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This article will be mainly useful for entrepreneurs who have reached the heights of the national market at home and are planning to expand their business abroad. If you are looking for an attractive region offering low tax rates and benefits as well as the prestige and economic stability of an EU member, you should consider opening a company in Cyprus. Imperial & Legal’s experts will outline all the advantages and disadvantages of setting up a business in this country.

What are the benefits of registering a company in Cyprus?

The political and economic stability of Cyprus allows international entrepreneurs to plan long-term projects and develop their businesses step by step.
The country is a member of the European Union and the Eurozone which means that international entrepreneurs can enter the European market by registering their company as a VAT payer in Cyprus.
The corporation tax is only 12.5% which is the lowest rate in the EU.
In Cyprus, legal entities are not subject to taxes on dividends, capital gains from trading securities and renting out historic buildings.
Some commercial activities allow you to lower the tax rate or are even exempt from the corporate tax. For instance, you can lower your tax burden by 80% if the profit is generated by exercising intellectual property rights.
Cyprus has signed double taxation agreements with over 50 countries.
Companies registered in Cyprus are not subject to foreign exchange control measures.
In Cyprus, you can enjoy the benefits of the well-developed transport infrastructure and highly motivated local workforce with degrees from highly acclaimed universities and a good level of English.
To attract as many international investors as possible, the registration of a company was simplified and streamlined as much as possible.
The country’s banking system is another advantage. Unlike in many other countries, your presence in the bank is not required for opening a corporate bank account.

Pitfalls to be taken into consideration while registering a company in Cyprus

„Pitfalls” might be a bit dramatic expression but still, you might encounter some difficulties when registering a company in Cyprus.

Before you start the process, you need to know that you will not be able to open an offshore company in Cyprus. This region does not qualify as an offshore zone or a tax haven. However, in Cyprus, you can benefit from preferential tax treatment with lower tax rates or even 0% rates, and these rules comply with the EU regulations. Besides, the country adopted the International Financial Reporting Standards long ago – the information about the company founders and shareholders will be publicly available which is required by the EU regulations. Sometimes you might find offshore companies advertised online; however, an offshore company there just means a firm working outside of Cyprus.
The company address should be registered in Cyprus.
If you wish to set up a business in Cyprus and work in this region, you should be ready so that not every idea can take off. Paradoxically, though the country enjoys enormous investments from abroad, it has not led to a higher purchasing power of the local population. As a result, competition in some areas can be quite high and unfortunately, some products might have difficulties finding their way to the hearts of the locals.

What business areas are the best for starting a company in Cyprus?

Since the country is a famous Mediterranean resort and revenue from tourism is the main source of currency income to the budget, the following areas might be especially attractive for an aspiring entrepreneur:

tourism or tourism infrastructure;
entertainment and recreation;
various services – from legal consultancy to hairdresser salons;
cafés, restaurants and fast food chains.

Additionally, IT and finance companies as well as Forex trading firms are also flourishing in Cyprus. Shipping companies are profitable too as their activities are not subject to corporation taxes.

How to choose a suitable legal structure for registering a company in Cyprus?

Your choice of the legal structure depends on your objectives. In Cyprus, you have a lot of legal entities – we will list only those that are especially popular with international entrepreneurs.

Private limited company

As the name suggests, the liability of the founders is only limited to their share in the authorised capital.

A company of this type should have at least one director, one to fifty shareholders, and at least one secretary. Both natural and legal persons of any nationality and residence can act as founders and secretaries in a private limited company. Every company of this type should have a physical office in Cyprus.

Note that you can use nominee shareholders for confidentiality purposes; it is completely in line with Cyprus’ regulations.

Public limited company

Such companies can issue bearer shares, and unlike private companies, public companies can trade their shares on a stock market. Shareholders’ liability is limited to the actual value of the shares they hold.

The most crucial requirements for public limited companies include 2 directors and 7 shareholders; the minimum authorised capital should be at least EUR 25,629.

Comparison of public and private limited companies

Description	Private Limited Company	Public Limited Company
Liability of the shareholder(s) is limited to	Their contribution to the share capital	Actual value of the shares held
Bearer shares	No	Yes
Number of directors	At least 1	At least 2
Number of shareholders	1 – 50	At least 7
Minimum authorised capital	No minimum	€25,629

Limited and unlimited partnerships

Entrepreneurs often choose either of these forms for tax optimisation as partnerships are not subject to taxes. The revenue received from the activities of a partnership is distributed among the partners who should then pay the income tax in the country of their tax residence. In an unlimited partnership, the founders are liable for the company’s debts with all their assets.

In a limited partnership, at least one general partner should be appointed who would be liable for the company’s performance with their overall assets. Such risks are compensated by an extensive authority: a general partner is not only the one running the company but also a decision maker when it comes to dividend distribution.

Unlike general partners, limited partners usually do not take part in running the company. However, if the company has debts, their liability will be limited to their share in the authorised capital. For a limited partnership to run smoothly, there should be at least one general and one limited partner.

