The Cyprus Company
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The Cyprus Company.
The Cyprus company’s significant tax advantages and precious tax exemptions are the main reasons corporations from around the world, choose the island as their base of operations.Cyprus company formation procedure is simple and fast. You can start operating in approximately 7-10 days. The process starts with the application of the name for approval within 3 working days and the registration is completed in approximately eight working days.
Cyprus law allows the movement of the operating headquarters to or off Cyprus. The regulations give the opportunity to investors, entrepreneurs and international companies to become Cyprus tax residents and benefit from the attractive local tax regime.
Types of Cyprus Companies.
The minimum number of members is one and the maximum is limited to fifty. And there can be no invitation to the public to subscribe for any shares or debentures.
This is the most popular type of companies in the business world and their general characteristics are the following:
- The minimum number of members is one and the maximum is fifty;
- The liability of every member is limited to the amount of their subscribed shares;
- No bearer shares can be issued (however nominee services can be offered);
- Preferential shares or different classes of shares can be issued;
- The right to transfer shares is restricted;
- The word “limited” must appear at the end of the name of the company
- There can be only one Director who can be either Cypriot of foreigner and the Board Meetings can be held anywhere in the world;
- The company must have a registered address in Cyprus and a company secretary;
- The Secretary maintains the Register of Members, the Minute Book recording all the Board Meetings and Resolutions, the Register of Charges, the Register of Directors and Secretary and the Company seal (under its custody);
- Any charges against the company must be registered with the Company Registrar in order to ensure priority and protection against other creditors of the Company.
What is important to note is that the identity of beneficial owners in a Cyprus private limited company may remain confidential through nominee holding. This confidentiality is maintained as long as the company and its ultimate beneficial owners are not involved in any criminal activity.
Public companies need seven or more founder members, they can invite the public to subscribe for their shares or debentures and do not restrict share transfers.
The liability of each member is limited to the amount agreed on the Memorandum of Association to be contributed in the event the company goes into liquidation. In the majority of cases these companies are incorporated as non-profit making organisations under section 20 of Cap 113.
Any company incorporated outside of Cyprus may establish a legal presence in Cyprus through the legal form of a branch in Cyprus – the so-called overseas companies.
To register a branch the following documents must be filed translated into Greek:
- A certified copy of the constitutional documents of the company (Memorandum and Articles of Association, its charter etc)
- Information regarding the Directors and Secretary of the Company;
- Name and address of at least one person who is a resident of Cyprus duly authorised to receive on behalf of the company any notices.
If the foreign legal entity is a bank, an insurance or an investment company then special licences must also be obtained from the relevant regulatory authorities.
The Cyprus Company Law changes implemented in 2003 as part of the EU accession process have also affected the rules covering branches. Every foreign corporation that maintains a branch in Cyprus must submit, for every financial year, copies of its financial statements as presented in its last AGM and published in accordance with its country of incorporation. For EU corporations though the law provides some exemptions; they are exempted from submitting separate branch financial statements if they publish their financial statements in their countries of registration and they submit them to the Registrar of Companies.
Cyprus has amended its Company Law in order the implement the provisions of the Council Regulation No. 2157/2001. The changes have been implemented by the Amendment Law No. 98(I) of 2006 and was enacted n the 7th July 2006. Thus an SE can now transfer its office from another Member State to Cyprus (and vice versa) without dissolving the company in the other Member State.
There are four possible ways for incorporating an SE:
Merger, i.e. a public limited company from two member states can form an SE by merger;
Holding, i.e. a public and private limited companies from two Member states can form a holding company;
Subsidiary; any legal entities governed by public or private law from two Member States (or an SE itself) can form a subsidiary SE;
Conversion; a public limited liability company can convert into an SE if it had a subsidiary in another Member State for two years.
Furthermore a EC can be established by an already existing European company.
Characteristics of a Cyprus Company.
- Approval by the Registrar of Companies of the proposed name of the company. If the clients are not particular about the name, we can provide a “shelf” name.
- A brief description of the main objects of the company in order to prepare/draft its Memorandum and Articles of Association.
- The amount of the nominal capital of the company, and how it is going to be divided. This is usually EURO 1,000 divided into 1,000 shares of EURO 1 each. It should be noted that it is also possible to denominate the capital in a currency other than EURO.
- The names, addresses, occupations, passport details and nationalities of the proposed beneficial owners, as well as the proportion in which they will hold the shares of the company. If nominees will be used, the particulars of the nominees are needed as well.
- The names, addresses, occupations, passport details and nationalities of the proposed directors and secretary of the company.
- The proposed address of the registered office of the company.
- The details of the proposed auditors of the company.
- In order to comply with Anti-Money Laundering legislation, our firm’s standard Know-Your-Client questionnaire will need to be completed and signed by the proposed beneficial owners.
The law requires the company to have a registered office in Cyprus, which will be used as the commercial address of the company for conducting their operations.
Cypriot companies must possess a memorandum and article of association that will determine the activities of the company and how the establishment will regulate its internal affairs.
