Company registration in Cyprus attracts entrepreneurs from all over the world due to favorable business conditions, the tax system, benefits, and the country’s strategic location in the heart of the Mediterranean. This jurisdiction has been one of the most sought-after for several decades.
Cyprus is a popular jurisdiction primarily due to its favorable tax system. The corporate tax rate is one of the lowest in the EU, and some taxes have even been reduced to 0%.
Another significant reason for choosing Cyprus is its solid legal framework, inherited from the British Empire and based on the principles of English common law. This ensures reliability and predictability of legislation, the ability to protect one’s rights, and the avoidance of unpleasant situations with the authorities.
Previously, Cyprus was considered a classic offshore jurisdiction due to its closed registry and, consequently, the anonymity of company owners, as well as low tax rates. Since 2004, the situation has changed, and as an EU member, the country is obliged to adhere to strict anti-money laundering rules, financial regulation, and other European international standards. Today, Cyprus is not on the EU or OECD “black” or “grey” lists and does not fall under the definition of a classic offshore jurisdiction.
Cyprus is popular for the registration of IT companies, R&D companies, e-commerce businesses, trading companies, shipping businesses, pharmaceutical companies, asset and real estate management companies, investment funds, holding companies, trusts, and others. Every business can benefit from Cyprus’s tax and legal systems.
Advantages of Company Registration in Cyprus
Company registration in Cyprus opens up many advantages, most of which are related to taxes. We will briefly outline the main ones.
Some of the benefits include:
- Low corporate tax rate of 12.5%
- The IP Box regime allows for a reduction of the corporate tax rate to 2.5%
- Dividend payments are taxed at a zero rate – 0%
- The inheritance, wealth, and gift tax rate is – 0%
- Tax on trading securities and corporate rights – 0%
- Tax on interest – 0%
- Tax on royalties – 0%, except for royalties used in Cyprus, which are taxed at a rate of 10%
- A wide network of double taxation avoidance treaties – 65
- Strategic location of Cyprus at the intersection of Europe, Asia, and Africa
- Jurisdiction is part of the EU and Schengen zone
- Simple company registration process
- No language barrier – about 70% of Cypriots speak English. English is used in the business environment
- Possibility to obtain documents for residence on the ground of business
Forms of Company Registration in Cyprus
The legal forms, registration procedure, company management, and other issues are regulated by the Companies Act and the Partnerships Act.
The laws provide for the following forms of business registration:
- Private Limited Company – LTD
- Public Limited Company – PLC
- Partnership
- Sole Trader
The most popular form of company registration in Cyprus is the Private Limited Company, also known as an LTD (abbreviation of the word “Limited”). An LTD can be registered by a foreign individual or a foreign company.
Notably, the director can also be a foreigner or a foreign company.
There are no requirements for share capital. Your contribution can be as low as 1 euro, but in practice, it is recommended to contribute at least 1,000 euros.
An important point is that for the company to be recognized as a tax resident of Cyprus, the majority of directors must be residents of Cyprus. This means that if you are a non-resident of Cyprus, you will need to use a nominee service and hire at least two nominee directors to take advantage of the jurisdiction’s favorable tax system. This is the main element of ensuring the company’s economic presence.
Additionally, to avoid questions about the company’s tax residency, you should hire a local secretary, rent an office, and preferably open an account with a traditional bank. You can also purchase a local phone number and create a website with a .CY domain.
Establishing an economic connection with Cyprus does not have to be done immediately, but it should not be delayed for more than six months. Once the company starts generating income, we recommend taking steps to ensure an economic connection with the jurisdiction.
Taxes for Companies in Cyprus
The main reason foreigners choose Cyprus as a jurisdiction for business registration is its attractive tax system. Many taxes are set at 0%, and some are not payable by foreigners at all.
The corporate income tax rate is 12.5%. In some cases, it can be reduced to 2.5%. This is done by excluding 80% of the profit from the tax base, meaning only 20% of the tax base is subject to taxation, which amounts to a 2.5% tax.
The possibility of reducing the tax burden arises from using a patent box or IP-box. This benefit is available only to companies that generate income from intellectual property rights in the form of income from licenses, royalties, patents, sales, or transfers of intellectual property rights. The IP box is often used by IT companies to optimize taxation. The regime is also popular with pharmaceutical and biotech companies, content-creating companies (movies, music, video games, etc.), and businesses in the research and development sector.
Withholding tax is 0%. The same applies to tax on interest and royalties, with some exceptions.
The VAT rate in Cyprus is 19%. The threshold at which a company must register as a VAT payer is €15,600 per calendar year.
Bank Accounts in Cyprus
According to official information from Thebanks.eu, the majority of the banking sector in Cyprus is occupied by 3 banks: Bank of Cyprus – 38.3%, Hellenic Bank – 31.35%, and Eurobank Cyprus – 14.01%.
In most cases, banks prefer to see the director in person, so to open an account, the director needs to plan a visit to the island. However, for our clients, there is good news – we can help you open an account with the largest bank in Cyprus, “Bank of Cyprus,” remotely. For this, you will need to prepare the necessary documents, a power of attorney, and apostille them. The process will take approximately up to 2 weeks. After that, your account will be opened, and you will be able to manage it remotely via online banking. A bank account with a local bank will also be part of the economic connection to the jurisdiction, so we recommend opening a bank account with a traditional bank.
An alternative could be a payment system, such as Payoneer, Wise, or similar. We will help you choose the best payment system specifically for your business.
You can have multiple accounts simultaneously, for example, with a traditional bank and a payment system. The account with a traditional bank is recommended to be used so that the bank does not decide to close it after some time.
Company Registration Process
To register a company in Cyprus, we will need to conduct a consultation and determine the type of business you plan to engage in, how many founders there will be, and discuss other organizational issues.
We will also ask you to prepare the following documents:
- Scan of the internal passport or ID card;
- Scan of a document with your residential address;
- Recent utility bill;
- Scan of the international passport;
- Information questionnaire for company registration (sample provided);
- CV;
- Proof of income source;
- Bank reference
Scans should be made in color, high quality, and in PDF or JPEG format.
The company registration process will take 2 to 4 weeks.
Tax Table
| Type of tax | % |
| Corporate tax | 12.5/2.5 |
| VAT | 19/9/5/3 |
| Dividend tax | 0 |
| Interest tax | 0 |
| Royalty tax | 0/5/10 |
0
Price table
| Service | EUR |
| Company registration | 2000 |
| Nominee director | 1200 |
| Nominee founder | 1200 |
| Secretary | 550 |
| VAT registration | 250 |
| Legal address for 1 year | 550 |
| Account opening in a traditional bank | 1500 |
| Account opening in a payment system | 250 |
| Accounting services | 200 |
| Local phone number for 1 month | 80 |
You can view the full list of jurisdictions where we offer registration services at this link.
If you are considering company registration in Cyprus for business expansion or structuring, leave an application on our website or contact us in any way convenient for you.
Company Registration in Cyprus is a wise step towards legal tax optimization!