Subsidiaries of international companies

It is a special legal structure allowing a foreign company to be registered with the Companies Registrar and start operating in Cyprus. It is the headquarters of the company outside of Cyprus that will be liable for the subsidiary’s debts. As a rule, a subsidiary in Cyprus has the same name as the headquarters if it does not contradict any local rules.

Opening a company in Cyprus

Entrepreneurs who have experience in running a company in the UK might notice that the incorporation process in Cyprus is similar to the one in Great Britain:

The overall process takes only a few steps.
Registration can be done online by filling in special forms and providing supporting documents.
First of all, you need to choose a suitable legal structure so that it would allow you to achieve your objectives and optimise taxation.
The next step would be choosing a name for your company. Like in the UK, Cyprus does not allow certain words and expressions to be used unless there is a valid reason. Please, keep in mind that the name you choose should be approved by Cyprus Securities and Exchange Commission which is also a part of the registration process.
All the documents you provide should have a certified translation into the official language of the country (Greek in this case).
If you want to save your time and money, it is better to use the services of experienced lawyers to avoid painful mistakes and obtain a registration certificate for your company within the time frame established by law.

How much does it cost to register a company in Cyprus?

The costs of starting a business in Cyprus depend on what you are doing – setting up a company from scratch, buying an existing company, acquiring the majority stake, etc., and also on the legal structure. As an example below, we list the government fees to be paid when registering a private limited company in Cyprus:

Amount (€)	Description
30	Fee for checking and approving the company name
52	Stamps for posting the HE1 form
485	Fee for processing a company incorporation application

The list above does not include costs of delivery, translation into English (if you are starting an international company) and services of a professional lawyer. However, if you use our company registration services, all these fees and costs will be included in a single package.

Opening a corporate bank account in Cyprus

To start working, you need a corporate account in a local bank. The banking system in Cyprus is well developed so you should not face any challenges when signing an agreement with a trustworthy financial institution.

You can usually start using your account about four days after you apply for it in a bank.
You do not need to keep thousands of euros as the minimum balance on your corporate account.
Opening a corporate bank account in Cyprus does not require the presence of the founders and can be done remotely.
Banks require only the minimum package of documents to be provided: articles of association, incorporation certificate, information about directors and secretaries and proof of the physical and registered company address.

To avoid overpaying for banking services, as well as online banking fees and international transfers, you should research the market to choose the most suitable bank for your company.

Registering your company in Cyprus with Imperial & Legal

As you can see, starting a business in Cyprus is not extremely difficult. However, to avoid wasting your time and paying to re-apply, you will need expert support.

With the help of Imperial & Legal in London, you will not only be able to open a company in Cyprus quickly, but you will also choose the most suitable legal structure for your business. Besides, our team can advise on annual financial accounts, bookkeeping, VAT filing and much more. To find out more, book a consultation with our advisors.

FAQs about registering a company in Cyprus

Why can’t companies in Cyprus be considered offshore even if their activities are carried out outside of the country?

Some standards for doing business in Cyprus that had existed before the early 2000s became invalid once the EU regulations were introduced. Even if a company in Cyprus operates exclusively abroad, it still cannot be considered offshore. However, the laws regulating commercial activities allow business owners to make it similar to an offshore company. Judge for yourself:

An international company registered in Cyprus still pays corporation tax (however, at a minimum rate of 12.5%), and there are opportunities for tax burden minimisation. It is also possible to open a partnership in Cyprus, in which case the founders will be subject to income tax once revenues have been distributed.
According to the EU standards, information about the shareholders must be in the public domain, but you can use nominee shareholders to avoid disclosure of the information about the beneficiaries.

How does Cyprus differentiate between local companies and companies operating abroad?

From a legal perspective, there is no difference between these companies. However, to avoid confusion, the terms “resident company” and “non-resident company” are used.

What mistakes do international entrepreneurs make if they are opening a company in Cyprus without any professional assistance?

Listing all the mistakes will require a whole article, so we will only share the most absurd one.

As you already know, in Cyprus you first need to have the name of your company approved. If you use words like “international”, “euro”, “bank”, “trust”, “national” or similar terms, the Commission will later ask you to explain why these terms were used. In other words, you will have to provide an explanation of the words used in the name alongside the application for registration. If such words were used, only “for show” as they call it, you would only waste your time clarifying the matter and the proposed company name would most likely be rejected.

What authorised capital must a private limited company in Cyprus have?

There is currently no minimum share capital requirement for private companies in Cyprus. However, there is a common trend to have €1,000 of authorised capital (1,000 shares of the company with a nominal value of €1). This is not mandatory and it is up to the founders to decide what the share capital of their private company will be.

Can a limited partner run a limited partnership in Cyprus?

As a rule, running a partnership in Cyprus is the role of general partners as they are liable for the company’s performance with their assets. However, it is legally possible for a limited partner to make a managerial decision and bepersonally liable for it, and this is recorded in the partnership documents (for example, in the shareholders’ meeting minutes).

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