How to register a company in Cyprus in 2024
An increasing number of entrepreneurs are selecting Cyprus as the location for their businesses. The island’s favourable geographical position, attractive tax regime, and flourishing tourism and tech sectors contribute to one of the most promising business environments within the European Union.
Establishing a company abroad can appear to be a complex and daunting task. This guide aims to clarify the process of setting up a business in Cyprus and to help avoid common pitfalls during the company’s registration on the island.
Organisational and Legal Forms of Business in Cyprus
In Cyprus, several business forms can be registered by foreign investors. The most common are limited liability companies (LTD), branches of foreign companies, and trusts.
The island also offers a sole proprietorship regime. To establish one, a foreign national must be a resident of an EU country or a close family member of an EU citizen.
Sole Proprietorship in Cyprus
A sole proprietorship is a business owned and operated by a single individual. Foreign nationals from non-EU countries will require a permanent residence permit in Cyprus. Additionally, to operate a sole proprietorship, one must reside in Cyprus for a minimum of 183 days per year.
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- The simplest and quickest option. No separate legal entity is created, but the sole proprietor must still register with the companies register.
- The owner bears unlimited personal liability for debts and obligations. The assets of the company can be seized.
- There is no authorised capital and no shareholders. The owner is entitled to all profits.
- Minimal paperwork and reporting requirements.
- Non-EU/EFTA nationals must obtain a work permit and residence permit before coming to Cyprus.
- Taxation at personal income tax rates. Possibility to apply a simplified tax regime.
The annual income of a sole proprietor in Cyprus is taxed at the following progressive rates:
Income (euros) | Rate |
up to 19,500 | 0% |
19,501 — 28,000 | 20% |
28,001 — 36,300 | 25% |
36,301 — 60,000 | 30% |
60,001+ | 35% |
Limited Liability Companies (LTD)
An LTD is the most convenient legal form of organisation in Cyprus, offering a high degree of flexibility in company setup and protecting shareholders through limited liability.
It is a separate legal entity, limiting the liability of the owner. It requires a memorandum and articles of association, directors, shareholders, and an office. Shareholders are liable only up to the amount of authorised capital.
- LTD can be established with just one shareholder and one director;
- there is no minimum limit on the amount of authorised capital (usually starts at 1,000 euros);
- net profits are taxed at a rate of 12.5%.
Branches of foreign companies in Cyprus
This form is designed for establishing a branch office of a foreign company in Cyprus, without creating a separate legal entity. The parent company still bears full liability.
- it is not a separate legal entity, but rather a part of a foreign parent company;
- the parent company bears full responsibility;
- the registration of a branch requires the authorisation of the tax authorities, the registration certificate of the foreign company, the memorandum and articles of association, details of directors and secretaries, details of the person residing in Cyprus and representing the Cypriot branch;
- the branch’s profits from activities in Cyprus are taxed at the corporate tax rate of 12.5%;
- can conduct business directly without setting up a new Cypriot company;
- reporting from the parent company is required.
Trusts
A trust operates by having the property owner (the settlor) authorise another person, either a natural or legal person (the trustee), to manage the property for the benefit of another person (the beneficiary) under certain conditions set out in the trust deed.
Both local and international trusts can be established in Cyprus. For a local trust, either the settlor or one of the beneficiaries must be resident in Cyprus. To establish a Cyprus international trust, neither the settlor nor the beneficiaries should have been resident in Cyprus for one year prior to the establishment of the trust, and at least one of the trustees must be resident in Cyprus.
Requirements for Companies in Cyprus
Appointment of Directors
A company must have at least one appointed director. There is no maximum limit on the number of directors, and both natural and legal persons can serve as directors. Residency in Cyprus is not a requirement for directors.
Presence of Shareholders
An LTD must have at least one shareholder, with a maximum of 50 shareholders permitted. Shareholders can be either individuals or legal entities. Information about shareholders must be made publicly available.
