Cyprus is an important European business hub providing major advantages to foreign investors such as a low tax haven, a stable economy and a welcoming territory for any type of investments. The company registration procedure in Cyprus is basically the same for all business entities, having a simple and straightforward structure.
The procedure of company formation in Cyprus includes drafting the articles of association and other documents required for the incorporation of a Cypriot company, such as signatures, passport copies, forms etc. New owners may also need to go to a local public notary, find an office for their company and set up a bank account. A Cypriot accountant may also be required for new business incorporation.
- Just like Limited Liability Companies in countries like Hungary, in Cyprus this type of company, also called a LTD, can either be public or private, depending on the types of shares and the size of the corporation. Private limited companies do not need a minimum initial capital, but for setting up a public limited company, at least 15,000 EUR are needed. Both types can be established by one or more shareholders.
- Branch, Subsidiary or Representative Office – these types can either be formed separately from the parent company or as an extension of it in Cyprus. Each structure has its own requirements that have to be met by the founders.
Incorporating a Private Company Limited by Shares (LTD) in Cyprus
This is the most common type of company used in Cyprus and it is founded by one ore more partners, up to 50. The company must have a registered office in Cyprus and a local company secretary. The shareholders subscribe shares, monetary or non monetary, which are given a nominal value and cannot be transferred. The members of a private company limited by shares are liable to the company's debts and obligations only to the extent of the nominal value of their shares. In a private company limited by shares there is no minimum required capital.
Registering a Public Company Limited by Shares (PLC) in Cyprus
The public company limited by shares functions the same as a private company limited by shares, except that shares are freely transferable and there is no restriction as to the maximum number of partners. The minimum share capital of a public company limited by shares is EUR 15.000.
Establishing a Cypriot Branch, Subsidiary or Representative Office: Any foreign company is able to set up branch entities in Cyprus. These can be set up as separate entities from the parent company (Cypriot companies having the foreign company as shareholder) or extensions of the parent-company in Cyprus. Also subsidiaries are a popular option of entering the Cypriot market.
Cypriot private companies limited by shares must have a registered office in Cyprus and are managed by a management board. An authorized company representative appointed by power of attorney can perform the registration procedure for a company in Cyprus. It may however be necessary to come in person when the bank account is opened in order to sign some papers and provide the registration certificate and identification documents of the managers.
VAT registration is only compulsory for the companies that perform activities that are subject to the Value Added Tax, such as trading.
A new company in Cyprus has to hire employees. Recruitment is not a difficult process if you collaborate with job websites and recruitment agencies, especially since the workforce in Cyprus is so well-trained. The average monthly salary is rather high in Cyprus and an employee earns approximately 1,800 EUR.
- The standard corporate tax rate for companies that are registered in Cyprus is 12,5%, one of the lowest in Europe.
- The standard VAT rate is 19%, but there is a reduced rate of 8% and 5%. There are also some services and goods to which a zero VAT rate is applied. The minimum annual turnover that a company must reach in order to be mandatory to register for VAT is 15.600 EUR (or 10251 EUR for acquisition of EU goods).
Whenever you need legal services in other European countries, such as company formation in Bulgaria, opening firms in Malta or setting up companies in Belarus please contact our partners in these country and they will provide you with the best legal advice and personalized consultancy. We also have partners in numerous Asian jurisdictions, such as Uzbekistan or Japan, so if you want to start a company in an Asian jurisdiction we can put you in contact with our affiliates.