Cyprus | Interstatus - Group of Companies Cyprus – Interstatus – Group of Companies

General jurisdiction information:

The Republic of Cyprus is an island state on the third largest island in the Mediterranean.

Since ancient times, Cyprus has fascinated and inspired with the majestic beauty of its mountain landscape, the turquoise blue water of the stunning sea, the wonderful climate and the hospitality and friendliness of the locals. As one of the most popular tourist destinations of the region, Cyprus attracts crowds of history and culture fans, museum goers and festival lovers, admirers of traditions, myths and exotic adventures, sandy beach frequenters and active holiday aficionados.

Nowadays The Republic of Cyprus is a magnificent combination of lavish nature, historical sights and a unique economic environment attracting foreign investors and international business.

The population of The Republic of Cyprus is slightly above 1,000,000 and the capital city is Nicosia.

The official language is Greek.

The official currency is the Euro (EUR).

The country is a full member of the EU, the Council of Europe, IMF, OSCE, WTO and a number of other international organisations. The main sources of national income are tourism, financial and banking sectors, services and property.

The Republic of Cyprus maintains a well-developed transportation system consisting of 2 international airports and 2 major sea ports and the roads are considered to be among the best in the EU. Telecommunications networks are well advanced.

The Republic of Cyprus attracts international investors by its transparent and corruption-free tax system offering tax rates substantially lower than average European countries.

A very favourable tax regime is offered to companies with intellectual property.

A constant advantage of the economic system of The Republic of Cyprus is its flexibility and ability to adapt to changing environments that is helping the country to overcome the negative effects of the financial crisis of 2013. The discovery of vast hydrocarbon reserves has created further appealing conditions for foreign investment and has enhanced the attractiveness of the energy sector (including “green” energy). With the adoption of new legislation making the disposal of problematic property easier there is a vast potential for inflow of further foreign investment.

Incorporation and operation of The Republic of Cyprus companies is regulated by The Companies Law, which provides for the establishment of private companies (with one or more shareholders) or public companies (with a minimum of 7 shareholders). Private limited liability companies are one of the most widely used organisational forms and legal structures of business in The Republic of Cyprus.

Advantages of incorporation of The Republic of Cyprus companies:

  • A strategic geographical location of the jurisdiction as a transit centre on the crossroads of three continents: North Africa, The Middle East and Europe.
  • Advanced legislation adapted to EU Directives.
  • A high standard of financial services and the availability of qualified legal, banking and accounting professionals.
  • A straightforward and quick incorporation process: companies may be set up with just one shareholder and one director who can be residents of any country.
  • Availability of nominees (director and shareholder).
  • The opening of a bank account does not require a personal visit to the bank.
  • There are no exchange controls.
  • The transparency of the tax system and an attractive tax regime.
  • Corporation tax is one of the lowest in Europe, just 12,5% of net profit.
  • Internal or external dividends, capital gains and the sale of securities are tax exempt.
  • Double Tax Treaties are in force with more than 50 countries providing reduced or zero tax rates for corporate entities or private individuals from a variety of countries including Russia, Belarus, Ukraine, Uzbekistan and others.
  • Citizenship and residence permit schemes offered to non-residents in exchange for investment as provided for in the laws of The Republic of Cyprus.

The Republic of Cyprus companies incorporation process:

Summarised information on the structure of private companies in The Republic of Cyprus is laid down below.

Director:

The minimum of one legal or natural person is required and there is no residency qualification.

It should be noted that in order to obtain residency of The Republic of Cyprus the director must be a resident and the management and control of the company is to be carried out in The Republic of Cyprus.

Appointment of local directors is recommended (they must be composed of the majority of the Board of Directors).

We can provide local (nominee) directors in full compliance with the Law of The Republic of Cyprus to manage the company according to your instructions.

Shareholder:

The company must have at least one shareholder and there is no residency qualification. If the potential beneficiary of the company wishes to preserve total confidentiality, our firm can offer nominee shareholders.

Secretary:

A secretary is mandatory. The Interstatus Group of Companies can act as a secretary unless other instructions are provided. Please note that this is purely a statutory function and the real secretarial services are not implied, should you need a real secretary we can also provide one. Please request relevant information from our virtual office adviser.

Registered office:

The company must have a registered office in The Republic of Cyprus.

This does not mean that you need to set up an administrative office, our office can be used as the registered office of your company.

Share capital:

The Republic of Cyprus applies a minimum share capital requirement.

In practise the authorised and issued share capital of a new company is usually at least 1,000 shares at €1 each. Shares need not be paid up. Bearer shares are prohibited.

Incorporation period:

3 weeks. Shelf companies are available.

Accounting and auditing:

According to tax legislation, every corporate entity of The Republic of Cyprus deriving its income from any profit or other benefits is required to maintain accounting and prepare financial statements. These must be according to the applicable accounting regulations and IFRS (International Financial Reporting Standards) for submission to the Registrar of Companies.

Tax declarations prepared according to the results of the financial statements are presented to the Inland Revenue Department of the Republic of Cyprus.

Holding companies with subsidiaries must consolidate their financial statements according to IFRS.

All companies, whether operational or not, must submit financial statements for auditing to a certified auditor of The Republic of Cyprus and obtain the auditor’s opinion.

Audited financial statements must be submitted to the Company Registrar within one year after the end of the financial period.

If the company has no operations during the financial period it must submit to the Registrar of Companies the relevant return and tax declaration (“zero report”).

Late submission of financial reports incurs penalties.

Companies of The Republic of Cyprus must submit an annual return containing information on shareholders and directors, secretary, liabilities of the company, its registered office, etc. to the Company Registrar. This return must be presented within 42 days after the general meeting of shareholders.

