Company Formation in Cyprus

Why Cyprus for Company Formation?

Cyprus has established itself as a premier destination for international business due to its strategic location, favorable tax regime, and robust legal framework. As a member of the European Union (EU), Cyprus offers businesses seamless access to the European market while providing one of the lowest corporate tax rates in the EU at 15%. Additionally, its extensive network of double tax treaties, modern infrastructure, and professional service sector make Cyprus an attractive jurisdiction for entrepreneurs and multinational corporations alike.

Key reasons to choose Cyprus for company formation include:

• Strategic Location: Positioned at the crossroads of Europe, Asia, and Africa, Cyprus serves as a gateway for international trade and investment.
• Favorable Tax Regime: In addition to its low corporate tax rate, Cyprus provides numerous tax incentives, such as exemptions on dividend income and capital gains under certain conditions.
• Business-Friendly Environment: The country’s legal and regulatory framework aligns with EU directives, ensuring transparency and compliance with international standards.
• High-Quality Workforce: Cyprus boasts a well-educated, multilingual workforce, essential for businesses operating in a globalized economy.
• Stable Economy: A member of the Eurozone, Cyprus enjoys a stable economic environment conducive to business growth.

Types of Companies in Cyprus

Cyprus offers several types of legal entities to cater to diverse business needs. Each entity type has distinct characteristics, making it essential to select the most suitable structure based on the company’s objectives and operations.

1. Private Limited Company (Ltd)

The most common type of entity for small to medium enterprises (SMEs), a Private Limited Company offers:

• Limited Liability: Shareholders’ liability is limited to the amount unpaid on their shares.
• Flexibility: Requires at least one director and one shareholder, who can be the same individual.
• No Minimum Share Capital: There is no statutory minimum capital requirement, though standard practice is to start with a nominal amount (e.g., €1,000).
• Privacy: Details of beneficial owners can remain confidential through the use of nominee services.

2. Public Limited Company (PLC)

Designed for larger enterprises or those intending to list their shares on a stock exchange, a PLC offers:

• Multiple Shareholders: Requires at least two shareholders.
• Higher Capital Requirements: A minimum share capital threshold of €25,000.
• Transparency: Stricter compliance and disclosure requirements, ensuring transparency for investors.

3. Branch or Representative Office

A branch or representative office is ideal for foreign companies seeking to establish a presence in Cyprus without incorporating a separate legal entity. Features include:

• No Separate Legal Personality: The branch is considered an extension of the parent company.
• Simplified Operations: Suitable for non-commercial activities such as marketing and liaison.
• Tax Benefits: Branch profits derived from foreign operations may be exempt from Cypriot tax under certain conditions.

Company Formation Process in Cyprus

The process of forming a company in Cyprus involves the following steps:

1. Name Approval
   • Submit your desired company name to the Registrar of Companies for approval.
2. Preparation of Documentation
   • Draft and file the Memorandum and Articles of Association, alongside forms outlining director, shareholder, and registered office details.
3. Submission to the Registrar
   • All documents are submitted electronically or in person for registration.
4. Certificate Issuance
   • Upon successful registration, the Registrar issues certificates of incorporation, directors, shareholders, and registered office.
5. Tax and VAT Registration
   • Register with the Cyprus Tax Department to obtain a Tax Identification Number (TIN) and VAT number, if applicable.
6. Bank Account Setup
   • Open a corporate bank account in Cyprus or abroad to facilitate business transactions.

Advantages of Setting Up a Company in Cyprus

1. Low Corporate Tax Rate

Cyprus’s 15% corporate tax rate is among the lowest in the EU, making it a competitive jurisdiction for businesses seeking tax efficiency.

2. Double Tax Treaties

With an extensive network of double tax treaties, Cyprus provides significant benefits for international businesses, including:

• Reduced withholding taxes on dividends, interest, and royalties.
• Elimination of double taxation on income earned in treaty partner countries.

3. Dividend Income Exemptions

Dividends received by a Cyprus-resident company from abroad are generally exempt from corporate tax, provided:

• The subsidiary’s profits are not derived from more than 50% passive income.
• The subsidiary is subject to tax rates exceeding 6.25%.

4. EU-Compliant Legal and Regulatory Framework

Cyprus adheres to EU directives on corporate governance, anti-money laundering, and data protection, ensuring compliance with international standards. This fosters investor confidence and facilitates cross-border operations.

5. Strategic Location

Situated at the crossroads of three continents, Cyprus is a hub for trade, investment, and business expansion. Its location is ideal for companies targeting markets in Europe, the Middle East, and North Africa.

6. High-Quality Professional Services

Cyprus offers a wide range of professional services, including legal, accounting, and auditing, provided by highly qualified professionals fluent in multiple languages.

Our Services for Company Formation

At Chambers & Co, we offer a comprehensive suite of services to ensure a seamless company formation process. Our expert team provides personalized solutions tailored to each client’s unique requirements.

1. Company Registration

We handle the preparation and submission of all required documents to the Registrar of Companies, ensuring compliance with Cypriot legal requirements. Key steps include:

• Reserving a unique company name.
• Submitting incorporation documents, including the Memorandum and Articles of Association.
• Issuance of a Certificate of Incorporation.

2. Legal Documentation

Our legal experts draft and review all necessary documents to establish the company’s governance framework, including:

• Memorandum and Articles of Association.
• Shareholder agreements.
• Resolutions for the appointment of directors and secretaries.

3. Bank Account Opening

We assist clients in setting up local and international corporate bank accounts. Services include:

• Preparing required documentation.
• Coordinating with reputable banks.
• Facilitating compliance with anti-money laundering (AML) regulations.

4. Tax Registration

We ensure the company’s timely registration with the Cypriot tax authorities, including:

• VAT Registration: Mandatory for businesses exceeding the €15,600 threshold.
• Corporate Tax Registration: Ensuring compliance with Cyprus’s 15% corporate tax rate.
• Social Insurance Registration: Required for hiring employees.

5. Nominee Services

For clients seeking confidentiality, we provide nominee directors, shareholders, and secretaries. These services ensure compliance with local regulations while safeguarding the privacy of beneficial owners.

Business Relocation to Cyprus

Why Relocate Your Business to Cyprus?

Relocating your business to Cyprus can unlock numerous advantages, including:

• A competitive tax regime with a 15% corporate tax rate.
• A strategic location ideal for international trade and operations.
• Access to a highly educated, multilingual workforce.
• A stable political and economic environment.

Key Steps for Business Relocation

1. Business Registration:
   • Establishing your business entity in Cyprus.
2. Immigration Services:
   • Assistance with obtaining work permits, visas, and residency for employees and their families.
3. Tax Optimisation:
   • Structuring your business to leverage Cyprus’s favourable tax regime.
4. Office Setup:
   • Assistance with leasing office space and utility setup.

Non-Domicile Tax Status

Cyprus’s non-domicile tax status offers significant tax savings for expatriates relocating to Cyprus, exempting them from taxation on worldwide dividends, interest, and passive income.

Support Services We Provide

• Relocation Planning: Comprehensive guidance for transitioning your operations to Cyprus.
• Employee Mobility: Assistance with relocating your workforce.
• Regulatory Compliance: Ensuring adherence to local laws and regulations.

Success Stories

Many multinational corporations and SMEs have successfully relocated their businesses to Cyprus, reaping the benefits of its dynamic business environment. Let us guide you through this process with ease and efficiency.