Cyprus is considered to be one of the world’s largest business centers. Over 225,000 international companies, including about 110,000 commercial companies owned by the citizens of the former USSR, have chosen Cyprus as their business headquarters. A favorable tax regime and a high standard of living are attracting an increasing number of entrepreneurs and investors to Cyprus who not only open their own business on the island, but also choose it as a place of permanent residence.
Advantages of opening a company in Cyprus
Opening a company in Cyprus provides its owner with a number of significant advantages, including in terms of taxation, access to the sources of investment and qualified personnel.
Here are some of them:
- Cyprus has the lowest corporate tax in the European Union, which is 12.5% and can be reduced to 2.5 % for the companies whose activities are related to the creation and use of intellectual property. IP Box Regime
- Cyprus Notional Interest Deduction regime (NID) increases tax incentives while financing operations with the capital, since the interest is recognized as an expense of the company.
- Cyprus has agreements on the avoidance of double taxation with 66 countries of the world.
- The legislation of Cyprus allows the creation of alternative investment funds which ensure in practice the implementation of the functions of international holdings Read more.
- Despite flexible taxation system, Cyprus is not included in the list of offshore jurisdictions, which ensures economic stability and allows a company to maintain good business reputation.
- Cyprus has been a member of the EU since 2004 and a member of the Euro zone since 2008, which gives your business direct access to the EU market of the goods and the capital.
- The legal and judicial systems of Cyprus are based on English private law and adapted to the EU system.
- Cyprus has a fairly high standard of living and relatively low cost of living and operating a company than in most EU countries.
- Cyprus labor market provides a wide selection of multilingual highly qualified professionals from different EU countries.
Legal requirements for the companies incorporated in Cyprus
- Organizational and legal form of the company:
Cyprus legislation provides for 5 different organizational and legal forms of companies, the most common of which is a private joint stock limited liability company (Ltd).
- Requirements for the share capital:
In Cyprus there are no legal requirements regarding the minimum or maximum share capital of a private limited liability company. Usually the share capital of a private company constitutes €1,000 (1,000 shares at €1 each).
- Requirements for the shareholders and Directors:
A shareholder of a Cyprus company can be an individual or a legal entity. A private limited liability company must have at least one and no more than 50 shareholders. Also, a private Cyprus company must have at least one Director. The Director of the company can be either an individual or a legal entity. There are no requirements for the nationality and the citizenship of the Directors in the legislation. Depending on the line of business of the company, there may be requirements for the qualifications of the Directors who are individuals.
The number and the qualifications of the company’s employees should correspond to the main types of its activity. Employees of the company are hired in accordance with the requirements of the legislation of Cyprus. They should also be registered with the social insurance authorities.
- Legal address of the company:
It’s undesirable for the company registration address to be a mass registration address (the place of registration of a large number of companies). This type of address can include the addresses of legal or accounting firms that support the company. The company must have its own office, from which the management and coordination of its activities is carried out, so that it is not considered as a nominee (a shell company). (There are some exceptions to this rule).
- Licensing activity:
Certain types of activities in Cyprus require a special license. This includes financial investment and brokerage activities, insurance, restaurant and tourism businesses, certain types of production, etc.
Therefore, at least a consultation of a lawyer specializing in working with companies is required before opening a company.
- Accounting and audit:
The companies registered in Cyprus should maintain their accounting records in accordance with the international standards. An annual audit and reporting to the tax authorities are required.
Opening a company in Cyprus
Opening a company in Cyprus consists of several stages:
- Registration of a company in the State Register of Companies.
- Registration with the tax authorities.
- Opening a bank account.
- Registration with the social security authorities.
- Trademark protection.
I. Company registration
The process of registering a company in Cyprus takes from 10 to 30 working days and consists of the following sequential steps:
- Choice and registration of the company name.
- Search, rent (purchase) of the office premises and registration of the legal address of the company.
- Preparation of a set of documents for the shareholders and Directors of the company.
- Disclosure of the information about the beneficial owners of the company (this requirement was introduced on 20.12.2020)
- Preparation of the Memorandum and the company Charter.
- Payment of the stamp duty.
- Registration in the State Register of Companies.
