An Introduction to Cyprus Company Formation
An Introduction to Cyprus Company Formation
Cyprus is an European Union member state and its official currency is the EURO. The country has also one of the lowest tax rates in the bloc.
Corporate Income Tax
12.5%
Advantages of the Cyprus Tax System
Any company registered as a tax resident in Cyprus is obligated to pay taxes on the income earned from both Cypriot and international sources. Conversely, a company not classified as a tax resident in Cyprus is only taxed on the income generated from a business operation conducted through a permanent establishment within Cyprus.
The Tax year runs from the 1st of January of each year until 31st of December of each year. Corporate tax returns must be filled by the 31st of March of the next year covering the fiscal tax year of 01/01-31/12 of the previous year.
There are 5 types of companies in Cyprus including:
- Private limited liability company by shares
- Public limited liability company by shares
- Limited liability company by guarantee without share capital
- Limited liability company by guarantee with a share capital
- Variable capital investment company
Of these, private limited liability company by shares with suffix ending in Limited is the most popular type of companies. - A Cypriot private limited company with shares can accommodate between 1 and 50 shareholders, offering limited liability and restricting financial responsibility to their initial investments.
Steps for setting up a limited company in Cyprus
- Secure the company name and obtain preliminary endorsement from the Registrar of Companies and Official Receiver. To seek approval for the name, a formal application is to be submitted either in person or by post to the One-Stop Shop Cyprus. Alternatively, the application can be electronically submitted to the Registrar of Companies and Official Receiver via the E-filing website at https://efiling.drcor.mcit.gov.cy.
2. The Registrar of Companies does not have a set form for these documents. The Companies Law offers a generic template suitable for various activities. It is a legal requirement for lawyers to draft and sign the Memorandum and Articles of Association. Since 2016, the Companies Law has introduced a standard Memorandum form that includes objectives for general-purpose companies, simplifying the process for new company formations. When it comes to the Articles, customised provisions may be needed to align with any agreements among shareholders.3.The following documents can be submitted either by hand or online, certified by a registered
advocate/lawyer in the Republic of Cyprus:
i) Declaration form (ΗΕ1, a affidavit (sworn) statement of the lawyer and signature from the
Registrar of the District Court);
ii) Form concerning the registered office address (HE2);
iii) Details regarding the directors and secretary (HE3);
iv) List of persons who consent to act as directors of the public company (HE5, in case of a public
company);
v) Original or scanned copy of Memorandum and Articles of Association (by law must be written by
a approved/registered lawyer);
vi) One Stop Shop Application Cover for Legal Entities Registration (applicable for submission to
One Stop Shop);
vii) Fee of €105,00, plus €60,00 for filling the accompanied documents, plus an optional €100,00
for accelerated procedure (payable in cash, cheque or bank transfer). Please note that One Stop
Shop accepts only applications with acceleration fees and the One Stop Shop Application Cover
for Legal Entities Registration is to accompany the above-mentioned application.
Upon completion of the registration the “Certificate of Incorporation” is issued. Upon request, the following certificates and/or certified copies can be issued:
(1) A certificate of the Shareholders;
(2) A certificate of the Directors and Secretaries;
(3) A certificate of the Registered Office;
(4) A certified true copy of the Memorandum and Articles of Association;
(5) A certified copy of the Certificate of Incorporation.
4.Please register with the Tax Department for tax and VAT purposes and obtain a Tax Identification Number (TIN). The Tax Department, established on July 1, 2014, combines the Inland Revenue Department and VAT Services. To register with the Tax Department, taxpayers must submit the following forms: – Form T.D.2001 for Taxpayer Registration to acquire a TIN (Tax Identification Number). (Form T.D.2001 can be accessed online at www.mof.gov.cy under Forms, Other Forms, Registration of Taxpayer) – Form T.D.1101 only if the taxpayer wishes to activate the TIN for VAT purposes. Registration with the Tax Department can be completed either in person or online. Online registration necessitates an e-signature and is accessible at http://www.businessincyprus.gov.cy/mcit/psc/psc.nsf/All/749FC411823BDD31C225785600375018?OpenDocument.This article should not be construed as legal advice and is not intended to be relied upon in relation to any tax or legal advice. The information we provide does not address your particular requirements and is for informational purposes only. It does not constitute any form of legal advice and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances and is not intended to be relied upon by you in making any decisions that may arise from reliance on materials contained on our website.
