Open a Subsidiary in Cyprus

Cyprus has a modern offshore legislation, a stable jurisdiction and the lowest corporate tax rate in Europe (10%). With these advantageous conditions, one of the business opportunities in Cyprus are the subsidiary companies, which represent entities that are owned and managed by a parent company that oens more than 50 % of the shares. 

The subsidiary company will operate as an extension of a foreign company in Cyprus, however, it will have full autonomy in running its operations. The subsidiary company is registered as any other domestic company in Cyprus.

Below, our Cyprus company formation specialists explain how to register a subsidiary here. We can help you through every step of the business registration procedure.

The main features of subsidiaries in Cyprus

Those who want to set up subsidiary companies in Cyprus must know that this business structure falls under the Company Law which means it has to respect the same incorporation conditions, requirements in terms licensing, management and accounting like local companies.

The Cyprus subsidiary can be characterized by:

1. the fact that its main shareholder will be a foreign or local company (it can also have a partner and be registered as a joint venture);
2. it is an independent company and does not need to obtain permission from the parent company in respect to the operation it can complete;
3. it can complete the activities of the parent company, however, additional undertakings can also be completed;
4. in terms of licensing, the subsidiary needs to obtain its own business licenses, as it cannot operate under those of the parent company
5. the subsidiary company will need to appoint a secretary, just like in the case of local businesses;
6. from a taxation point of view, the subsidiary will be treated as any other Cypriot company;
7. the Cyprus subsidiary must have a registered address and bank account in this country.

Often, the subsidiary is compared to the branch office and the representatives of foreign companies interested in operating in Cyprus can obtain complete information on both structures from our local consultants.

Setting up a subsidiary  -  a process described by our experts in company formation in Cyprus

In Cyprus the forms under which a subsidiary can be organized are: private company limited by shares (LTD) and public company limited by shares (PLC). In the first case, the number of shareholders can be between 1 and 50 while for public limited companies there are no restrictions regarding the number of shareholders. Another difference between these two types of Cyprus companies is related to the required capital: for public companies the minimum share capital is 15.000 CYP, while for private entities there aren’t any minimum requirements for the share capital. 

Documents required for opening a subsidiary in Cyprus

When opening a subsidiary in Cyprus, the foreign company must prepare the Cypriot company’s Memorandum and Articles of Association, however, its statutory documents and certificate of incorporation issued by the Trade Register in its home country are also necessary.

When compared to the branch office, it is useful to know that the subsidiary does not need to run under the same name of the parent company like in the case of a Cypriot branch.

The subsidiary will also need to have a registered address in Cyprus, and for this, it must secure a rental agreement for the space used for the address. A virtual office can be used in the initial stage of the company registration procedure in Cyprus. This service can be provided by our agents in Cyprus.

Our Cyprus company formation advisors can assist with the drafting and verification of all documents which need to be prepared upon the incorporation of a subsidiary in this country.

As a reply to your appliance the following certificates will be issued:

 

The subsidiary company in Cyprus must be then registered at the following ministers: Minister of Commerce for the corporation tax (the tax on the annual profit of a company), Minister of Finance for the VAT tax and the Ministry of Labour for Social Contribution. 

Taxation of a subsidiary in Cyprus

As mentioned above, the subsidiary is treated as any other Cypriot company and this also applies when it comes to taxation. Subsidiaries must register for taxation and VAT with the Cypriot authorities and pay the corporate tax on their worldwide income.

The corporate tax is levied at a 12.5% rate in Cyprus to which the Special Defence Contribution applies. Its rate is 30%.

Cypriot subsidiaries must comply with the accounting and reporting requirements imposed by the local tax authorities, however, they must also submit financial information about the parent company. Subsidiaries are also subject to the value added tax provided that VAT registration has been completed in Cyprus.

If you need information about the accounting and reporting requisites applied to foreign companies operating in this country, our agents can advise you. We can help you open a company in Cyprus, no matter if you are a single entrepreneur or the representative of a foreign company.

Advantages of the subsidiary in Cyprus

As many companies do a lot of research before deciding for a branch or a subsidiary, our specialists in company formation in Cyprus have prepared a list with the advantages and benefits of the subsidiary. Among these are:

• - the registration costs and maintenance of a subsidiary company are quite low in Cyprus;
• - the procedure of incorporating a subsidiary here is also time-effective, as the procedure is simple;
• - Cyprus has one of the lowest corporate taxes in the EU which favors local companies, such as subsidiaries;
• - in terms of tax reliefs, a subsidiary can benefit from many such benefits, among which foreign tax reliefs;
• - the distribution of profits to non-residents is also made under very advantageous conditions;
• - subsidiaries can also take advantage of Cyprus’ agreements for avoidance of double taxation.

The decision of opening a subsidiary can be influenced by various factors and our company formation representatives in Cyprus can help you choose the right business form.