Cyprus company formation is a great option for people who want to start a business in a country with low taxes. Cyprus has one of the lowest corporate tax rates and many other tax incentives that make it a business-friendly environment for investors.
A Cyprus offshore company formation also gives investors access to European and international markets. Additionally, the company registration process only takes five to 10 days, which is easy, efficient, and perfect for busy business owners.
In this article, we’ll guide you through the process of the Cypriot company formation, including the required documents, registration fees, and some of the country’s most attractive tax incentives.
Why start a business in Cyprus?
Cyprus is a great place to start a business thanks to its low tax rates, easy access to European markets, and business-friendly rules. As a member of the EU, Cyprus offers many benefits for entrepreneurs, including a simple company registration process and tax advantages. It’s a great option for both local and international businesses. Here are some of the benefits of investing in Cyprus:
- Low corporate tax rate of 12.5%, one of the lowest in the EU.
- Access to the EU market with unrestricted trade benefits.
- Tax exemptions on dividends, interest, and royalties for non-residents.
- Double tax treaties with over 60 countries to reduce international taxation.
- Strategic location between Europe, the Middle East, and Africa for global trade.
- Fast company registration process, usually completed within 5–10 business days.
- No minimum capital requirement for Private Limited Companies (Ltd).
- Strong banking system with international banking and investment options.
- Skilled workforce with multilingual professionals fluent in English, Greek, and Russian.
- Residency and citizenship opportunities for business owners and investors like the Cyprus Golden Visa, which grants permanent residency in exchange for a €300,000 real estate investment.
To learn more about the Cyprus Golden Visa
Step by Step Cyprus Company Formation Process
Company formation in Cyprus is a quick and simple process that is completed within a few days. The key steps include choosing a business structure, reserving a company name, and preparing legal documents like the Memorandum and Articles of Association. Registration can be done through a law firm, licensed service provider, or the Business Facilitation Unit (BFU).
1. Hire a Lawyer
The first step to starting an offshore company in Cyprus is hiring a lawyer. Speaking to a Cyprus-registered lawyer is important to ensure compliance with local laws. Only lawyers licensed by the Cyprus Bar Association are authorized to prepare and sign the Memorandum, Articles of Association, and the HE1 form.
2. Choose a company structure
Most businesses register as a Private Limited Liability Company (ltd) due to its limited liability protection. This means that the owner’s personal assets are generally protected from the company’s debts and financial obligations. Their liability is limited to the amount they have invested in the company. Other structures include Public Limited Liability Company (PLC), Branches, and Partnerships.
3. Select and reserve a company name
The name must be unique and approved by the Cyprus Registrar of Companies. It should not be misleading or too similar to existing company names. The approval process takes around two to five working days.
4. Prepare Company Documents
The following documents must be drafted and notarized:
- Memorandum and Articles of Association (M&A): Defines company objectives, structure, and internal regulations.
- Incorporation Forms (HE1, HE2, HE3): These include details about directors, secretaries, registered addresses, and share capital.
- Declaration by a Lawyer (HE1): A Cyprus-registered lawyer must sign a statement confirming legal compliance.
5. Register the company
Submit the required documents to the Department of Registrar of Companies and Intellectual Property in Cyprus. The company registration takes about 5–10 business days. Upon approval, the company receives a Certificate of Incorporation.
6. Obtain a Tax Identification Number (TIN)
Register with the Cyprus Tax Department for corporate tax and VAT (if applicable). A company must register for VAT if its turnover exceeds €15,600 annually. You must also register for tax if you make more that €19,500 or if you are a registered business.
7. Open a corporate bank account
Choose a Cypriot or international bank. Provide company documents, proof of business activities, and shareholder details. The process can take one to three weeks, depending on compliance checks.
8. Obtain necessary business licenses (if Applicable)
Some industries, like financial services, tourism, and real estate, require specific licenses. Check with the relevant regulatory authorities.
9. Register for social insurance (if hiring employees)
If employing staff, register with the Social Insurance Services. Employers must contribute 8.3% to social security on employees’ salaries.
Cyprus Company Formation Requirements
To start a company in Cyprus, these are the requirements that must be met:
- Company Structure – Choose a business type, which is usually a Private Limited Company (Ltd) due to its limited liability benefits.
- Minimum Share Capital – No minimum capital is required for an Ltd, but a nominal amount of about €1,000 is recommended. Public Limited Companies (PLC) require a minimum of €25,629.
- Directors & secretary – At least one director. It can be an individual or corporate entity and a company secretary are required. A Cypriot resident director is recommended for tax benefits.
- Shareholders – At least one shareholder is required. They can be individuals or corporate entities of any nationality.
- Registered office address – The company must have a physical address in Cyprus for official correspondence.
- Bank account – A corporate bank account in Cyprus or abroad is needed for business transactions. The bank account can also be opened online.
- Legal compliance & due diligence –
- Know Your Customer (KYC) Documents: Passport copies, proof of address, and bank references for shareholders and directors.
- Declaration of Beneficial Owners to ensure transparency.
- Tax & VAT Registration – Register with the Cyprus Tax Department and obtain a Tax Identification Number (TIN). VAT registration is mandatory if annual turnover exceeds €15,600.
- Licenses & permits – Certain industries, such as financial services, tourism, and real estate, require additional licenses from relevant authorities.
Required Documents to a Cyprus Offshore Company Formation
To form a company in Cyprus, you need to submit the following documents:
- Memorandum and Articles of Association (M&A) define the company’s purpose, structure, and internal regulations.
