Incorporate a Limited Liability Company in Cyprus
According to Cypriot Law, an application for the formation and registration of a company must be carried out through the Cyprus Law Office. The first step is to create or choose a name for your company, names may be expressed in Greek, or any language that uses the Latin alphabet, provided that the Registrar receives a Greek or English translation, and the name is not considered undesirable. The following names or their derivatives require consent or a licence: 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. Once that is established, the formation procedure is as follows:
- Approval of the name of the company.
- Application to the Central Bank for Exchange Control approval.
- Preparation and printing of the Memorandum and Articles of Association of the company in both Greek and English.
We will draft and file the following documents with the Registrar of Companies: Memorandum and Articles of Association of the company (in Greek); forms HE1, HE2, HE3; approval of the Central Bank and the payment of the registration duty.
As soon as registration of the company is affected, the Registrar of Companies will provide us with the Certificate of Registration in Greek and a copy in English, as well as certified copies of the filed company details and a Certificate of Good Standing of the Company. As soon as the Certificate of Incorporation of the Company is issued, the company can arrange for the first meeting of the directors for statutory matters, such as appointment of auditors, appointment of the secretary, appointment of legal adviser, opening bank accounts and of the Memorandum and Articles of Association, etc.
The powers and objects of a Limited Company in Cyprus are contained within the Memorandum of Association and have to be specific. A company cannot undertake the businesses of banking and insurance, or the render financial services to the public, unless special permission is granted. It may also not trade with resident individuals or companies situated in Cyprus other than in relation to the maintenance of premises, banking and professional services.
Only one director is required, there is no requirement to appoint a local resident director, and the director can be of any nationality, however, many clients use our Cypriot director service because, with a Cypriot director, the company can claim Cypriot residency and take advantage of the beneficial tax treaties of which Cyprus is a party. The names of the initial directors are stated on the records lodged with the Registrar. Further appointment and resignation details are also lodged with the Registrar
Cypriot companies require a company secretary and whilst it is not necessary to have a resident secretary, if you need to establish tax residency for the company, your company needs to demonstrate that management and control of the company take place in Cyprus. For this reason, as well as for ease of administration, it is advisable to have a resident secretary if any papers are to be signed for the local authorities. Formacompany can provide a resident secretary as part of our Corporate Administration Package.
It only takes only five days to incorporate your new company.
Formacompany has over 20 years’ experience forming companies in Cyprus and across the world, and our staff will be available to offer advice and support through the entire incorporation process, from initially selecting a suitable company name through to finally commencing taxable activities.
What you need to set up a Limited Liability Company in Cyprus
To start incorporating your offshore company in Cyprus we require the following:
- Your company name
- The full name, date of birth, address and nationality of all directors
- The full name and address of all shareholders
- The objects of the company, specifying the principal activity
- The amount of capital and the number of shares taken by each shareholder
Documents you are required to provide:
- Proof of identity (passport, national identity card, photographic driving licence)
- Proof of residential address (gas/electricity bill or credit/debit card bank statement dated within the last 3 months)
All Limited Liability Companies must have a registered agent and a registered office. The registered office is where documents may be legally served on the company and must be a physical address in Cyprus– this is included in our Standard Company Formation Package.
Shares and Share Capital Requirements
- Shares should be denominated in Euros; the currency of Cyprus. Older companies may have shares denominated in Cypriot Pounds.
- Only one share, with some nominal value, must be paid up.
- Share types may be registered shares of par value, preference shares, redeemable shares and shares with no voting rights.
- A company pays a small stamp duty, based on the authorised share capital.
- There is no standard share capital but 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.
Ready Made Companies
- We have shelf companies in Cyprus currently available, with a standard Memorandum and Articles designed to permit most general activities; making it possible to commence business at very short notice. Our ready made companies are in good standing, are not the subject of any insolvency proceedings and have not entered into any contracts or engaged in any business activities.
What it costs to set up a Limited Liability Company in Cyprus
- A Cyprus company will cost £2630, this includes all duties, taxes and professional fees except the stamp duty on the authorised shared capital.
- The Government of Cyprus has recently introduced a new legislation under which Cyprus Companies are required to pay an annual fixed duty of €350 per annum to the Registrar of Companies. The duty is not applicable to dormant companies (i.e. companies with no turnover in the current year) and to those not owning any assets. The Company Director must make a declaration in either case.
- The duty is also not applicable to companies registered in current year.
- For groups of companies the total duty is capped at €20,000.
- Since 2013, the deadline for the payment of the levy is 30 June.
- If the duty is not paid on time but is paid within two months from the due date (before 31st August) then there will be a penalty of 10%. If it is paid within five months from due date (before 30th November), there will be a penalty of 30%. If the duty is not paid after five months from the due date (after 30th November), the Companies Registrar will strike off the company from Registry.
What you receive after setting up your new business
- Minutes of the first inaugural meetings
- Copies of the Memorandum of Association and Articles of Association
- Original Certificate of Incorporation
- Share Certificates for each shareholder specified, plus two blank certificates
5 Advantages to Setting up a Limited Liability Company in Cyprus
- Incorporating in Cyprus provides a host of tax benefits. Cyprus is not considered to be a tax haven but rather a country with tax incentives; there is no withholding of tax on dividends, no capital gains tax and all expenses incurred for the earning of income, as well as annual allowance on fixed assets, are allowed as deductions.
- Cyprus has a low yearly tax obligation. The net profits of the company are subject to a corporate tax at the flat rate of 12.5% 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 and foreign employees of companies incorporated in Cyprus benefit from a number of tax incentives. Foreign employees working in Cyprus are liable to personal income tax at a rate from 0 to 20%, if they are working outside Cyprus but receiving their salary through Cyprus then the rate is from 0 to 2%. Shareholders are not liable to an additional tax on dividends over and above the amount of corporate tax paid by the company.
- Cyprus has a wide network of double tax treaties with many countries, including Russia and other former 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.
- Cyprus is one of the easiest places to open a business bank account. The banks we work with are organised to accept international clients. Freely transferable accounts of any currency may be kept either in Cyprus or anywhere abroad without any exchange control restrictions.
Important information about incorporating a Limited Liability Company in Cyprus
- 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.
- An offshore entity is not subject to any capital gains tax except on gains arising from the disposal or immovable property held 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
- Exemption from stamp duty on any contracts entered into by offshore entities.
- No estate duty on the inheritance of shares provided the deceased was not domiciled in Cyprus.
- Shareholders may be of any nationality and may reside anywhere, the shareholder can be a person or a corporation and there is no upper limit to the number of shareholders. The share register may only be inspected by a shareholder. Nominee shareholders are permitted and we can provide this service.
- Former losses can be carried forward against future profits
- The company does not have to keep records in Cyprus. If the company chooses to keep records they can be kept anywhere in the world.
- Accounts need to be audited and filed every year. We can assist with the accounting, and the appointment of an auditor. Accounting rules are very flexible and are based on British Company legislation and norms. Audited financial statements have to be submitted to the Cyprus Taxation Authority and to the Central Bank of Cyprus annually.