Cyprus Branch Office
The procedure for setting up a branch in Cyprus is the same as registering a new company. A branch is one way to conduct business, but there are many drawbacks. The main issues are that a foreign parent carries full liability for the branches operations, and lengthy and complicated dealings with the tax authorities are often required regarding the branches tax obligations. We recommend incorporating a limited company in order to carry out business in Cyprus.
Opening a Cyprus Branch of a Foreign Company
Disadvantages of a branch office are:
- The parent company is fully liable for the liabilities of the branch
- The representatives of the branch may be held jointly and severally liable for tax debts
- The financial statements of the parent must be lodged at the Companies Registry
- The obligations of the branch are the same as those of the parent, including filing VAT returns, employees returns and corporation tax returns; so there are few savings in administering a branch
- Banks and clients may prefer dealing with a Cyprus company rather than a foreign branch
- A branch is rarely ideal for substantial projects because the parent company runs the entire risk
- Upon registration of a branch, evidence of the legal existence of the parent has to be provided
- Any public act by the branch is likely to need ratification by the board of the foreign parent. A company that signs contracts in front of a notary on a regular basis, should incorporate for administrative ease
- Less obligations to present accounts than with corporations
Features of a branch office in Cyprus
In Cyprus, the procedure for the setting up of a branch office is the same as registering a new company; however, foreign companies need to submit an application within one month of their formation to the Department of the Registrar of Companies and Official Receiver of the Ministry of Trade, Industry and Tourism.
A branch is usually an adequate vehicle for low cost projects. However, it is not the ideal choice for substantial projects because the parent company and branch offices activities are not differentiated - the parent company is fully liable for the liabilities of the branch.
From a tax point of view, branches are permanent establishments of non-resident companies and a Cyprus branch is not a separate legal company from its parent.
The branch must have the same name as the parent company.
A branch of a non-resident company must appoint a resident individual or a company to represent it in its dealings with the tax authorities. The representatives may be held jointly and severally liable for the tax debts of the permanent establishments of non-resident entities, which they represent.
To register a branch, evidence of the parent company's existence has to be provided, as well as certified copies of the Articles or Statues, the names of the directors, the share capital, the registered office, and the names of the representatives who will act for you.
Documents required for a Branch
Certificates have to be legalised by a notary public and the Cyprus consulate of the country in which the company was initially registered. The branch office must have the same name as the parent company.
Official documents must be officially translated into Greek - the necessary documents are:
- Your business registration certificate
- Your company's articles of association;
- The names of the company's directors and secretary, as well as the name of at least one resident of Cyprus to whom public documents and any announcements in connection with the company and the branch office may be sent
A certified copy of your balance sheet for the branch office must be translated into Greek and sent annually to the Department of the Registrar of Companies and Official Receiver.
Various documents will need to be translated, including:
- Your parent's registration certificate
- Your company's articles of association
- The names of the company's directors and secretary
After Branch Registration
All stationery, order forms and similar documents used by your branch are required to show:
- The place of registration of the parent
- The number with which it is registered
- The legal classification of the company
- The address of its registered office
- The place of registration of the branch, and its registration number
Also the following particulars must be shown at the branch office:
- The company name
- The name of the country in which the company is incorporated
- The parent of the branch has limited liability