In the event of late submission of the returns the Registrar of Companies suspends the issue of certificates required for operation.

Companies submitting audited financial statements may be required to present the reports electronically.

All value added tax registered companies must submit a VAT declaration within 10 days after the end of the month following the end of the tax period.

Financial statements and accounting books must be kept for at least 6 years at the registered office of the company and must be accessible for official inspection at any time.

Information in the registers:

The Company Register of The Republic of Cyprus is open to the public. Information on directors, shareholders and financial statements of companies are freely accessible.

It is recommended to use nominees to preserve total confidentiality.

The Republic of Cyprus taxation provisions:

A company is deemed tax resident of The Republic of Cyprus if management and control of its business is exercised in Cyprus. Cyprus corporate tax residents pay tax on income derived or received from sources situated in or outside The Republic of Cyprus. Non-resident companies pay tax on income derived or received within The Republic of Cyprus only.

Corporate profit tax:

The fixed rate is 12.5% (net of qualified expenses incurred to generate profit).

The following is exempt from corporate tax:

  • interest and dividend income;
  • capital gains from the sale of securities and property outside of The Republic of Cyprus. Capital gains on the sale of property in The Republic of Cyprus, including shares of companies with property in The Republic of Cyprus is taxed at the rate of 20%;
  • profit of permanent establishments abroad;
  • 80% of the profit from the use and/or sale of royalties.

Tax losses may be deducted from taxable income for 5 years from the end of the financial year. If the companies are members of the same group throughout the entire financial year they can transfer losses to another company in the same group.

Income tax paid in another country is deductible from relevant income derived in The Republic of Cyprus irrespective of any application of Double Tax Treaties. If the Double Tax Treaty is available the taxpayer is allowed to apply the most favourable terms.

 Taxation at source:

Dividends, interest and royalties (only on the use of rights outside The Republic of Cyprus) paid by a company of The Republic of Cyprus to a non-resident are exempt from tax at source. This is irrespective of the residency of the receiving party, its status and the availability of the Double Tax Treaty between The Republic of Cyprus and the jurisdiction of the non-resident.

Royalties arising from sources in The Republic of Cyprus and paid by a company of The Republic of Cyprus to a non-resident are taxed at the following rates:

  • 5% on income from the demonstration of films;
  • 10% on any other rights or similar income.

The above rates are adjusted subject to Double Tax Treaties or terminated according to the EU Interest and Royalties Directive.

Special defence contribution:

Residents of The Republic of Cyprus must pay Special Defence Contributions that are charged on the following income:

  • dividends – 17%;
  • interest income – 30%;
  • rental income – 3%.

Non-residents do not pay the Special Defence Contribution.

Value added tax:

The standard rate is 19% but reduced rates of between 5 and 9% or even total exemption may be applied.

Annual levy:

Companies incorporated in The Republic of Cyprus must pay a €350 levy every year from the date of incorporation and this levy is payable by 30th June of each year.

Late payment of the levy incurs penalties as follows:

  • late payment of up to 2 months – 10% penalty;
  • late payment of 2 to 5 months – 30% penalty;
  • failure to pay the levy will result in the deletion of the company from the Registry and reinstatement of the company in the Register will incur the following fees:
    • within 2 years – a fixed penalty of €500 plus the outstanding levy;
    • after 2 years – a fixed penalty of €750 plus the outstanding levy.

At the request of the company the Inland Revenue Department of The Republic of Cyprus may issue provisional opinion on the Law or its application in specific situations.

Personal taxes:

  • personal income tax is charged progressively at the rate of 0% to 35% (subject to taxable income);
  • Social Insurance Fund (employer – 7.8%, employee – 7.8%);
  • Redundancy Fund – 1.2%;
  • Industrial Training – 0.5%;
  • Special Government Budget Enhancement Contribution – at the rate of 0% to 1.75% (for any person with a monthly income above €1,500) on the total sum of the monthly income;
  • Social Cohesion Fund – 2% (of the total emoluments).

Double Tax Treaties:

Cyprus maintains a network of over 50 Double Tax Treaties, most of which are signed with countries in Central, Eastern and Western Europe, including such countries as Austria, Belarus, Bulgaria, the UK, Greece, Georgia, Lithuania, Malta, Poland, the Russian Federation, Ukraine, Estonia, etc.

The provisions of these Treaties may be utilised by interested parties for tax planning of companies or by private individuals (additional information is available upon request).

For more information on the incorporation and administration of companies in The Republic of Cyprus or companies registered in other jurisdictions please contact us. 

1st year

BASIC
2450
  • Company Incorporation
  • Corporate Documents with Apostille
  • Registered Office
  • Secretary
  • Annual Government Levy
  • Company Stamp
  • Courier
STANDARD
3475
  • Company Incorporation
  • Corporate Documents with Apostille
  • Registered Office
  • Secretary
  • Annual Government Levy
  • Company Stamp
  • Courier
  • Nominee Director
  • Power Of Attorney with Apostille
  • Nominee Shareholder
PREMIUM
3925
  • Company Incorporation
  • Corporate Documents with Apostille
  • Registered Office
  • Secretary
  • Annual Government Levy
  • Company Stamp
  • Courier
  • Nominee Director
  • Power Of Attorney with Apostille
  • Nominee Shareholder
  • Cyprus Bank Account Opening

2nd year

BASIC
850
  • Annual Government Levy
  • Registered Office
  • Secretary
STANDARD/PREMIUM
1875
  • Annual Government Levy
  • Registered Office
  • Secretary
  • Nominee Director
  • Power Of Attorney with Apostille
  • Nominee Shareholder

* Please note – all fees are exclusive of VAT. VAT will be added where applicable.If you require a detailed fee schedule for Cyprus please do not hesitate to contact us.