Company registration in Cyprus: Legal aspects and advice

Company registration is the process of formalizing the status of a legal entity in accordance with the laws of a certain country. During this process, the company is officially recognized as a legal entity with its own legal capacity. To receive this status, it is necessary to provide certain documentation and fulfill the requirements established by the state authorities. Due to registration, the entity is able to conduct commercial activities, conclude contracts, participate in court proceedings and perform other legally significant actions.

If you are planning to set up a successful business in Europe, you should consider registering a company in Cyprus. The island offers a promising geographical location at the crossroads of major trade routes, providing convenient access to the markets of Europe, the Middle East, Asia, and Africa. The country has a highly developed infrastructure, a stable political situation, and a favorable tax system, making it attractive to investors. Add to this a high standard of living and international recognition as a reliable jurisdiction, and you have the perfect environment to grow your business

The Manimama team has conducted in-depth research, analyzed the main subtleties of registering a company in Cyprus, and is ready to share its results and help you choose the right jurisdiction. 

What are the main advantages of incorporating a company (business) in Cyprus?

1. Promising location

Cyprus’s geographical location makes it an ideal platform for international business due to its strategic proximity to key markets in Europe, the Middle East, Asia, and Africa. Located at the crossroads of major trade routes, the island provides convenient access to a wide range of markets and the ability to deliver goods quickly between continents. This helps to reduce logistics costs and optimize trading operations for companies operating internationally. Additionally, it is simple to establish business interactions with different regions from Cyprus, increasing the efficiency of global business and creating new opportunities for business growth and development.

2. Favorable tax system

Cyprus’ attractive tax regime is one of the main reasons many international companies choose this jurisdiction to register their business. The country has one of the lowest corporate tax rates in the European Union – 12.5%. Compared to other EU countries, where rates can reach 25% or more, Cyprus offers significant tax savings for companies. This makes it attractive to small and medium-sized enterprises and large corporations looking to optimize their costs. In addition, the country has concluded numerous double taxation treaties with more than 60 countries, which minimizes tax liabilities for international companies. Another advantage of doing business in Cyprus is the significant number of tax incentives, which is an important tool for stimulating economic activity and attracting investment. 

3. Stable political system

The government provides a predictable and favorable environment for business, allowing companies to plan for the long term. In addition, as a member of the European Union, Cyprus adheres to European legal and economic standards, which further strengthens the confidence of investors and entrepreneurs in this jurisdiction. The island’s stable political situation guarantees the protection of property rights, the security of assets, and the predictability of important decisions.

 4. A reliable legal system

Cyprus has a legal system based on English common law, which provides a significant advantage for international investors. This well-known legal framework is understood by investors from many countries, making it easier to do business and ensuring confidence in legal protection. The transparent and predictable legal system facilitates the efficient and fair resolution of commercial disputes, which is crucial for protecting business interests. As a result, Cyprus offers investors a strong legal infrastructure that provides stability and flexibility to meet the needs of modern businesses.

5. Highly developed infrastructure and financial sector

The island offers modern transportation, telecommunications, and logistics networks that enable businesses to operate efficiently on an international scale. Cyprus also has a successful financial sector, with numerous banks, investment companies, and other financial institutions offering a wide range of business services, including access to capital, asset management, and financial consulting. This infrastructure is supported by a transparent and stable legal environment, making Cyprus an ideal location for international operations and financial management.

6. High living standards

Cyprus is renowned for its high quality of life, which is a major draw for investors. The clean environment, pleasant climate, and well-developed social infrastructure make the island an appealing place to live and work. The high standard of living is accompanied by excellent medical care, quality education, and numerous cultural opportunities, which help attract and retain talented professionals and businesspeople, ensuring a comfortable business and personal life.

7. International recognition and reputation

Cyprus is internationally recognized as a reliable jurisdiction for doing business, making it attractive to companies in various industries. The island has established itself as a stable and transparent place for financial transactions, with many financial institutions, investment companies, and stock exchanges choosing Cyprus as their base. In addition, Cyprus has a strong reputation for technology and innovation, attracting start-ups and high-tech companies due to its favorable environment for the development of new products and services. This international recognition is underpinned by a strong legal system and adherence to international standards, giving investors and entrepreneurs confidence in the security and stability of doing business in Cyprus.

8. Strong international cooperation

Cyprus’ membership in the European Union offers numerous advantages to businesses by providing access to the European market. This allows companies to freely export and import goods and services within EU countries without facing additional customs barriers or restrictions. The free movement of capital enables companies to easily invest and conduct financial transactions throughout the Union. Furthermore, the free movement of labor allows access to highly skilled workers from various EU nations, thereby enhancing business efficiency and facilitating international expansion.

How to register a company in Cyprus and what are the main requirements for such registration?