Appointment of a Secretary
A company is required to appoint a secretary. In Cyprus, professional firms typically handle documentation and certain administrative tasks. The secretary is responsible for filing and office management.
Registered Office Address
Every Cypriot company must have a registered office address on the island. This address is required when applying for business registration in Cyprus.
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Maintenance of Organisational Records
Companies are required to maintain organisational records, including shareholder registers, minutes of board meetings, and annual returns for submission to the tax authorities.
Annual General Meeting (AGM)
The first AGM must be held within 18 months of the company’s incorporation. Thereafter, no more than 15 months may pass between AGMs.
Documents Required for Company Registration in Cyprus
Founders must provide a set of documents to successfully establish a company in Cyprus. The required documents include:
- memorandum of association, outlining the company’s activities and share capital structure;
- articles of association, detailing the rules governing the company’s operations;
- HE1 form (completed by a lawyer to confirm compliance with legal requirements);
- HE2 form, specifying the registered office address in Cyprus;
- HE3 form, providing details of the directors and company secretary;
- notarised copies of the passports of shareholders and directors;
- resolution on the appointment of directors and the allotment of shares;
- proof of a Cypriot bank account and evidence of the paid-in authorised capital.
The company’s articles of association must include the company’s name, type of activity, location, amount of authorised capital, number and value of shares, rights and obligations of shareholders, management bodies, and procedures for decision-making and liquidation.
Forms HE1, HE2, and HE3 for Company Registration in Cyprus
HE1: Solicitor’s Statement
This is a written certificate confirming that the lawyer has reviewed the memorandum and articles of association and that they comply with all relevant laws and regulations for the type of company being registered.
The form includes the lawyer’s details, signature, and date. Non-compliance or falsification may result in penalties for the lawyer.
HE2: Legal address
This form provides the registered office address where all official correspondence will be delivered.
The address must be a physical location in Cyprus. It is often the office of a lawyer or corporate service provider and must be available for the delivery of documents, notices, and legal correspondence.
HE3: Directors and Secretary
This form contains details about the directors and secretaries, including full names, occupation, residential addresses, dates of birth, and signatures. Any changes in directors or the secretary must be formally reported to the registrar.
Advantages and Considerations of Having Your Own Office in Cyprus
Having an office in Cyprus strengthens the company’s physical presence and demonstrates real business operations within the country, which is beneficial for meeting tax residency requirements.
A physical office is one of the mandatory criteria that tech companies need to meet in order to benefit from the reduced tax rate under the IP Box regime. With a real presence in Cyprus, technology companies can enjoy a significant advantage: the effective tax rate can be as low as 2.5%.
Having a physical office also provides a local address for legal and communication purposes, which is necessary for company registration. Additionally, an office on the island facilitates employee meetings and the hiring of local professionals.
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Organisational and Legal Regulations for Businesses in Cyprus
Determination of Resident Status
Determining the tax residency of a company in Cyprus is a complex task, as the tax authorities consider numerous factors related to the management and operations of the company.
Tax residency is essential to qualify for tax credits.
The primary factors indicating tax residency include whether the directors, shareholders, and secretary are residents of Cyprus, the board of directors meets in Cyprus, the company holds a Cypriot bank account, and whether strategic decisions are made within Cyprus.
To confirm a company’s residency status, the entrepreneur must obtain a certificate from the Cyprus Tax Department.
Approval of the Company Name
The company name must be unique. The Registrar of Companies checks for similarities with existing names, and certain words, such as «bank» or «insurance», require additional approval. Specific abbreviations, like «LTD» must be used to indicate the type of company.
To validate a company name, an application must be submitted to the Registrar of Companies, along with a €10 fee. The name will be reserved for two months, during which time the company registration documents must be filed. It is advisable to submit several name options in case the first choice is rejected. Name approval typically takes two working days.
