Cyprus - Company Incorporation

Company Type	Time to Incorporate	Cost
LLC	5 days	£2330

Cyprus is at the north-eastern end of the Mediterranean Sea.

Political Structure

Formerly run by the British, Cyprus became an independent Republic in 1960. The political system is modeled on western democracies. Cyprus has a presidential system of Government. The President is the Head of State and is elected for a five year term of office.

The legal system is based on that of the United Kingdom and all statutes regulating business matters and procedure are based on English Law. Most laws are drafted in Greek and are officially translated into English.

Language

Greek, English and Turkish are the official languages of Cyprus. English is widely spoken and understood, particularly in commercial and government sectors.

Currency

Cypriot pounds.

Exchange Control

Yes, but does not apply to IBC companies.

Type of Law

Civil code with many English Common Law influences.

Principal Corporate Legislation

Companies Law, Cap. 113, as amended.

Type of Company for International Trade and Investment

A limited liability company is incorporated in Cyprus under the Companies Law Cap 113  which is based on the British Companies Act 1948. Companies incorporated under the Companies Law, Cap 113, as amended, who have obtained Exchange Control permission from the Central Bank of Cyprus to acquire IBC company status.

Procedure to Incorporate

By submission of the Memorandum and Articles of Association to the Registrar of Companies, together with an affidavit before a Court and the appropriate registration fee.

Restrictions on Trading

Cannot undertake to the business of banking, insurance or the rendering of financial services to the public unless special permission is granted, and cannot trade with resident individuals or companies situated in Cyprus other than in relation to the maintenance of premises, banking and professional services.

Powers of Company

The powers and objects of a Cyprus company are contained within the Memorandum of Association and have to be specific.

Language of Legislation and Corporate Documents

English and Greek.

Registered Office required

Yes, must be maintained in Cyprus.

Ready Made Companies available

Yes.

Timescale to Incorporate

Approximately five days after company name approval.

Language

Names may be expressed in Greek or any language using the Latin alphabet if the Registrar is in receipt of a Greek or English translation and the name is not considered undesirable.

Names Requiring Consent or a Licence

The following names or their derivatives: bank, trust, building society, insurance, assurance, reinsurance, their foreign language equivalents or any name that the Registrar considers may have a connection with the aforementioned.

Suffixes to denote Limited Liability

Limited or Ltd.

Disclosure of Beneficial Ownership to Authorities

Yes, only to the Central Banks of Cyprus where strict confidentiality is legally protected.

Authorised and Issued Share Capital

The minimum authorised, issued and paid up share capital of a Cyprus IBC company is EUR €1,708 for companies not wishing to establish an office in Cyprus.

Classes of Shares permitted

Registered shares of par value, preference shares, redeemable shares and shares with no voting rights.

Taxation

By virtue of special provisions in the Cyprus Income Tax Laws, the net chargeable profits of Cyprus IBC Companies are taxed at a rate of 4.25%.

Double Taxation Agreements

Cyprus has concluded 33 double tax treaties with: Austria, Bulgaria, Belarus, Belgium, Canada, China, the Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Mauritius, Norway, Poland, Romania, Russia, (including all the CIS countries except for Kazakhstan), Singapore, Slovakia, Slovenia, South Africa, Sweden, Syria, Thailand, United Kingdom, USA and the former Yugoslavia.

Financial Statement Requirements

Audited financial statements have to be submitted to the Cyprus Taxation Authority and to the Central Bank of Cyprus annually.

Directors

The minimum number of directors is one. They may be individuals or bodies corporate, be of any nationality and need not be resident in Cyprus.

Company Secretary

All Cypriot companies must appoint a company secretary, who may be an individual or body corporate. It is advisable to appoint a resident company secretary.

Shareholders

The minimum number of shareholders is one.

Advantages of a Cyprus Company

• A great degree of respectability amongst companies registered in other tax incentive or tax haven countries.
• Cyprus is not considered to be a tax haven but a tax incentive country.
• No withholding of tax on dividends.
• No capital gains tax.
• Freely transferable accounts of any currency may be kept either in Cyprus or anywhere abroad without any exchange control restrictions.
• No exchange control restrictions once the approval for the registration of the company is granted by the Central Bank of Cyprus.
• All expenses incurred for the earning of income as well as annual allowance on fixed assets are allowed as deductions.
• Company's foreign employees working in Cyprus are liable to personal income tax at a rate from 0 to 20% and if working outside Cyprus but receiving their salary through Cyprus at a rate from 0 to 2%.
• Foreign employees are exempt from social insurance contributions.
• The net profits of the company are subject to a corporate tax at the flat rate of 10% and if such profits are derived from dividends received from another Cyprus offshore company, then no further tax is payable other than the flat rate of 10% paid only by the distributing company.  This rate is paid irrespective of whether they are managed and controlled from Cyprus or elsewhere.
• Shareholders are not liable to an additional tax on dividends over and above the amount of corporate tax paid by the company.
• Exemption from stamp duty on any contracts entered into by offshore entities.
• No estate duty on the inheritance of the shares provided the deceased was not domiciled in Cyprus.
• Duty free facilities are extended to offshore companies maintaining an office in Cyprus and to their expatriate personnel in respect of motor vehicles, office equipment and household effects (except furniture and air-conditioning equipment).
• Cyprus has a wide network of double tax treaties with many countries including Russia and other ex eastern block countries.  Specifically with reference to Russia, the tax treaty provides for zero withholding tax on dividends paid from Russia to a Cyprus company as well as on gains generated by Cyprus companies from the disposal of securities in Russia.
• The Owners identity can be kept secret, and nominee shareholders may be used.
• An offshore entity is not subject to any capital gains tax except on gains arising from the disposal or immovable property held in Cyprus.