There is no legal regulation restriction on the minimum or maximum share capital of the company.
In accordance with Cyprus law, limited liability companies must have at least one shareholder. If you wish to preserve the anonymity of shareholders, the shares may be held by a company which acts as a trustee of the shares of the owners, without revealing their real identity. The confidentiality of such information is kept and a decision by Cyprus court is required before disclosure.
Although the appointment of local board members is not required by law, however, for tax purposes, it is considered desirable. It should be noted that, from a tax point of view, is essential that the company is managed and controlled in Cyprus, which is why it is recommended that the majority of directors are local residents.
According to the current law, the company must have a secretary named.
The law requires the company to have a registered office in Cyprus, which will be used as the commercial address of the company for conducting their operations.
Tax Advantages of a Cyprus Company.
- Corporate tax rate at 12,5% on profit
- Dividend participation exemption
- Exemption on disposal of securities (e.g. shares, bonds, debentures)
- No withholding taxes on dividend, interest and royalty payments abroad
- No capital gains tax (except for disposal of real estate in Cyprus or shares of company holding real estate in Cyprus to the extent gains is attributable to the real estate holding)
- Notional interest deduction for investments into Cyprus companies
- Tonnage tax for shipping companies
- More than 60 double tax treaties
- No succession taxes
- Attractive IP regime
Furthermore, Personal tax exemptions apply for new Tax residents and non-domiciled individuals.
Other advantages when relocating company operations in Cyprus.
Cyprus is a European Union member state since 2004. This comply Cyprus with all the EU directives and legislations, such as Anti-Money Laundering, banking system, trade, taxation and much more.
Cyprus has become an important business hub not only because of the tax legislation but also due to the high-quality professional services, investment opportunities, and last but not least the lifestyle. Entrepreneurs and investors relocate with families for business but also for the all year sunshine, low crime records and high level of education.
- Low company registration and annual fees
- Secure bank system
- Free move of capital abroad
- Wide use of English language (also Russian, Arabic, French)
- A state member of European Union since 2004
- Legal framework attuned to the European Acquis Communautaire
- Attuned legal legislation in accordance with OECD regulations
- Stable legal and tax environment (based on the Anglo-Saxon law system)
- Modern infrastructure
- Stable and modern public administration
- Friendly and stable business environment for investors
- Low operating expenses (office rent, monthly expenses)
- High level of business service providers
- High level of education and professional expertise
- Low labor cost
Cyprus company registration procedure.
The Registration process of a company in Cyprus can take up to 10 days to be completed. Usually is done in 7 days. Operations can start immediately.
Company name submission.
First you need to decide a company name and apply for approval. The procedure is easy, fast and the name is approved in 3 working days. We suggest that you decide a company name but having some alternatives as well. In some cases, names might look similar and rejected by the registrar authorities.
Our advisors can also suggest names for you. Also, there is the option of choosing an already registered name and skip this stage allowing us to setup the company in shorter period of time.
Timeframe.
After the name approval, application to the Cyprus Registrar department with all the relevant documentation and paperwork follows. The examination of the application takes 4-5 working days and will be completed usually in 7 or 8 working days timeframe, with the issuing of all the approved documentation including the Company Memorandum and articles of association.
Issued documentation.
- Registration certificate
- Board of directors and secretary certificate
- Shareholders certificate
- Office address certificate
- Memorandum and articles of association
After the company registration follows the:
- Tax registration to Tax Department for ID
- Application for company bank account opening to any local bank.
Documents needed to apply for Cyprus company registration.
- Certified copy of ID or Passport
- Certified copy or original Utility bill (as a proof of address)
- Reference letter for the good standing of the beneficial owners. (from a bank institution, lawyer or accountant) Our firm can provide to you an appropriate template of a reference letter. Reference letters are needed to validate you as a person of trust.
Annual and legal obligations of a company.
- A Cyprus registered company is obliged to pay the annual fee of 350 Euro.
- To perform a board of directors meeting at least once per year.
- The company is obliged to keep accounting records and prepare audited financial statements.
- Submit annual reports and Audited financial statements to Company Registrar department.
- Has to be registered to the Tax Department and get a Tax Identification Number.
- Submit the annual return form.
- Pay the yearly tax in three installments.
FAQ.
No. A visit is not requires. Our advisors will guide and advice you via email or teleconference and then sent you the paperwork to be signed.
The annual fee to keep a company active is 350 Euro and is paid to Cyprus company registrar via the online portal or your service provider can arrange it for you.
The company director(s) have to have a clear criminal record. The company director has to be a Tax resident of Cyprus. A company can have only one director.
- Company certificates (Shareholders certificate, registered office, Incorporation certificate, Directors and secretary certificate)
- Memorandum and Articles of association
- Identification documents of the beneficiary person (Id, Passport and proof of permanent address)
Yes, most of the local banks have online banking platform.
This depends from the banking institution. Usually there is an annual fee. A company is obliged to provide information such as activities, owners, clients and customers.
