There are various types of companies which can be established in Cyprus. The simplest business form is the sole proprietorship, while the more complex ones imply the private and public limited liability companies, shortly known as LTDs.
Below, our Cyprus company formation consultants provide detailed information on the limited liability company. If you want to invest in Cyprus, you can rely on our local agents for support in registering a business in Cyprus, including under the form of a private or public limited liability company.
The Cypriot Limited Liability Company
The limited liability company in Cyprus (LTD) is the most popular business form in Cyprus. The majority of foreign investors choose to set up this business form and it can be established by EU or non-EU citizens.
The limited liability company must be registered at the Cypriot Registrar of Companies and the investor will need to prepare and submit certain documents as well as apply for a company name. Our Cypriot company formation experts can assist you throughout the company incorporation procedure and help you provide the necessary documents and information.
The main advantages of an LTD in Cyprus
Most of the foreign investors choose the LTD as a business form whenstarting a company in Cyprus because it offers many advantages. Among these, we can mention the following:
the shareholding structure of the company is quite simple, requiring at least two members;
the liability of the shareholders is limited to their contribution to the share capital of the company;
this type of company can be used for multiple purposes which makes it very flexible;
if the company is not considered a Cyprus-resident company, it will be exempt from the corporate tax;
the LLC can be used for completing various activities in Cyprus, including trading activities.
If you are interested in a particular aspect related to establishment of a Cyprus LTD, our local consultants are at your disposal. Also, if you have any questions about the LLC, do not hesitate to ask us.
The private company limited by guarantee can be with or without shares.
Our local consultants can help foreign investors who want to open a company in Cyprus, including a limited liability company. If you need other types of services in Cyprus, for example immigration services, we recommend our local partners.
Requirements for a limited liability company in Cyprus
Limited liability companies in Cyprus can be private or public. There are no applicable requirements for the minimum share capital of a private limited liability in Cyprus. Public limited liability companies need to have a minimum share capital of over 25,000 EUR. The Companies Act regulates the number of shareholders for these companies:
-at least one member for the private limited liability company and at least seven members for the public LTD;
-a private LTD can have up to 50 members.
The shareholders must provide personal information like nationality, contact details or the number of shares they own in the company. There are no restrictions on the nationality of an individual who wants to form this type of company.
The contribution to the company’s share capital is divided into shares. The total capital of a Cyprus LTDis called the Authorized or Nominal capital. The Paid Up capital represents the amount that the shareholders have to pay. The liability of the company members is limited to the nominal value of the fully paid-up shares. The contributions can be made in kind or in cash.
Our Cypriot company formation consultants can help you know more about the attributions of a company director in Cyprus and the legal requirements for corporate taxation. We can also assist with VAT registration in Cyprus.
Steps for opening an LTD in Cyprus
The company formation process in Cyprus is the same no matter the type of company one wants to set up. The limited liability company benefits from one of the simplest business incorporation procedures as the requirements for its creation are also easy to comply with.
The following steps must be completed in order to open an LTD in Cyprus:
reserve a trading name (the shareholders must make sure the name is unique);
draft the incorporation documents;
set up the corporate bank account and deposit the share capital;
apply for the business licenses in accordance with the activities of the company.
If you want to open a company in Cyprus and choose to set it up under the form of a limited liability company, our agents can guide you.
The Articles of Association of an LTD in Cyprus
The Articles of Association represent the main documents which provide for the existence of a Cypriot limited liability company, be it private or public. These documents must contain specific information in order for the Trade Register to accept them and the company registration procedure to be completed.
The following information must appear in the Articles of Association:
- the details of the shareholders – their names, nationalities, and addresses in Cyprus;
- the name of the company’s director(s) and secretary with their personal details;
- information about the share capital of the company and the division of shares among the stakeholders;
- special clauses related to the alteration of the share capital and appointment of the directors.
Our Cyprus company formation advisors can help with the preparation of an LTD’s Articles of Association.
You can also find out how open an LTD in Cyprus from the scheme below:
Company name particulars of an LTD in Cyprus
The Company Law contains specific provisions about each type of company which can be registered in this country, and one of the most important of them refers to the name of the LTD which must be reserved prior to the Cyprus company formation procedure.
The most important aspect when reserving the trading name of an LLC is that it must be unique. For this purpose, it can be verified with the Companies House in Cyprus. Then, the name must end with the abbreviations LTD or LLC. The name of the company can be in Greek or English, considering Cyprus is a former British colony.
Shareholders in a Cyprus LTD
The minimum number of shareholders in a limited liability company depends on the type of structure of the entity. In the case of a private company, there is no need for more than one shareholder, while the minimum number for public companies is seven. Also, the maximum number of shareholders in a private company is 50.
An LTD can have as shareholders natural persons or other companies of any nationality. When the LTD is incorporated by a foreign entity it can take the form of a subsidiary company, however, it will be treated as a domestic business.
Another important aspect that needs to be considered when it comes to limited liability companies is that their founding members can called shareholders because of their capital requirements of being divided into shares, which is not the case of companies limited by guarantee, for example.
Cypriot LTDs can have general and minority shareholders depending on the number of shares issued. When it comes to the shares the company can issue, it should be noted that these can be:
- ordinary (the most common type);
There is also the possibility for limited liability companies to issue other types of financial instruments that can be converted into shares. Among these are warrants and convertible debentures. The most important aspect to consider, however, is that the LTD cannot trade its shares to the general public unless it is converted into a public one. This is can happen by increasing its share capital.
Our Cypriot company formation specialists can offer more information on the shareholding company requirements in the case of an LTD.
Registered address requirements for a Cyprus LTD
One of the main requirements for opening an LTD in Cyprus is for it to have a legal address in this country in order to be deemed as a domestic company. The address can be located in the Cypriot city the business has its main operations in. A virtual office can also be used during the first steps of incorporation, however, the contract indicating the address needs to be filed with the Trade Register in order to demonstrate meeting the legal requirements in this sense.
