Starting a Business in Cyprus

How do I register a company in Cyprus?

The procedure of registration of a company in Cyprus is relatively easy and begins by filing an application with the Registrar of Companies for the approval of the name of the company, which takes up to 7 days to be approved. The process can be accelerated.

Nonetheless, upon approval of the name application, the Memorandum and Articles of Association is drafted, which we can undertake, together with the required forms which are prepared, completed and submitted to the Registrar of Companies. Registration of the company takes up to 7 days.  It is also required to undertake the due diligence and compliance procedures with regards to the ultimate beneficial owners of the company.

Cyprus is a renowned International Shipping Centre and home to some of the world’s leading names in the global shipping industry.

What are the main points of interest for foreign investors in Cyprus?

Cyprus is becoming a fast-growing investment fund centre in Europe and has become a key regional domicile when it comes to setting up investment funds as well as establishing asset management companies.

Further, Cyprus is a renowned International Shipping Centre and home to some of the world’s leading names in the global shipping industry.

What are the advantages of a holding company in Cyprus?

Cyprus is considered as a very attractive holding jurisdiction due to its favourable tax regime, compliance with EU regulations and strict anti-money laundering regulation.

The main advantages of a holding company in Cyprus are summarised below:

• One of the lowest corporate tax in Europe at 12.5%
• No withholding tax on dividends paid to non-tax resident shareholders or to the resident shareholder, but non-domicile;
• No withholding tax on interest paid from Cyprus to non-tax resident individuals or to resident individuals, but non-domicile;
• No tax on dividend income paid from one Cyprus tax resident company to another Cyprus tax resident company;
• No tax on dividend income received by Cyprus holding company from a company which is not residing in the Republic or from a foreign permanent establishment of a Cyprus holding company; provided that they are not allowed a tax deduction in the jurisdiction of the foreign paying company, and also one of the following two conditions are met:
  – The non-resident dividend paying company must not engage in more than 50%, directly or indirectly, in activities which lead to passive income (investment income).
  – The foreign tax burden on the profit of the dividend paying company is not lower than 6.25%;
• No withholding tax on royalties paid from Cyprus in respect of intellectual property exploited outside Cyprus;
• No tax applied on profits arising from the sale of shares;
• The notional interest deduction for tax purposes upon the introduction of new equity capital injected into Cyprus resident company, provided the new equity funds are used for business purposes.

. Despite of these certain issues that may be encountered when opening a bank account in Cyprus, opening such an account still offers great operational advantages and benefits to account holders

In general, a Cyprus holding company structure may help to decrease or to eliminate the tax charged on dividend income and gains.

Although there are no restrictions on the legal form of a Cyprus holding company, the most commonly used form is the Cyprus private limited liability company.

Cyprus has a wide network of double taxation treaties, including all main western countries as well as most Eastern European countries.

Cyprus has adopted the EC Merger Directive and in the event where a transaction falls within the re-organisation, it is exempt from corporation tax, capital gains tax and transfer fees.

What are potential factors which may put some investors off?

The requirement to provide certain documents for the opening of a bank account might be considered to be an obstacle as the documents cannot be processed unless they are in English. The documents to be provided must be up-to-date and even offshore entities with no auditing obligations need to provide management accounts for financial statements. Despite of these certain issues that may be encountered when opening a bank account in Cyprus, opening such an account still offers great operational advantages and benefits to account holders,  as the easily accessible services (online-banking, no terms for minimum monthly balance, low bank charges on transfers etc) and the strategic position of Cyprus makes the relevant bank account one of the most useful tools for companies and other individuals.

Anna Grigorieva

Managing Partner

3 Krinou Street, ‘The Oval’, 2^nd floor, office 203

Agios Athanasios, 4103, Limassol, Cyprus

Tel: +357-25-057000

Fax: +357-25-057001

Web: www.ag-advocates.eu

I am the managing partner of the firm and oversee the firm’s strategic direction and local operations. I am both qualified to practice law in Russia and Cyprus and have extensive experience of corporate and commercial matters, insolvency and restructurings, international tax planning, immigration and real estate. I was a partner at a reputable law firm in Cyprus for more than 10 years prior to setting up my own law firm in 2012. I have been involved in a wide range of operations involving corporate and private clients from all over the world but with a focus on Central Eastern Europe.