In Cyprus it is possible to register Limited Liability Companies or Private Limited Companies (Ltd.). There are two types of Private Limited Companies – resident, when the control and management of the company are carried out in Cyprus (usually when the majority of directors are Cypriots) and non-resident, when the control and management of the company are carried out outside Cyprus.
At least one shareholder and one director can register a Cypriot company. Both owner and director may be natural or legal persons of any residence. It is also required to appoint a secretary, who may be either natural or legal person, but preferably Cypriot.
It is recommended that issued and authorized share capital would be not less than 1 000 euro. There is no paid-in capital requirement.
The company name must be either in Greek or in English, end with «Limited», or the abbreviation «Ltd.». Words «Bank», «Insurance», «Trust», «Finance», «Deposit», «Savings», «Security» or «Royal». Others are not allowed to use unless the company has a specific license.
Information about a real beneficial owner of the company is confidential and kept by the registered agent in Cyprus.
It takes 12-15 working days to incorporate a company in Cyprus and 6-7 weeks to receive a full set of corporate documents.
Cyprus Holding Company (CHC)
Cyprus Holding Companies are usually incorporated as Cypriot resident Companies, either Private Limited or Public Limited. These companies may be involved in the various activities.
CHC is mainly used for the following:
• For companies that are making investments outside of Cyprus in order to receive dividends, which are mostly exempt from the tax in Cyprus;
• To manage subsidiaries with substantial funds, which can be re-sold in the future. Such transactions are not taxed in Cyprus;
• To take advantage of the Double Taxation Avoidance Agreements and the European Parent-Subsidiary directive.
Taxation of companies in Cyprus
The corporate income tax rate for the public companies is 25%, for private – 12.5%.
The standard VAT rate is 19%; reduced rates of 5% are applied to goods such as fertilizers, books, newspapers, animal feed; 9% – for juices, bottled water, confectionery products and pharmaceutical products. 0% applies to certain services and/or products related to vessel and aircraft operations; sale of goods to other EU countries; triangular transactions when goods are imported into the territory of Cyprus.
By the 30st of June, all companies in Cyprus are obliged to pay the annual state fee (350 euro). In case of payment delay the fine will be imposed on the company.
Taxation of Cyprus Holding Company
An income from trading activities is taxed at a rate of 12.5%.
Dividends and other profit distributions received by CHC from another Cyprus resident company is exempt from the corporate tax, as well as the dividend payment and other profit distributions received by CHC from a foreign company.
Such income should also be exempt from the special tax on defense (30%), if CHC owns at least 1% of the company that pays dividends.
This exemption does not apply if:
a) more than 50% of company’s activity that pays out dividends is resulted by investments;
b) the tax rate in the country, in which the foreign company operates, is significantly lower than the tax rate applicable in Cyprus.
Dividends paid by CHC to its parent company are not subject to the taxation in Cyprus.
Accounting and audit of Cypriot companies
Accounting and auditing are obligatory for all the Cypriot companies. The company must submit an annual return after 18 months from the date of incorporation.
Based on audited financial reports, the Form HE32 must be filled and submitted to the Tax Department of Cyprus.
For Cypriot companies it is allowed to appoint nominee directors, shareholders and a secretary.
Opening a bank account
For Cypriot company it is possible to open a bank account in any of our partner banks.
It is important to keep in mind that every bank account opening procedure is individual and depends on the accuracy and timeliness of information and documents provided by the client.