The nation's Companies Law provides for various types of companies that can be incorporated. The company registration process in Cyprus is straightforward and can be completed remotely in just a few days. Key benefits include low incorporation and operational expenses, an extensive double tax treaty network, absence of foreign exchange controls, and access to EU markets. Companies in Cyprus are subject to a competitive corporate tax.
Overall, Cyprus presents an optimal location for holding companies, IP rights retention, trading businesses, and international consulting firms looking to expand within the EU or Middle East regions. With its robust legal system based on English common law, Cyprus ensures strong minority shareholder rights and creditor protection.
In this article, we will talk in more detail about why in 2024 Cyprus will be one of the priority areas of business activity for progressive investors from all over the world.
Company registration in Cyprus: free zones and key industries
Cyprus maintains several special economic zones offering incentives for global business registration and foreign direct investment. Major zones include the Larnaca Free Zone near the international airport, focused on logistics and manufacturing, and the Limassol Free Zone adjacent to the seaport, catering to maritime services.
These zones provide various benefits like tax relief, simplified customs procedures, free capital repatriation, and established transportation links. However, each zone has distinct regulations. Obtaining expert legal counsel during formation ensures full compliance.
Key sectors for Cyprus company registration
A number of factors render Cyprus an optimal base for international operations across various industries:
With advanced connectivity infrastructure, a talent pool of qualified professionals, and R&D incentives, Cyprus has developed into a thriving regional technology hub. IT education is prioritized, while emerging startups can access state funding and mentoring.
Leveraging Cyprus’ skilled workforce, expanding youth entrepreneurship, and aptitude with digital channels, the jurisdiction provides competitive advertising and marketing solutions globally. Numerous innovative agencies pioneer new techniques.
Strategically positioned between three continents as an EU member state, Cyprus eases trade flows with Europe, the Mediterranean, Middle East and North Africa. Tax and investment incentives attract overseas trading firms.
Major east-west shipping lanes transit near Cyprus. Ongoing port upgrades support the government’s goal of consolidating Cyprus as an East Mediterranean shipping centre, complemented by its participation in developing international maritime standards.
A beneficial tax regime along with Cyprus’s extensive double tax treaty network facilitates locating holding structures and asset management activities to achieve tax efficiency.
Robust growth in domestic and cross-border online trade is promoted by public and private investments into digital platforms and payment systems harmonized with EU e-commerce rules. IP-intensive firms can benefit from the “IP box” regime.
Please note that Cyprus company law mandates certain steps for registration. Our specialists can advise on conforming to requirements based on your commercial objectives.
Launching startups in Cyprus: support schemes
Cyprus offers various programs to nourish an innovation ecosystem and aid the launch of high-growth tech startups. Key initiatives are:
This scheme furnishes funding, infrastructure access, consultancy and other assistance to early-stage ventures across sectors like ICT, life sciences, and environmental technology.
Both grants and equity financing are made available through this initiative to tech startups utilizing emerging technologies and demonstrating viable concepts.
Preferential tax treatment applies to certified innovative firms, including a favourable corporate income tax rate and R&D tax credits.
Securing Cyprus residence through investment
The Cyprus government actively encourages foreign direct investment, making available various programs to obtain residency rights upon meeting certain capital deployment thresholds.
Purchasing Cyprus property worth EUR 300,000–500,000 secures a renewable 3-year residence permit, extendable by another 3 years. For EUR 500,000+ purchases, a 5-year permit applies with one 5-year renewal.
Investing a minimum of EUR 2 million into Cyprus businesses or government bonds grants access to residency visas of up to 5 years, contingent on retaining the assets. Applications entail a rigorous due diligence process.
Introduced in 2021, this special 1-year visa class targets location-independent professionals in creative fields and information technology. Applicants must provide proof of remote work status with non-Cyprus employers and adequate self-sustaining income.
In summary, Cyprus offers multiple options to obtain temporary or permanent residence status contingent upon substantial capital investments, active business pursuits or professional relocation. Our firm can advise on suitable programs aligned with your personal immigration objectives.
Now let’s look in more detail at the algorithm for starting a business in Cyprus: from registering a Cypriot company to organizing servicing of its accounts in a Cypriot bank.
Tax obligations when registering a Cyprus company
Cyprus boasts competitive tax rates within its jurisdiction that spur foreign investment inflows:
- CIT: 12.5% flat rate
- VAT: Standard 19%, Reduced 9%/5%, Exempt 0% (annual VAT registration threshold: €15,600)
- Dividends paid to non-resident shareholders are tax-exempt, excluding distributions from certain domestic real estate holdings.
- Royalties associated with IP rights used locally incur 10% tax, whereas foreign-source royalty income avoids Cyprus tax.
- Gains from disposal of Cyprus residential real estate attract 20% Capital Gains Tax. Sales of non-Cyprus properties are fully exempt.