Issuance of the Registration Certificate means the beginning of the legal existence of the company.
II. Registration with the tax authorities and systems
- Registration with the Tax Office
Each company is required to register with the Tax Register. This must occur within 60 (sixty) days from the date of its creation. A Tax Identification Number (TIN) is issued when registering a company.
Registration with the VAT Department
Registration of a company in the VAT Register can be mandatory or voluntary.
The company is required to register as a VAT payer if the value of the company’s VAT-taxable operations exceeds €15,600. The volume of transactions is calculated for the previous 12 months and registration with the VAT Department should be made within the next 30 days.
- Voluntary registration is not related to the volume of the company’s operations subject to VAT. It is carried out by prospective traders who conduct the business with the intention to carry out taxable supplies in the future, as well as the companies who transact outside Cyprus (this is permitted provided that the management and control of these companies is carried out in Cyprus).
- Mandatory registration:
- Registration in the VAT Information Exchange System (VIES)
A VAT payer company supplying goods and/or services to the persons registered in other EU countries must register in the VIES in order to exchange VAT information and submit VIES forms monthly.
- Registration in the Intra-Community Trade Statistics System of EU countries ЕС (INTRASTAT)
If a VAT payer company purchases the goods delivered to Cyprus from the persons registered in other EU countries in the amount of more than €160,000, then it must register in INTRASTAT to record import to Cyprus and submit INTRASTAT forms monthly. If a VAT payer company supplies the goods worth more than €55,000 from Cyprus to the persons registered in other EU countries, it must also register in INTRASTAT to record exports from Cyprus and submit the forms monthly.
III. Company bank account opening
Opening a corporate bank account is mandatory when registering a company in Cyprus as it is a part of the registration procedure.
The process of opening a corporate bank account in Cyprus is as easy as the setting up a personal bank account, except that the companies have to provide more documents. In order for a company to open a bank account in Cyprus the following documents should be submitted:
- The Charter, the Registration Certificate and the Certificate of Shares of the company.
- Certificates of the Directors and the Secretary, Certificate of the registered office.
- Confirmation of the registered office in Cyprus (utility bills, brochures and business cards, etc.).
- Passports, IDs, confirmation of the addresses of residence for each Director of the company in Cyprus, Certificate of No Criminal Record for each Director of the company issued by the state of which he is a resident, Tax Registration Number for the Directors of the company who are residents of Cyprus.
- Application form issued by the bank (each bank has its own application from).
- Information about the shareholders and the ultimate beneficial owners of the company.
Our consultants will assist you in preparation of all the necessary documents and opening company bank accounts in Cyprus.
IV. Registration with the social security authorities
Every employer is obliged to register in the Employers’ Register of Cyprus Social Security Service and register all his employees there.
V. Trademark protection
Trademark registration is also important. This is necessary to protect the rights of the company and promote its products and services at the market.
As the result of all the above actions the company will receive a package of official documents and certificates.
Taxation of companies in Cyprus
Cyprus has one of the most flexible taxation systems in the world, allowing you to significantly reduce the tax burden on your business.
The main taxes levied on companies include the following:
1. Corporate tax or corporate income tax
All Cyprus tax resident companies are taxed on the income accrued to or derived from all the sources in Cyprus or abroad.
The companies that are nor tax residents of Cyprus are taxed on the profit accrued to or derived from all the commercial activities carried out through their permanent establishments in Cyprus, as well as certain other income derived from the sources in Cyprus.
The estimated income tax rate constitutes 12.5% and is national. There are no local income taxes in Cyprus.
Apart from that, there is a list of benefits and exceptions that allow reducing the effective income tax rate to 2.5% or less (including IPBox regime and NID).
2. Value added tax
Value added tax is levied on the provision/sale of goods and services in Cyprus, the purchase of goods from the EU countries and the import of goods to Cyprus. The tax rate is differentiated depending on the type of taxable goods and services. The maximum VAT rate in Cyprus is 19%.
3. Company annual levy
Company annual levy is fixed and constitutes €350. There is a system of penalties in case of late payment of the levy, up to the deletion of the company from the State Register.
