then this must be paid within 40 days. If the amount being reclaimed is greater, then the difference will be transferred by the tax authorities.
- Basic rate 19%
- Reduced rate 5%, 9%
- Zero rate 0%
- VAT-free services
Service providers who provide only VAT-free services are not authorised to deduct or reclaim VAT on acquisitions.
The following services are currently VAT-free:
- letting services (the letting of immovable property with the right of purchase is not exempt)
- medical services
- banking, financial and insurance services
- cultural, educational and sport activities
- real estate transactions (exempt a building, or a part of buildings and the land on which they stand if the application for a building permit was submitted after the 1st May 2004)
- lottery tickets and betting coupons for football and horse rating
- management services provided to mutual founds
- Zero-rated services
This covers, for example:
- food and food products (exempt the supply of food in the course of catering)
- export products
- air and sea transport
Distributors of zero-rated products and companies offering zero-rated services can reclaim the VAT paid on acquisitions, or can deduct it from the VAT they have to pay.
- Products and services subject to reduced rate 5% VAT
The main services covered in this field typically include the following:
- acquisition and /or construction of residences for use as primery and permanent place of resident
- fees arising from artistic and performing arts activities
- Products and services subject to reduced rate 9% VAT
- fees for hotel services
- catering services (excluding alcoholic beverages)
- Products and services subject to basic rate 19% VAT
Products and services not mentioned above; that is the majority of products and services fall into this category.
- Real estate
From May 1st 2004, services related to the sale of real estate, including building land, are subject to VAT as follows: 5% on new property (if first house)
- Trade within the community
After May 1st 2004 the terms import and export lost their meaning in regard to the EU member states.
It is only possible to export to and import from countries outside the EU. Trade between Cyprus and other EU member states became so-called “intra community supply and intracommunity acquisition”.
Cyprus has adopted the use of the general EU regulations with regard to community trade. Accordingly, in the case of sales within the community, if the goods leave one member state and enter another, for sales purposes, then the first member state does not have to charge VAT on the sale of the goods, provided that
- the buyer is in possession of a community VAT number
- there is documentary proof that the goods left the first country and arrived in the second one.
Similarly, in the case of acquisition within the community, VAT is not charged in the country of arrival, provided that
- both the buyer and seller have EU VAT numbers and have informed each other of the fact
- the goods actually left one country and arrived in the other.
- Triangular business transactions
There is a special type of international trading transaction, where companies from three different countries are involved in the trade. The company buying the goods, acting as an intermediary, buys goods from one country and sells them on to a third country, without the goods ever actually entering the country of the intermediary.
In these triangular transactions within the EU, the most favourable situation occurs when all three trading partners possess community VAT numbers, and there is documentary proof that the goods were actually transported from one country to the other for the purpose of being sold. In this case there is no VAT charged on either the acquisition or the sale. Of course, this does not mean that the company in Cyprus is exempt from the preparation of VAT returns. Returns have to be prepared and filed with the tax authorities quarterly in this case too.
In a Triangular Transaction simplified procedure can be applied under the following conditions:
- All three parties must be registered for VAT purposes in one of the Member States,
- The intermediary supplier (Cyprus) must not be registered for VAT in the third Member State (France), where the goods are delivered,
- The invoice of the intermediary issued to the Buyer includes the phrase “ VAT EU Art.28 Simplified Invoice”
The second buyer is registered for VAT purposes in the Country of delivery of the goods (France).
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LAVECO Ltd. was established in 1991, in Hungary, and since then has been registering and administering companies in Hungary and other countries, opening bank accounts and providing services related to the support of the companies it has registered.