When it comes to founding a business in Cyprus, foreign investors have several possibilities. Because of the Cypriot government’s residence by investment policies, the country is one of the most enticing corporate destinations in the European Union. Under these programs, international entrepreneurs can establish businesses and live well in Cyprus in exchange for an investment that can secure permanent residence or citizenship.
It is pretty simple to establish a business in Cyprus, and with the proper assistance, foreign investors may have their own companies up and running in the shortest amount of time. We invite you to read on for more information on how to start a business here.
And you might like to adopt digital solutions like Cypruslimited.com for starting and managing your business in Cyprus!
Pick Your Preferred Business Entity
To begin, you must determine which business structure is best suited to your investment. We strongly advise speaking with professionals in the industry and those who have gone through the same experience when weighing your options. It will provide you with a broader perspective and insight into what to expect in any of the three configurations accessible: Sole proprietorship, Partnership, and Limited Liability Companies.
You should keep in mind that your choice will have an impact on the paperwork you’ll have to perform, the business’s rules, and the taxes you’ll have to pay.
Choose A Name
The correct company name is determined by various factors, ranging from the nature of your firm to your preferences and style. It is also possible to use pre-approved names that we can offer you or to purchase a shelf (ready-made) company that already has an approved name.
The Registrar of Companies and Official Receiver
The Department of the Registrar of Companies and Official Receiver handles company formations and registrations in Cyprus. This government agency is in charge of administering and managing all of the fundamental components of your registration, and it is where you will need to submit the majority of your documentation.
Limited corporations in Cyprus must end in the suffix “Limited” or “Ltd.” (no other suffix is permitted) and must be approved by this organization. This process typically takes two to four business days. You must also submit your memorandum and articles of incorporation (which must be prepared beforehand by a licensed law practitioner).
You must also obtain a registered office in Cyprus and give this address to the registrar, albeit you are not required to be physically present on the island. Company meetings do not have to be held in-country, though given the location’s beautiful weather environment, highly qualified labor force, and established transportation links, many organizations choose to establish themselves there, particularly in the bigger towns of Limassol and Nicosia.
Specify The Objective(s)
Define the company’s goals, share capital, and, if necessary, address particular problems such as the Board of Directors’ powers, whether particular shareholder rights will exist, whether majority or special majority voting will be used, and so on.
Submit Due Diligence Documents
According to Cyprus law, we must perform due diligence, often known as the “know your client” (KYC) approach. Names, addresses (both work and home), utility bills, passports, and references for the company’s owners and officers are typical requirements.
Examine for Required Licenses
When a corporation specializes in a specific industry, the government imposes stricter rules. So, if you are unsure whether you require a special license, contact one of the advisers to ensure you are on the right track and avoid fines or penalties.
Payment of Annual Fee
Regardless of the date of incorporation, all companies registered with the Cyprus Registrar must pay an annual fee of €350 by June 30th of each year. Failure to do so will result in further financial penalties for your firm. The goal of this contribution is to ensure that your company name is kept on the body’s register, as well as to serve as a declaration of good faith on your company’s behalf.
Create a Bank Account
Following that, we recommend that you open a separate bank account for your business operations. It is best to keep your personal and business finances separate. In Cyprus, a bank account can be opened in 10 to 15 days.
Cyprus’s Taxation and Accounting
Firms are deemed Cypriot tax residents if their management and control – their directors – are based in Cyprus. In this case, your company will be taxed at a rate of 12.5 percent on profits. Non-resident corporations, on the other hand, are not subject to taxation in Cyprus, provided that the company’s management and control are exercised outside the nation and you do not earn any revenue in Cyprus, according to the island’s tax regulations. It should be mentioned that in such instances, you will be unable to use the country’s DTA network.
Secretariat and Directorship
Your company must have at least one director, albeit there are no nationality restrictions, and the directors in question can be either physical or legal individuals. However, because your directorship can have a considerable impact on your company’s tax position, it is traditional in many situations for the majority of a company’s directors to be Cypriot citizens. This assures that the company is considered a tax resident in Cyprus by the government.
Shareholders and Capitalization
The number of shareholders in a Cypriot limited business should be between one and fifty. These stockholders can be either physical individuals or legal entities (of any nationality). It’s worth mentioning that, under Cypriot company law, shareholder information – including names, addresses, and nationalities – is deemed public record; however, the appointment of a nominee shareholder can nullify this. There are no minimum or maximum share capital requirements for a private limited business. In practice, however, it is normally suggested that businesses be formed with a minimum share capital of at least €1,000.
A Note of Caution
In terms of time and cost, the procedure of forming a corporation in Cyprus may appear to be favorable and uncomplicated. However, keep in mind that the restrictions are taken seriously, and failure to comply with the current criteria will result in legal penalties.