Updated: June 02, 2024
A small island, Cyprus offers a variety of business opportunities. It has a stable, modern, free-market, service-based economy with high household incomes. International investors and domestic businesses can confidently invest, grow, and prosper. Our article provides more benefits of establishing a company in Cyprus and incorporation details.
Here are six main reasons to establish a company in Cyprus:
Companies in Cyprus pay only 12.5 % to the local government. It is one of the lowest corporate tax rates in Europe. Additionally, there are more Cypriot tax benefits. The companies have a full tax exemption on the sale of securities, dividends, and, in some cases, capital gains. Good news for international holdings. Companies in Cyprus have a territorial tax system, which means the country only taxes locally sourced income. Therefore, companies can significantly optimize the taxable base through agreements to avoid double taxation.
Cyprus offers many investment opportunities for profitable investments:
Compared to continental Europe, Cyprus has less bureaucratic oppression of businesses. At the same time, commercial licenses issued in Cyprus have great authority and a good reputation outside the island. This means that investors can easily set up headquarters in Cyprus to conduct business throughout Europe without complying with additional licensing requirements.
The Cyprus State meets the needs of local and foreign businesses. The country has introduced extremely attractive tax benefits and deductions.
More than 70 % of the Cypriot population speaks English, and half of all people received higher education. This means that businesses can hire first-class specialists to provide accounting and legal services.
According to the Knight Frank Global Lifestyle Review, Cyprus is in fifth place among the countries best to move in. The cost of living in Cyprus and the crime rate are some of the lowest in the EU. Unsurprisingly, foreigners make up almost 20 % of the island’s population. It is convenient, comfortable, and safe to live in Cyprus.
To conduct business in Cyprus, companies must register with the Department of Registrar of Companies and strictly follow the rules in The Cyprus Company Law. This regulatory provision is the main moderator of commercial activity on the island. It clearly describes the types of businesses allowed in Cyprus. The Registrar of Companies duly signs the Cyprus Certificate of Good Standing.
The detailed content of The Cyprus Company Law can be found on the page.
The Cypriot Employment Law and numerous EU directives protect employees of companies. The Cypriot Employment Law sets out all the rights and obligations of employees. There is also the requirement that foreign employees obtain a work permit issued by the Civil Registry and Migration Department in Cyprus.
Let us find out which commercial enterprises can operate in Cyprus.
According to Chapter 113 of The Cyprus Company Law, a company is an independent legal entity established under the provisions of The Company Law for conducting any legal activity. The company’s members are not personally liable for its debts or any other obligations and are protected from any legal actions of creditors.
Sole Proprietor Companies with foreign investors are called International Business Companies. They must meet certain requirements to complete the incorporation procedure in The Cypriot Department of Registrar of Companies.
Partnerships in Cyprus fall under Chapter 116 of The Cyprus Company Law. By the way, Sole Proprietorship companies fall into this category and follow the same rules.
There are five different types of companies that you can register in Cyprus.
Private limited liability Company by shares
This is the most common type of company in Cyprus. Such a company does not have a minimum share capital requirement, and the liability of its members is limited depending on the value of their shares. The number of shareholders with non-transferable shares can range from 1 to 50.
Pubic limited liability Company by shares
It can be opened with a minimum capital of 25,629 EUR. Shares are transferable, and there must be at least 7 shareholders (no upper limit).
Limited liability Company by guarantee without share capital
Its members act as guarantors rather than shareholders. Each participant is free to set the limit of their liability, subject to prior agreement between the participants. Such companies in Cyprus are usually established for charitable or non-commercial purposes.
Limited liability Company by guarantee with a share capital
This company has a share capital. The liability of its members is limited by its memorandum of association:
This type of company can be either a private or public company.
Variable Capital Investment Company
This type of company has shares that do not have a nominal value but rather a variable value. The minimum initial capital for this type of company is from 50,000 to 300,000 EUR. After receiving a license from the Cyprus Securities and Exchange Commission (CySec) to operate as a Collective Investment Fund (CIF), this company can be incorporated. If a company is private, the number of members can range from 1 to 50. If a company is public, the number of members must be at least one.
Cyprus Company Law requires hiring a licensed lawyer to prepare corporate documents and submit them to the Department of Registrar of Companies and Official Receiver. Read about it in more detail in the article.
The entire registration procedure takes 3 stages:
After the company is incorporated, the created commercial enterprise must be registered with the tax service and receive the Taxpayer Identification Number within 60 days. In some cases, it is also required to receive a VAT number. Since a Cyprus company is required to hire employees, the company must register with the Ministry of Labour, Welfare, and Social Insurance. Also, you may register a trademark to have commercial and proprietary protections.
The total cost of the company incorporation in Cyprus (government fees) is approximately 900 EUR.
George K. Konstantinou Law Firm can help you incorporate your business:
Our company has provided legal support to local and international clients since 1983. Using our accumulated experience and knowledge, we offer consultations on the most effective structures of the company in Cyprus, prepare and submit documents to the Department of Registrar of Companies, and provide tax consulting and accounting services.
What business should you start in Cyprus? Which one is best?
Businesses that do well in Cyprus are tourism, hospitality, education consultancy, property agency, and investment in property, IT, construction, transport, and shipping.
Tourism and hospitality include restaurants and cafes – Cyprus has a “cafe culture” whereby locals and tourists alike spend time in cafes to relax, socialise, watch entertainment and sports, and do other activities like study and organise. Also, tourism involves business services for tourists – excursions, agency services like booking, and events organising.
However, before you decide to start a business, you are advised to weigh the pros and cons. Apart from a good idea, a service or a new product, you need a budget and a business plan. Moreover, consider whether you might be happier as an employee – not everybody has an entrepreneurial mindset, and that’s OK.
Other qualities of a business person are the ability to work on your schedule, take decisions and initiatives and, most of all, take risks. Before starting a business, therefore, talk to a financial advisor, a business consultant, or perhaps another entrepreneur.
What are the business opportunities in Cyprus?
Cyprus has many business opportunities, of which tourism and hospitality, real estate, transport, and education consultancy are among the most important. Have a look at question 1.
How to register a business in Cyprus?
Business registration happens through the Registrar of Companies in Nicosia. You are advised to contact a lawyer because only lawyers licensed by the Cyprus Bar Association can carry out business registration for you.
There are various business entities, of which the partnership and the company limited by shares are the most popular. Alternatively, you can register a business name and start trading with it.
Is Cyprus a good business place?
In general, Cyprus is a good business place. There is a market for most products and services, while your business budget can remain low as rents, utilities, and other costs are lower than in other parts of the EU.
Is doing business in Cyprus easy and safe?
Doing business in Cyprus is an easy process. The government has established a legal and financial infrastructure that helps businesses. At the same time, legislation protects financial and commercial activities and counters illegal processes like fraud, swindling, insider dealing, money laundering, etc.
The court system is impartial and reliable, though somewhat slow. There is a highly specialised network of professionals, from lawyers to accountants to business and IT experts, that operates as the backbone of any good and safe business.
Furthermore, the Central Bank of Cyprus and the Cyprus Securities and Exchange Commission exercise strict control and are accountable to the EU. This guarantees a stable financial environment.
How much does it cost to start a business in Cyprus?
It depends on the type of business. The fees for the Registrar of Companies and lawyers may be as low as 900 euros in total, but you will need to factor in renting some office space and an initial budget.
How can a foreigner start a business in Cyprus?
A foreigner can register a company and reside abroad but must have at least one Cypriot director for tax purposes (to be tax resident in Cyprus, the management of a company must have a Cyprus connection). A local lawyer must carry out the process.
The foreigner owner can come to Cyprus as a visitor on a business visa and apply for permanent residence for business purposes. However, if they want to start their own company and be self-employed, they will need a capital of about 260,000 euros.
Alternatively, it is possible to register a company as a branch of a foreign company or do a cross-border conversion of a company registered in another EU member state.
Finally, if you deposit 200,000 euros to a credit institution licensed by the Central Bank of Cyprus and the majority of your shares or 200,000 of your share capital is held by third-country nationals, you may qualify for the Cyprus Business Facilitation Unit (BFU), which offers services and incentives for businesses.
George K. Konstantinou
Popular services
Navigation
Our Address
Book a Free Consultation
Fill in our contact form and one of our lawyers will reach out to you shortly.