Articles of Association in Cyprus
The articles of association is a binding document that defines the powers and limitations of the company, its shareholders, and its directors. Amendments to the articles require a special resolution passed by a 75% majority vote. A standardised template of articles is available, which can be amended as necessary.
The articles of association include:
- The nature of the company’s business.
- Rules for the appointment of directors and the conduct of board meetings.
- Voting rights of shareholders and regulations for general meetings.
- Share capital structure and the transferability of shares.
- Powers and responsibilities of the directors.
- Procedures for the payment of dividends and the distribution of assets.
- Procedures for amending the articles of association.
- Other internal management matters.
Memorandum of Association of a Company in Cyprus
While the articles of association govern internal management, the memorandum of association addresses external aspects. The memorandum outlines the scope of the company’s activities, its approved objectives, and its authorised capital. It complements the articles of association and provides a comprehensive overview of the company’s intended activities at the time of incorporation.
The memorandum of association must include:
- The company’s name.
- The address of the registered office.
- The objectives of the company’s business.
- The authorised capital and principles of share division.
- A limited liability clause.
- The names of the initial shareholders and the number of shares subscribed.
Authorised Capital and Shares of the Company
There is no minimum amount of authorised capital in Cyprus. Most companies opt to issue shares valued between €1,000 and €5,000.
Cyprus companies may issue ordinary and preference shares; however, only registered shares are permitted. Bearer shares are not issued in Cyprus. Transfers of shares and increases in share capital require amendments to the articles of association.
Due Diligence Procedures
Cyprus has comprehensive anti-money laundering (AML) and Know Your Customer (KYC) regulations in line with EU directives. Banks, lawyers, accountants, and corporate service providers conduct due diligence on clients, including background checks and verification of the source of funds/wealth.
Cypriot companies must identify their owners and take steps to verify the identity of their beneficiaries using reliable documents, data, or information from trustworthy sources.
The Cypriot government continuously monitors and updates this information. In 2021, Cyprus introduced an asset ownership register.
Business Licence in Cyprus
For most commercial activities, an entrepreneur from Russia will need a general trade licence, which is issued after submitting an application with the required documents and fees.
Certain activities, such as financial services, educational services, tourism, and alcohol sales, require special permits and licences.
Licences must be renewed periodically to confirm continued compliance with regulatory requirements. Authorities conduct regular inspections as part of compliance monitoring.
Company Registration Procedure in Cyprus
The process of registering a company in Cyprus may appear straightforward. However, it is important to be aware of certain nuances that may affect successful registration.
- Choosing a business structure, with a private limited liability company (LTD) being the most common choice for foreign investors.
- Reserving a unique company name, with alternative options considered in case the first choice is rejected.
- Preparing incorporation documents: the memorandum of association and the articles of association.
- Appointing a director and secretary.
- Opening a bank account.
- Establishing a presence and opening an office.
- Submitting the registration application and paying the associated fees.
Tranio experts can assist you in gathering the necessary documents and navigating the company registration process in Cyprus. Receive advice and support at every stage of establishing a company on the island.
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Company Registration Time in Cyprus
The standard timeframe for company registration in Cyprus is 1–2 weeks.
- name approval takes 2 working days after submission to the Registrar of Companies;
- preparation of the memorandum, articles of association, and other documents can be completed within 2–3 days with the assistance of a lawyer;
- the application for registration is typically processed within 2–3 working days, during which the Registrar officially approves and registers the company.
Accelerated registration is available by paying additional fees to the Registrar and requesting an expedited review of the application.
Cost of Company Registration in Cyprus
Starting a business in Cyprus involves the payment of various fees. A comprehensive list is available on the official website of the Cyprus Registrar of Companies.
Fee Name | Fees (€) |
Registration and submission of forms HE1—HE3 | 165 |
Increase in authorised capital | 20 |
Issuance of shares | 20 |
Approval of company name | 10 |
Annual fee | 350 |
Update of registered address | 20 |
Accelerated registration | 100 |
Maintaining Company Accounts in Cyprus
All Cyprus companies are required to publish annual financial statements in accordance with International Financial Reporting Standards (IFRS).
