Cyprus Limited Company – Formation Guidance

Cyprus Key points

• Time – 5 days to incorporate your company
• Directors – only one director of any nationality, is necessary for your company
• Shareholders – only one shareholder required of any nationality
• Share Capital – the share capital requirement is only €1,708
• Tax – low corporation tax
• Tax – no taxation on dividends and no Capital Gain Tax on sales of securities
• Support – using our 20 years experience we guide you throughout every step of the company formation process
• A Cypriot company must appoint a company secretary, which we will arrange for you
• More than 40 double tax treaties concluded with other countries

Share capital

• There is no standard share capital.
• A company pays a small stamp duty, based on the authorised 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.
• Shares should be 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.

Maintaining company records in Cyprus

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 or financial statements filing

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.

Financial Statement Requirements

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

Disclosure of Beneficial Ownership to Authorities

Yes, only to the Central Banks of Cyprus – information is treated with strict confidentiality and is legally protected.

European VAT Number

It is easy to obtain a European VAT number for your company, without needing to visit Cyprus. All that needs to be done is supply information which proves that European trading activity has started.

Company taxes on profits

A company deemed resident in Cyprus has to pay corporation tax at 12.5%. Non-Resident Cyprus companies are not subject to corporation tax, but may be considered resident in its country of main trading. Resident companies can take advantage of the following concessions:

• Capital gains tax on the sale of shares in subsidiaries is payable only if the company whose shares are being sold is not listed on a recognized stock exchange and owns freehold property in Cyprus
• Capital gains on the sale of real property outside Cyprus is reduced by inflation, and double tax relief is available in accordance with tax treaties
• Former losses can be carried forward against future profits
• Dividends from foreign shareholdings are exempt from tax in normal circumstances. An intermediate holding company could easily pay no taxes on its income.

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.

Taxes on Distribution of Corporate Income

Dividends for all companies are not subject to withholding taxes. Royalties connected to the use of an asset outside Cyprus, and other payments connected with non-Cypriot incomes have no withholding taxes. Film royalties may be subject to 5% withholding taxes.

Exchange Control

The Central Bank of Cyprus is the only authorised institution exercising exchange control under the Exchange Control Law. The approval of the Central Bank is required for any non-resident to become a shareholder, or for any share transfer in an offshore company. Such approval is always given by the Central Bank either for offshore or shipping companies in bona fide cases. Bank references as to the credit worthiness, financial character, respectability and business integrity of the beneficial owners of the shares are required.

The Bank imposes the following conditions for Exchange control approval to be granted:

• The shares of the company must belong directly or indirectly, exclusively to aliens.
• The objects of the company shall be confined outside Cyprus.
• The company will be considered as a non resident company.
• The company must derive income from abroad either from immovable property, royalties, commissions, investments of capital in bonds, shares, debentures or loans or income deriving from any business.
• The company will not obtain any finance from local sources.
• The  company must regularly submit copies of its balance sheet and profit & loss account.
• The minimum authorised and paid up capital must be at least €1000.

Annual Government Duty

Duty must be paid by all Cyprus companies including inactive companies. If the Duty is not paid on time, then there will be a penalty.

The amount payable is as follows: