The Cyprus Limited Company

The Cyprus Resident vs. Non-Resident Company

A Cyprus company, under the Income Tax Law of 2003 (118(I) 2002) can be either Tax Resident in Cyprus or Non-Tax Resident.

The Cyprus Resident vs. Non-Resident Company

A Cyprus company, under the Income Tax Law of 2003 (118(I) 2002) can be either Tax Resident in Cyprus or Non-Tax Resident.

(i) Tax Resident Company

A tax resident company is a company whose management and control is exercised in Cyprus. Hence the majority of directors must be in Cyprus. It pays 12.5% tax on its worldwide business profits (5% on interest income, 0% on dividend income). It can claim relief under the Cyprus double tax treaty network.

(ii) Non-Resident Company

A non-resident company is a company where the management and control is exercised outside of Cyprus. Hence the majority of the directors must be outside Cyprus. A non-resident company is taxable at 0% on its worldwide income. Any income generated in Cyprus is taxed at 12.5%.

Incorporation Procedure

The establishment of a Cyprus Company requires the submission of all relevant documentation to the Regsitrar of Companies. The incorporation procedure taks between 5 to 7 working days from the application to the Registrar of Companies.

The procedure can be reduced by 2 – 3 working days if a name is chosen from our list of pre-approved names.

Incorporation Requirements

We require completion of our standard application form for the incorporation of a Cyprus Company.

In order to comply with our due diligence requirements and the relevant anti-money laundering legislation we request the following information from all shareholders above the Cyprus company leading up to the ultimate beneficial owners(s) or to a regulated entity in an approved jurisdiction. In addition to shareholders and beneficial owners we request due diligence on any foreign directors appointed on the board of the company, bank signatories and instructing parties.

The documents required for the know-your-client (KYC) purposes for corporate entities include:

  • Corporate certificates of incorporation, shareholders, directors, secretary and registered office.
  • Memorandum and Articles of Association.

The documents required for the know-your-client (KYC) purposes for individuals include:

  • A certified copy of a valid international passport.
  • A certified copy of a utility bill as proof of residency.
  • A bank reference letter

Cost in Set up and Operating a Cyprus Limited Company

The costs of establishing and operating a Cyprus IBC can be classed as follows:

1. Incorporation Costs One-off cost that depends on the capital of the IBC.

2. Representation Costs:

  • Nominee Shareholders
  • Nominee Directors
  • Company Secretary
  • Registered Office Facility

Annual fee payable on the 1st of January of each year.
This fee is time apportioned to 31st December in the year of incorporation.

3. Government Fee

Annual Return Filing Fee of €45 and Annual Professional Tax of €220 plus our fees for the submission and preparation of the statutory returns.

4. Administration & Accounting Time based fee. A quote is provided in advance.

5. Auditing and Reporting Time based fee

Time based fee is payable to third party local audit firm, a quote of which is provided in advance.

Accounting Records and Audited Financial Statements

(i) Company Law Requirements

The company Law requires that a company maintains proper accounting records in accordance with the International Accounting Standards.

The first reporting period can be up to 18 months from the date of incorporation. Financial statements for a 12-month accounting period have to be prepared annually after that. A Cyprus registered auditor is required to be appointed in the cases where the company:

  • is required to prepare consolidated accounts, or
  • is a Public Limited company, or
  • fails to meet the small company criteria

(ii) Tax Returns

Tax resident companies have to prepare and submit their annual tax returns (IR4) to the Tax Authorities by 31 December following their year-end. The IR4 must be signed by a registered auditor.

Non-resident companies, although not required to submit an annual tax return, are still subject to the provision of the Company Law for the appointment of a Cyprus registered auditor.

(iii) Returns to the Registrar of Companies

All Cyprus companies must submit their audited financial statements (or unaudited when the Company Law exemptions apply) to the Registrar of Companies together with their annual return HE32.

Operating a Cyprus Limited Company

The operations of a Cyprus Company can be performed without the need for a fully-fledged office in Cyprus.

In the case where nominee directors are used for the establishment of the Company, the beneficial shareholders or the decision makers can be issued with specific Powers of Attorney to enable them to engage the Company into business activities as prescribed by the Memorandum and Articles of Association.

We undertake to perform the day-to-day activities of the Cyprus Company.

Banking in Cyprus

The bank accounts of a Cyprus Company can be opened in any jurisdiction worldwide. We strongly recommend the appointment of our Cyprus resident director as signatory to the bank account in order to demonstrate that management and control is exercised locally. The local bank signatory may have joint signatory authority with a designated individual as signatory to the bank account.

The banking system in Cyprus is highly developed and efficient, capable of coping with the ever increasing needs of the business community in a fast growing economy. Most of the banks in Cyprus offer the facility of internet and electronic e-banking.

The banks operating in Cyprus include:

LocalInternational
Bank of CyprusBarclays Bank
Cyprus Popular BankFBME Ltd
Hellenic BankSociete Generale
Alpha BankBNP Paribas

The commercial banks of Cyprus have strong international connections, which enhance their ability to provide banking services on an international level.

Cyprus has very strict bank confidentiality laws. However, as part of the global anti-terrorism and anti-money laundering policy, the banks require to know the identity of the beneficial owner of the bank account.

To receive more information on a specific bank and its services or to receive account opening forms please contact us directly.