We can provide full virtual office services to our clients who can benefit from faster company registration procedures this way. Later, this address can be changed, the process being quite simple, as one of the company representatives needs to inform the Trade Register about the change by filing a form.
Director and secretary requirements for Cyprus LTDs
All companies in Cyprus must have at least one director and a secretary. If in the case of the secretary, the person or company appointed to take this role must be Cyprus resident, in the case of the director, there are certain particularities apply.
In the case of the company director, the person appointed can have any nationality, however, his or her residency will determine the tax residency of the Cyprus limited liability company. In other words, if the company has a Cypriot resident director, the LTD will be considered a Cyprus tax resident company.
Our Cyprus company formation specialists can offer detailed information on this aspect. We can also assist with nominee services in relation to company director and secretary requirements.
Bank account opening procedure when setting up LTD in Cyprus
The bank account opening is part of the company formation procedure in Cyprus as the shareholders need to deposit the share capital and obtain a statement that will be filed with the Trade Register. Even if the LTD has no specific share capital requirements, the stakeholders must establish the amount of money they need for the operations and deposit it upon creating the bank account.
In order to open a corporate bank account in Cyprus, the company’s Articles of Association and information about the company must be submitted with the selected financial institution. The procedure can take a few weeks, however, this is also the case of other European countries.
Business licensing requirements for LTDs in Cyprus
Depending on the industry the LTD will operate in, it will need to obtain specific licenses and business permits. This is the last step in the company incorporation procedure and business owners must verify the requirements in this sense.
Among the industries which require such licenses are travel and tourism, telecommunications and the financial one.
If you are interested in setting up an LTD in Cyprus and need information on the procedures that need to be completed do not hesitate to ask for advice from our experienced officers.
Setting up an LTD - a procedure presented by our Cypriot company formation agents
The first step when setting up an LTD in Cyprus is to prepare the required documents. A lawyer in Cyprus can help you at this stage. The investor then proposes a company name and submits an application for approval with the Companies Registrar. The availability of the name can be checked online. After the name is approved, the investor can start gathering the documents needed to register the company. The following documents will be requested by the Registrar of Companies:
-declaration form for the registered address;
-details about the company directors and secretary;
-the company’s Articles of Association.
There are various fees associated with the company registration procedure payable to the Registrar of Companies. Additional requirements for a newly established company in Cyprus include opening a bank account.
Holding companies can also be created as limited liability companies in Cyprus.
Our company registration representatives in Cyprus can help you open a limited liability company and also give you information about the other types of companies available in the country.
The Cyprus LTD as a shelf company
One of the most important uses of the Cypriot LTD is that of a shelf company. Most of the ready-made companies sold in Cyprus are incorporated as private limited liability companies which are kept on a shelf and then sold to foreign entrepreneurs most of the times. The benefit of this type of company is that it can be kept on a shelf until it ages, case in which investors with companies in other countries can include the history of their companies in that of the Cyprus ready-made LTD.
If you need additional information on shelf companies, our company registration advisors in Cyprus are at your disposal. We can also help you buy a shelf company in Cyprus.
The LTD as a Cyprus holding company
Another common use for the Cypriot LTD is that of a holding company. This type of company is one of the most advantageous in this country because of the tax benefits it offers. Considering holding companies are usually registered by foreign companies seeking to control other businesses, the LTD is a good choice because of the possibility of being owned by foreign shareholders without any restrictions.
If you want to open a Cyprus holding company under the form of an LTD, feel free to discuss with our local agents.
We also invite you to watch our video on the LTD in Cyprus:
Taxation and accounting requirements for LLCs in Cyprus
As mentioned above, the taxation of an LTD in Cyprus is subject to whether the company is considered a tax resident or not. In the case of Cyprus resident companies, the corporate tax will be levied on the worldwide income, while in the case of non-resident companies, no taxes will be levied in Cyprus.
Here is what one needs to know about the taxation and accounting of an LTD in Cyprus:
- the standard corporate tax rate applicable to resident companies (LTDs included) is 12.5%;
- resident companies must also pay the Special Defence Contribution at a rate of 17%;
- the audited accounts of the company must be filed within 18 months in the first year of existence of the company;
- then, the company must have its annual accounts audited and filed every 12 months.
Tax exemptions for LLCs in Cyprus
One of the most important of opening an LLC in Cyprus is related to the tax exemptions offered by the authorities. Among these, the most important ones are:
- an exemption from the dividend tax which is applied to both local and foreign shareholders distributing profits derived from dividend payments;
- an exemption from the capital gains tax is also available for the disposal of shares in a Cyprus LTD;
- interest incomes can also benefit from tax exemptions, as long as several conditions are met – these conditions can be explained by our company registration agents in Cyprus;
- rental income earned by a Cypriot LLC can also be subject to tax exemptions, provided that the income is generated through the preservation of buildings;
- income resulted from foreign exchanges also benefits from an exemption from the corporate tax under certain conditions.
Apart from these exemptions, LLCs in Cyprus can also benefit from numerous tax deductions.
Here are some facts on the Cyprus economy:
- in 2019, the Cypriot economy has increased by 3.2%;
- the unemployment rate decreased to 7.1% in 2019 compared to the 8.4% registered in 2018;
- even if 2020, the economy is expected to decrease by more than 6% because of the COVID 19 pandemic, it is predicted to grow by 5.6% in 2021.
Call us now at +357 24 656 406 to set up an appointment with our consultants in Larnaca, Cyprus. Evgenios Erotokritou is the CEO of E.R. Team Global Consultants and he will help you open your company in Cyprus as fast as possible.
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