- Creating a holding company in Cyprus is optimal for reducing the tax burden.
Post-incorporation compliance
All Cyprus companies must comply with annual reporting:
- Audited financial statements.
- Annual tax return.
- Annual statistical return.
Preferential IP regime
Qualifying IP related profits are taxed at a maximum rate between 2.5% to 12.5% under the Cyprus IP Box Regime. The rate applies to the calculated “net profit margin” tied to the IP asset. Securing advance rulings can optimize outcomes.
Overall, Cyprus levies reasonable tax burdens on companies and offers incentives around IP. Our specialists can advise on optimal structuring for tax efficiency.
Company registration process in Cyprus
Key steps when registering a Cyprus company include:
Selecting a legal entity
Various corporate structures exist, like private/public companies, partnerships, and branches. Determining the optimal vehicle depends on factors like ownership, liability, taxation, and capital needs.
|
Type |
Characteristics |
Authorized capital |
Number of founders |
Number of directors |
Responsibility of officials |
|
Society |
Ltd and PLC. Ltd for small/medium PLC for large businesses. Affairs managed by director for Ltd. |
No requirements for Ltd. 25,700 EUR |
1 to 50 2 without limitation |
1 A board of directors consisting of at least three members. |
Members liable only to extent of contributions. |
|
Partnership |
General and LP. No separate business entities. 2 to 20 partners. |
Not regulated for LP. |
2 to 20 |
- |
Partners jointly liable for business obligations. |
|
Branch |
Available to foreign organizations. No initial capital. Local director required. |
No requirements. |
- |
- |
Foreign organization bears full responsibility. |
|
CIT (Trust) |
Legal ownership transfer to Cypriot trustees for managing assets. Strict confidentiality maintained. |
Not applicable |
- |
- |
Trustees manage assets for beneficiaries. |
Reserving the firm name
The name must be unique and align with naming conventions stipulated under the Companies Law. Availability is checked and reserved with the Registrar.
Preparing incorporation documents
Foreign parties engaging local agents to register a Cyprus company must prepare certain documentation, chiefly:
- Copies of valid passports for each founder and beneficial owner
- Confirmation of company name availability from the Registrar of Companies
- Draft Memorandum and Articles of Association in Greek or English
- Director and company secretary identification, including detailed CVs
- Bank reference verifying injection of requisite share capital
- Proof of registered office address per substance rules
Additionally, the Memorandum and Articles of Association stand as the key constitutional documents for Cyprus companies. They codify information regarding shareholders, directors, authorised share capital, capital distribution, company purpose, and governance procedures. These instruments must undergo notarisation prior to submission.
Submitting registration application
The incorporation documents, director and shareholder information, and other statutory statements get filed with the Registrar to certify incorporation.
Post-registration procedures: setting up a corporate account
Cypriot banks adhere to strict EU and international AML/KYC rules for client onboarding. Typical requirements when opening a company account include:
- Proof of ultimate beneficial ownership and sources of wealth
- Comprehensive identity verification paperwork
- For existing entities, financial statements and descriptions of activities
- Indications of substantive local Cyprus operations
Major banks accepting overseas business customers include:
Bank of Cyprus, Hellenic Bank, RCB Bank, AstroBank, Eurobank Cyprus, Alpha Bank Cyprus and Universal Bank. Each bank applies specific eligibility criteria. Obtaining expert guidance can smooth the process.
Payment services provide alternate solutions to facilitate flows for international trading firms and investors.
With proper structuring advice and preparation, Cyprus offers accessible business banking together with varied support mechanisms for ambitious startups ready to tap its platform for European expansion.
Documents required
Key documents needed from foreign founders during engagement as a fiduciary agent include passports, proof of company name approval, and evidence of contribution of share capital or working capital as applicable.
Conclusion
Strategically situated between Europe, Asia and Africa, Cyprus constitutes a vital trade junction between these regions. Its EU membership, sound business environment and advantageous tax regime help attract international firms seeking a base to access the European common market.
Key strengths that elevate Cyprus for global business include:
- EU gateway status: Unimpeded access to the entire EU market due to its status as a member state since 2004
- Competitive taxation: A flat 12.5% corporate tax rate alongside exemptions make Cyprus highly tax efficient
- Expedited company registration: Streamlined launch of Cyprus entities with appropriate advisory support
- Investment incentives: Promotions targeting priority sectors like energy, technology, maritime and financial services
The Cyprus government works closely with industry associations, law firms, banks, and other local partners to smooth business establishment on the island. IQ Decision UK consultants can advise foreign investors on navigating Cyprus market entry, from company registration logistics to opening Eurozone bank accounts. We invite interested parties to schedule an advisory session on structuring international commercial activities via Cyprus.
