CYPRUS COMPANY FORMATION

Cyprus Jurisdiction guide

Cyprus is an independent country in the Eastern Mediterranean south of Turkey with a population of some 875,000.

It is a full member of the EU and is also part of the Euro zone. The Governing law is the Cyprus Companies Law, Cap. 113 and is closely based on the 1948 UK Companies Act.  

Cyprus is a common law jurisdiction.

RESIDENT OR NON-RESIDENT CYPRUS COMPANY?

The vast majority of Cyprus companies are formed as resident companies. Such companies gain access to EU markets, may be registered for VAT (a requirement for trading within the EU). Resident Cyprus companies are liable for tax - currently 12.5% on profits. However a second option exists and that is for a Cyprus non-resident company. Such a company will generally be managed from outside the EU (to avoid complications with VAT) and will not pay corporate taxes in Cyprus. Please see below for a short summary detailing the differences:



Cyprus resident company














Summary of resident companies

For trading within the EU a VAT number is required and therefore a Cyprus resident company is the only option.

Resident companies pay tax at 12.5% (see taxes below) and in every respect are “normal” EU companies.

In all cases a local (Cypriot) director is required to establish management and control and the company’s trading address should be in Cyprus.

Cyprus non-resident company














Summary of non-resident companies

Where a Cyprus company does not require a VAT number and ensures that its management & control is outside Cyprus, it is deemed to be non-resident. By being designated as non-resident, no Cyprus corporate taxes are payable. It is important to note that the company may not do any business within Cyprus (other than the purchase of professional services), and should not trade within the EU. Although no tax is payable, an audit must still be carried out and accounts filed.


Corporate tax rate 12.5%

Full EU member since 2004  

Low VAT rate - 19%


Zero tax for non-resident companies

Perception of EU membership

However, non-resident companies are generally managed & controlled from OUTSIDE the area of the EU to avoid VAT obligations.

Cannot register for VAT if non-resident

FEATURES COMMON TO BOTH RESIDENT AND NON-RESIDENT COMPANIES


Director & Shareholder requirements

Cyprus maintains a public registry from which details concerning the company's officers and shareholders may be obtained by means of a personal search (Other than checking names, there is no facility to undertake on-line searches).


Corporate directors are not permitted in Cyprus, however corporate shareholders are allowed. Professional directors / nominees are frequently used both to protect privacy and to establish management & control.


Filing Of Accounts/Financial Statements For Cyprus Companies

Accounts (often referred to as Financial statements) do need to be prepared, audited and filed with the Inland Revenue in Cyprus. We offer all the necessary services e.g. bookkeeping, VAT registration (where applicable) and maintenance, accounting etc. and can arrange for audit with a local firm of Chartered Accountants.


Public records

Cyprus has a public register of officers & shareholders. Minimal information is available online (company name and number only).

Shelf companies

A small selection of ready formed companies (shelf companies) is usually available. Due to frequent changes in availability please contact us for an updated list.

Dividends

Dividends may be distributed to shareholders outside Cyprus without taxation.
















FEATURES SPECIFIC TO RESIDENT OR NON-RESIDENT COMPANIES

Cyprus resident companies are taxed at 12.5% on profit. (Profit is income less allowable expenses e.g. general overheads, travel, salaries, consultancy fees etc).

Cyprus also has a wide network of tax treaties, particularly with EU & CIS countries to avoid double taxation.



The obligation for trading companies to register for VAT makes a Cyprus company an ideal vehicle for trading within the EU. We can arrange for Cyprus companies to obtain VAT registration and provide book-keeping/accounting services to ensure compliance.

Form a Cyprus company now

Non resident Cyprus companies should not trade within the EU.

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