The most common legal form of a Cyprus Company is the Private Limited Liability Company is a legal entity in its own right and is separate from those who own it in the eyes of the law. This is a major benefit to operating as a limited liability company as the liability of the shareholders is limited to their investment and any unpaid shares they own. The personal assets of a shareholder would not be exposed if a limited liability company is dissolved.
Due to the limited liability characteristic of the Cyprus Company, potential tax advantages and simplicity in operating a limited liability company, make it the most popular business vehicle in Cyprus. Once the company is registered, information regarding the filing history and current appointments is made publicly available on the Registrar of Companies register. This affords limited companies with a level of transparency which is regarded as a significant advantage when doing business.
The company’s name must be approved by the Cyprus Registrar of Companies. The name can’t be too general or similar to other existing companies, and must end with Ltd or Limited. If the proposed name is the same as the Parent Company’s name then the parent company must provide the Registrar of Companies with a letter of consent for the usage of the name.
Share Capital of Cyprus Company
Although there is no minimum paid up capital requirement, authorised share capital of €1.000 is usually used. Different classes of shares may be registered such as ordinary shares, preference shares, redeemable shares and shares with or without voting rights.
Cypriot Companies must have at least one shareholder. Shareholders may be either corporate or physical persons (individuals), residents of Cyprus or foreigners.
A Cypriot Company must have a registered office in Cyprus. All official documentation of the company is kept at this office.
Secretary of Cypriot Company
Cypriot Companies must appoint a company secretary.
The company must have at least one director, and the Director may be either corporate or physical person. Although there is no requirement that the director(s) are local, we strongly recommend that the majority are Cyprus residents, so that the company is considered to be a tax resident of Cyprus.
Nominees (Hold the shares in trust for the Owner)
It is permissible to provide for nominee subscribers to the memorandum of association to ensure anonymity and confidentiality. Nominees may be companies or individuals persons. A trust deed is issued which is executed by the nominee shareholder in the favor of the beneficiary stating the powers of the nominees along with an open date share transfer agreement, signed and sealed, so that the beneficial owner of the shares can transfer the shares to his/her name at any moment.
Accounting & Audit
Cyprus Companies are required to maintain accounting records of all their transactions and to file on an annual basis their Audited Financial Statements to the Registrar of Companies and the Tax Department.
- The company tax rate for Cyprus is 12.5%.
- Certain income types are also subject to a special contribution for defense. (Interest, Dividends, Rents)
- Temporary Tax is payable in two equal installments on the 31st July and 31st December of the current year, and Self-assessment tax (tax balance from the previous year) is payable on the 1st August (the following year).
- The Deadline for electronic filing of the Company’s Tax Return is 31st March – 15 months after the end of the calendar year.
- Taxable profits include the profits that the company makes from renting and/or doing business.
Additionally a Cypriot Company may be subject to Capital Gains Tax based on the provisions of the relevant law for Profit from the disposal of:
- immovable property situated in Cyprus;
- shares of companies whose property consists of, inter alia, immovable property situated in Cyprus;
- shares of companies which either directly or indirectly participate in a company or companies which own immovable property situated in Cyprus and at least 50% of the market value of such shares is derived from the said property.
The Cypriot Company is liable to pay company tax on all its profits from Cyprus and abroad.
If your company isn’t based in Cyprus but has an office or branch in Cyprus, it only pays company tax on its profits from its activities in Cyprus.