The statements must detail assets, liabilities, capital and reserves, expenses, revenues, and profit/loss. Supporting documents such as receipts and invoices must be retained for at least six years.
Large companies must provide audited financial statements annually, whereas small companies may prepare unaudited accounts.
Companies must file an annual return together with financial statements with the Registrar within 12 months of incorporation, and each subsequent year thereafter.
If a company is registered as a VAT payer, VAT returns must be filed quarterly. Payroll and social security taxes must also be paid for employees.
Accounting and tax records must be stored digitally or physically at the registered office.
Business Taxation in Cyprus
The corporate tax rate on net profit is 12.5%, one of the lowest in the EU. VAT is charged at 19% on various goods and services.
Employee payroll tax is calculated on a progressive scale, depending on salary size, with rates ranging from 0% to 35%.
Companies with a permanent establishment in Cyprus are liable to pay a Special Defence Contribution (SDC) on passive income in the form of dividends, interest on deposits, and rents:
- contribution on dividends received: 17%;
- contribution on bank deposits: 30%;
- contribution on rental income: 3%.
Owners of real estate in Cyprus, including companies and sole proprietors, are required to pay an annual municipal tax ranging from €55 to €185, depending on the size of the property. Further details on property taxes in Cyprus can be found in our article.
Taxes for Foreign Companies in Cyprus
Foreign companies are subject to corporate tax at a rate of 12.5% only on income earned within Cyprus. A tax of up to 15% is levied on royalties paid to non-residents.
There is no capital gains tax on transactions involving non-resident shares.
IP Box Tax Regime for Tech Companies in Cyprus
Technology companies in Cyprus benefit from reduced taxation under the Intellectual Property (IP) Box preferential tax regime.
Cyprus has implemented a special tax regime specifically for companies in the technology sector. Under this regime, 80% of qualified income is exempt from income tax, while the remaining 20% is taxed at the standard rate of 12.5%.
Qualified income includes profits derived from intellectual property (IP), such as licences, sublicences, the sale and/or transfer of IP assets, including patents, software, and other technological innovations.
80% of worldwide royalty income for the use of IP (net of any direct costs) is exempt from income tax. Any capital expenditure incurred in connection with the acquisition or creation of IP assets is deductible in equal instalments over a number of years.
Non-Domicile Status
The Non-Domicile status is a related tax regime often chosen by many entrepreneurs. With Non-Domicile status, it is possible to avoid paying the Special Defence Contribution (SDC).
Entrepreneurs with Non-Domicile status are exempt from tax on interest, dividends, and profits from the sale of any securities (except shares in companies owning real estate in Cyprus).
To obtain Non-Domicile status, an entrepreneur must apply to the Ministry of the Interior for a registration certificate.
Procedure for Closing a Business in Cyprus
The liquidation and dissolution of a company in Cyprus require a 75% majority vote from shareholders at a general meeting. The shareholders appoint a licensed insolvency practitioner to oversee and manage the liquidation process.
The insolvency specialist notifies the Registrar of Companies and publicly announces the impending liquidation. The company ceases all operations except those necessary for the liquidation process. No new business activities are permitted during this time.
The liquidator is responsible for selling and converting assets into cash, settling creditors, and distributing the remaining funds to shareholders according to their rights and the company’s articles of association.
Then the liquidator prepares a report on the company’s financial condition, submits it to the Registrar of Companies for approval, and requests that the company be struck off the register. If all requirements are met, the Registrar publishes a notice of the company’s liquidation in the media, officially declaring the company closed.
The entire process may take several months, depending on the scale of the business and the issues to be resolved.
Alternatively, a company may apply for voluntary winding up if certain criteria are met, thereby avoiding the formal liquidation process.
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