- Incorporation Forms:
- HE1 (Declaration of Compliance) –Signed by a Cyprus-registered lawyer, confirming legal compliance.
- HE2 (Registered Office Address) – Declares the company’s official address in Cyprus.
- HE3 (Details of Directors & Secretary) – Lists the names and details of company officers.
- Copies of passports & proof of address are required for all directors, shareholders, and the secretary.
- Bank reference letter – A document from a bank verifying the financial credibility of shareholders.
- Shareholder structure & beneficial owner declaration – Outlines company ownership and ultimate beneficiaries.
- Approval of company name – A certificate from the Cyprus Registrar of Companies confirming the reserved business name.
Additional documents may be required depending on the type of business.
Cyprus Company Registration Fees
These are the main fees you can expect when forming a Cyprus offshore company. The costs might vary slightly depending on the service provider or specific needs, but these amounts are a general guide.
Initial registration costs
- The cost to register a Cyprus company is around €1,300 plus VAT, assuming a nominal share capital of €1,000.
- If you need to translate your corporate documents into English, it will cost an additional €300 plus VAT.
- There are also disbursement fees (fees paid to the Registrar of Companies), which typically range between €650 and €1,000.
Annual cost: Each year, registered companies must pay an annual fee of €350, which is due by June 30th.
Tax Incentives in Cyprus
One of the biggest advantages of a Cypriot Company Formation is its tax incentives. Here is a breakdown:
- 12.5% corporate income tax rate: Cyprus has one of the lowest corporate tax rates in the EU at 12.5%.
- 0% Tax on trading in securities: No tax on revenues from trading in securities, including shares, bonds, and other investments.
- 0% Tax on dividends from other companies: No tax on dividends received from companies where the business holds shares.
- 0% Tax on profits from selling real estate abroad: No tax on profits from the sale of real estate outside Cyprus.
- 0% Tax on profits from permanent establishments abroad: No tax on profits from permanent establishments abroad, such as hotels, casinos, factories, and restaurants.
- 0% Stamp Duty: No stamp duty on many transactions, lowering operational costs.
- 0% Tax on profits from selling shares: No tax on profits earned from selling shares in other companies.
- No withholding tax: No withholding tax on dividends, interest, or royalty payments made to non-residents.
- 2.5% tax on intellectual property rights: Only 2.5% tax on income derived from intellectual property rights, offering a competitive tax advantage.
Ongoing Commitments and Obligations for Foreign Companies in Cyprus
Foreign companies operating in Cyprus have certain ongoing obligations and commitments they must adhere to in order to maintain compliance with local regulations. These include:
1. Annual financial statements
Foreign companies must prepare and file annual financial statements that comply with Cyprus Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), depending on the nature of the business. These statements must be audited by a licensed auditor in Cyprus.
2. Annual fee to the registrar
As mentioned earlier, every company in Cyprus must pay an annual fee of €350 to the Registrar of Companies, which is due by June 30th each year.
3. Tax filing and payments
Companies must file an annual tax return with the Cyprus Tax Department, detailing all taxable income and expenses. They are also responsible for paying taxes on profits and value-added tax (VAT), if applicable. Companies must abide with the Cyprus Income Tax Law and VAT Law, to ensure timely and accurate tax payments.
4. Compliance with employment laws
If the company hires employees in Cyprus, it must adhere with Cyprus labor laws, including Social Insurance contributions and other employee benefits. It must also keep up to date with any changes in employee taxes and social security contributions.
5. Statutory registers and corporate records
Companies are required to maintain up-to-date statutory registers, including those for shareholders, directors, and company officers. Regular updates must be made to the Registrar of Companies regarding any changes to company ownership or governance.
6. Data protection and privacy
Foreign companies operating in Cyprus must comply with the General Data Protection Regulation (GDPR), ensuring that personal data is handled securely and in line with EU regulations.
7. Corporate governance
Companies are required to follow corporate governance guidelines, which include having a board of directors and maintaining proper records of shareholder meetings and resolutions.
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Frequently asked Questions about Cyprus Company Formation
How long does it take to register a company in Cyprus?
The process of registering a company in Cyprus takes between 5 to 10 business days, depending on the complexity of the documents and approval from the Registrar of Companies.
What is the minimum share capital required to start a company in Cyprus?
The minimum share capital required for a Cyprus company is usually €1,000. However, the capital can be higher depending on the type of business or specific requirements.
What are the main tax benefits of setting up a company in Cyprus?
Cyprus offers a low corporate tax rate of 12.5%, with additional tax incentives such as 0% tax on profits from the sale of real estate abroad, dividends, and capital gains from selling shares.
Do I need a local director to form a company in Cyprus?
Cyprus requires at least one director to manage the company, but the director does not have to be a local resident. It’s common to have an international director or appoint a nominee director.
Is there an annual fee for maintaining a Cyprus company?
Yes, all companies registered in Cyprus are required to pay an annual fee of €350 to the Registrar of Companies by June 30th each year to keep the company active.
Can I open a bank account for my Cyprus company remotely?
Yes, you can open a bank account for your Cyprus company remotely, although the process may require providing certain documents and undergoing compliance checks, which may take some time.
What documents are needed to form a Cyprus company?
To form a Cyprus company, you will need to submit documents such as the Memorandum and Articles of Association, a declaration from a lawyer, and details about the company directors, secretary, and shareholders.
Can I get a Cyprus residency permit through company formation?
Yes, forming a company in Cyprus can be a path to residency. Investors who meet certain criteria, such as investing in the country or creating a business, may be eligible for a Cyprus residency permit.