Step 1. Initial setup

• Initiating a preliminary project assessment, assessing risks, choosing the type of company, preparing the necessary documents and obtaining the necessary permits, determining the time frame, budget, and resources required to complete the process
• Preparation and filing of the package of documents

Step 2. Company registration

• Submitting an application for an approval of company name at the Registrar of Companies and Official Receiver (RCOR)
• Facilitating the notarial process for the company’s official registration
• Incorporating the company’s data into the RCOR
• Obtaining the Certificate of incorporation issued by the local registrar, Memorandum and Articles of Association
• Company registration with the tax department and opening of a bank account where necessary

Requirements for registering a company in Сyprus on the example of a Limited Liability Company (LLC):

• Shareholders: the company is required to have a minimum of 1 shareholder and maximum 50 shareholders (in a Cyprus company with one shareholder, the director and company secretary can be one person; If there are two or more shareholders, the company secretary and director must be different people). There are no restrictions on the nationality of the shareholders.
• Director: there must be at least 1 director.
• Company secretary: the company must have 1 secretary.
• Minimum share capital: there is no minimum share capital requirement.
• Legal address: the company must have a registered office address in Cyprus.
• Liability: the company has limited liability only with its share capital.
• Accounting: each company incorporated in Cyprus is required to prepare annual financial statements and be audited by an independent certified auditor. A company in Cyprus must submit its audited accounts and annual return within 18 months from the date of incorporation to the RCOR. Afterwards they must be filed annually. The audited accounts are also filed with the Income Tax Department.

What do you have to know about taxes when registering a company in Cyprus?

Corporate income tax (CIT)

1. A company which is a tax resident of Cyprus is subject to tax on income arising or accruing from sources both within and outside Cyprus.
2. A non-Cyprus tax resident company is taxable only on income accrued or arising from sources within Cyprus.
3. The basic CIT rate is 12,5%.
4. Tax exemptions:

• profits from sale of securities
• capital gains from the sale of IP assets
• interest income not accruing from or not closely connected with the ordinary activities of the business
• profits of a permanent establishment abroad
• income from dividends
• forex gains (other than FOREX gains arising from trade and related derivatives)

Personal income tax (PIT)

1. An individual who is tax resident in Cyprus is taxed on income accruing or arising from sources both within and outside Cyprus.
2. The individual who is not a tax resident in Cyprus is only taxed on income accruing or arising from sources within Cyprus.
3. PIT rates are as follows:

• €0 to €19,500 – 0%
• €19,501 to €28,000 – 20%
• €28,001 to €36,300 – 25%
• €36,301 to €60,000 – 30%
• €60,000+ – 35%

Value-added tax (VAT)

1. The standard rate is 19%.
2. The reduced rates are:

• 9% (all restaurant and catering services; accommodation in hotels, tourist lodgements; transportation of passengers and their accompanying luggage within the Cyprus using urban; movement of passengers in inland waters and their accompanying luggage; provision of services and supply of goods by nursing homes, which are not exempt transactions and so on)
• 5% (the supply of foodstuff; the supply of pharmaceutical products and vaccines that are used for health care, prevention of illnesses and as treatment for medical or veterinary purposes; entry fees to circus, festivals, etc; entry fees at sports events and fees for using athletic centers and so on)
• 3% (books, newspapers, and periodicals; audiobooks for disabled persons; splints, supports, and other fracture items and devices; certain prosthetic items; street cleaning, refuse collection, and waste treatment services, other than the supply of such services by public authorities, local authorities, and bodies governed by public law and so on)
• 0% (the exportation of goods; supply, modification, repair, maintenance, chartering and hiring of sea-going vessels, which are used for navigation on the high seas and carrying passengers for reward or used for the purpose of commercial, industrial, or other activities; transportation of passengers from the Cyprus to a place outside the Cyprus and vice versa using a seagoing vessel or aircraft; supplies of gold to the Central Bank of the Cyprus and so on)

1. Exemptions: rental of immovable property for residential purposes; financial services (with certain exceptions); hospital and medical caring services and so on.
2. Every individual or company is required to register as VAT payer, if at the end of any month the value of taxable supplies recorded in the last 12 months exceeds €15,600 or at any point in time the value of taxable supplies is expected to exceed €15,600 in the next 30 days.

For readers 

Manimama provides services to help you choose the right jurisdiction for your company’s incorporation, as well as to register your business in Cyprus and create a strategic framework for its successful operation and development in the long term. We have a good understanding of the tax and legal peculiarities of specific jurisdictions, which helps our clients make an informed choice based on their unique needs and development strategies. In our work, we take into account factors affecting the business environment, such as the level of competition, access to financial and human resources, as well as opportunities for further growth and development in different jurisdictions. 

By choosing our company formation service in Cyprus, you are working with a law firm that values integrity, competence, and client satisfaction. Let us help you set up a company in Cyprus and pave the way for your business success!

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The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.