4. Contributions to the Social Insurance Fund, Holiday Fund and General Health System Fund (GHS), calculated based on the gross payroll of the company’s employees
The employer is obliged to pay contributions for each employee to the following funds:
- Social Insurance Fund – 8.3%.
- Holiday Fund – from 8% (deductions are not made by the employers who independently pay for the employees’ vacations).
- Redundancy Fund – 1.2%.
- Industrial Training Fund – 0.5%.
- Social Cohesion Fund – 2%.
- General Health System Fund (GESY) –2.9%.
5. Municipal professional tax
Municipal professional tax is established by local governments and ranges from €50 to €200, depending on the nature of the company’s activities. It is paid annually.
6. License and stamp duties
When carrying out activities subject to licensing, the company pays license duties. Stamp duties are paid by the company on the capital increases and transactions.
What are the advantages of living in Cyprus?
- Cyprus is one of the five safest countries of the European Union.
- Possibility to easily obtain a permanent residence permit and even citizenship of Cyprus (Read more).
- Flexible health care system and excellent doctors.
- No pressure from the government agencies, minimization of the bureaucratic procedures associated with starting and running a business.
- Mostly friendly and loyal to foreigners population.
- The subtropical Mediterranean climate of Cyprus is characterized by warm summers and mild winters. The number of sunny days is over 300 per year.
- No real estate tax and inheritance tax.
- English and Russian-speaking private kindergartens and schools.
- Recognition of Russian diplomas of secondary and secondary specialized education allows children of Russian citizens to continue their studies in the higher educational institutions of Cyprus.
- Multy-ethnic population (about 20% of the residents of Cyprus are foreigners).
- Organized Russian community (schools, churches, social clubs).
- The cost of living and studying in Cyprus is not very high compared to other developed European countries.
Expenses for living and running a business in Cyprus
Cyprus is one of the countries where the costs of starting and running a business are relatively low:
- Cost of registering a company (service packages) from €1,100.
- Cost of the registration of a trade name - €300.
- Cost of the logo registration - €300.
- Cost of the accounting and auditing statements from €750.
- Cost of the quarterly VAT reporting from €150.
- Employer’s liability insurance from €170.
- Office rent from €350 per month.
- Renting an apartment from €350 per month.
- Car insurance from €175 per year.
- Obtaining a work visa for an employee from €150.
- Services for PinkSlip obtaining from €150.
Amazon Corporate&Immigration Services offers its clients the following services for organizing a business in Cyprus:
- Consulting on the corporate structure.
- Consulting on the tax planning.
- Company registration.
- Sale of a company with a clear tax history.
- Registration of the legal name of the company.
- The trade mark/logo/patent registration.
- Services of the nominee shareholders.
- Services of the nominee Director.
- Services of the company Secretary.
- KYC/ AML/Due Diligence services.
- Corporate governance services.
- Registration with the VAT service.
- Registration in the Tax Office.
- Registration in the Social Security Service.
- Providing accounting of the income/expenses based on IP Box.
- Registration of the patents (registration of the trademarks and patents).
- Preparation of the company’s annual audited statements.
- Full range of services for organizing office work.
- Obtaining a work permit.
- Opening a bank account.
- Obtaining a visa for you and your family (Pink & Yellow Slip).
- Financial analysis and preparation of the feasibility studies for the startups.
- M&A services.
- Obtaining bank financing.
- Obtaining the European grant.
- Insurance services.
- Employment benefits for unemployed scientists.
The first consultation is free.
The cost of services related to the company registration is from €1,150 to €2,500. The list of services and the price list of our company can be found here.
Why clients choose us?
- 35 years of experience working with the businessmen from Russia and the countries of the former USSR.
- One of the most competitive prices at the market.
- Knowledge of the legal systems of Cyprus, EU and former Soviet Republics.
- Extensive experience in obtaining patents and copy right protection (the European Union, the United States of America).
- Availability of professional consultants in various areas of commercial and financial activities, which ensures the optimization of the accounting of the company’s income and expenses and the maximum use of tax incentives.
- Our company employs former tax inspectors, government and banking officials as independent consultants who use their business contacts and valuable experience to advance the interests of our clients.
- You can get all the services you need in one office.