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Updated: August 14, 2024
You have two options if you want to relocate your business to Cyprus:
Some rules change depending on whether you are a European Union (EU) or a third-country national.
In fact, there is a third option for EU nationals. They can transform their domestically registered business into a European company, a process called “a cross-border conversion”.
This guide outlines the basic ways in which a business can be relocated to Cyprus and the actions you need to take.
If you are interested in business relocation to Cyprus for entrepreneurs, please check our Cyprus Business Visa guide.
Table of Contents ˅
Cyprus is a favourite destination for business relocation. It has one of the lowest corporate tax rates in Europe and has signed over 50 Double Taxation agreements. As a member of the European Union, Cyprus operates within a highly effective regulatory framework. The rules guarantee human rights and protection for the environment.
According to the 2020 World Bank Group Doing Business Report*, Cyprus ranks in the Top 60 (#54) of the easiest countries to conduct business.
*The World Bank has discontinued Doing Business, so there is no report for 2021 or later.
To start a company in Cyprus, you must register it with the Registrar of Companies.
There are many types of business enterprises of which the most popular is the private limited liability company. The limited liability company is one of the most useful inventions in human history, contributing significantly to economic growth. This is because the limited liability company can move efficiently in the business environment, protecting members in case of company breakdown or failure.
The relevant legislation concerning limited liability companies in Cyprus is the Cyprus Companies Law (Cap 113).
For a private limited liability company, the minimum share capital in Cyprus is recommended to be EUR 1,000, with each share having a value of EUR 1.
If you are an EU national, see the rules that apply to you below.
If you are a third-country national, and your company will have at least EUR 200,000 in share capital, you can benefit from the Business Facilitation Unit (BFU) scheme. If the share capital is lower, the general rules for entry to the Republic apply to you.
Third-country nationals should register a company with the Registrar of Companies and the Civil Registry and Migration Department Registry of Companies of Foreign Interests. For more details, please read about Cyprus company formation.
There can be one sole director who can also be the sole shareholder. This means that one person can be the single director and shareholder of the company.
The corporate tax rate is low in Cyprus, at the rate of 12,5%. It is among the lowest in Europe. There is no tax on the payment of dividends.
A private limited company in Cyprus must have a company secretary.
The fee payable at the Registrar of Companies is EUR 165 plus EUR 100 fast track. Source: https://www.companies.gov.cy/...
Note that further fees may apply when registering the whole document package.
To register the company with the Cyprus Registrar of Companies, you should do the following:
Find the list of documents at the Registrar’s official website at Applying to incorporate a Company, Business Entities
The company will be issued a business license. Now the company can start work.
The Registrar of Companies offers help with the M&A at:
https://www.companies.gov.cy/en/business-entities/.
To register your company with the tax department, you must hand in the form T.D. 2001 (application for obtaining a tax number) and a T.D. 1101 (application for VAT registration).
VAT applies only if a minimum profit is reached. See businessincyprus.gov.cy.
For the documents needed to submit to the Inland Revenue, see mof.gov.cy.
The forms can be submitted by hand at the closest tax department district offices.
A lawyer must sign the whole registration procedure. You should appoint a local lawyer for your company’s registration. Our firm can give you expert help and advice.
A branch of a foreign company in Cyprus is a permanent establishment of a company not registered in Cyprus. It has the same name as the parent company and offers the same services.
Under section 347(1) of the Cyprus Companies Law (Cap 113), the report that the parent company must submit to the Registrar must contain several details:
For all the details, see: companies.gov.cy/en/business-entities/overseas-company
According to the High Commission of Cyprus in the UK, Britain is the second most important trading partner for Cyprus in all aspects of business – imports, exports, and services.
A significant benefit of transferring a business from Cyprus to the UK is that Cyprus, apart from being a member of the EU, is also a common law country.
UK citizens who wish to transfer to the UK must, according to the UK official government website, use the instructions found on the websites:
the Cyprus BFU (Business Facilitation Unit) at: https://www.businessincyprus.gov.cy/...
and,
The Registrar of Companies’ Point of single contact at:
https://www.businessincyprus.gov.cy/....
Other than the information found in the BFU, the rules for third-country nationals apply (see above in setting up your own company and setting up a foreign branch).
If you are an EU national and you wish to transfer your business to Cyprus, you can:
The SE is “a type of public limited liability company that allows you to run your business in different European countries using a single set of rules” (europa.eu). The SE can only be set up within the territory of the European Union (etui.org).
The SE officially entered into operation throughout Europe on 8 October 2004. It was created after 30 years of discussion among member states.
The relevant legislation is composed of two documents. First, Council Regulation on the Statute for a European Company, EC/2157/2001 and the Council Directive about the involvement of employees (Council Directive 2001/86/EC of 8 October 2001).
The SE facilitates cross-border mergers and re-incorporations, allowing businesspeople to choose the legal system they think is more favourable for operation.
To set up a European Company (SE), you need:
To turn themselves into SEs, private limited companies must form a European holding company or a European subsidiary in another EU member state. For example, a private limited company in France can form a subsidiary in Cyprus and turn itself into an SE.
When the European company is registered, the abbreviation “SE” must be added before or after the company name.
The Official Journal of the European Union will publish the details of the SE.
The Registrar of Companies has all the details at: https://www.companies.gov.cy/en/business-entities/...
A cross-border conversion is when a company registered in member state A converts itself to a company belonging to member state B.
The company will not be deleted from the registry of member state A (the country of origin).
Cross-border conversions are part of the freedom of establishment (one of the fundamental freedoms of the EU).
Cyprus allowed cross-border conversions in 2006. The relevant legislation is Companies Law, Cap. 113, Articles 354 A-Θ (I, in the English numbering).
The company wishing to transfer to Cyprus must:
This list (Article 354 C) includes:
Once a company converts, it will be treated as if it is set up under the Cyprus Companies law. Also, it will be under the authority of the Cyprus Registrar of Companies, exactly like a local Cyprus company.
A new Directive on cross-border conversions was transferred into national law by 31 January 2023. It aims to fill gaps and introduce uniform rules to create legal certainty. Another aim is to offer adequate legal protection to stakeholders.
To relocate your employees to Cyprus, note that there are different rules for EU nationals and nationals of a third country.
Also, note that regardless of your business form or country of origin, as long as you carry on business in the Republic, you must register with social insurance and the general health system (“GHS”).
For social insurance, find the documents here: http://www.mlsi.gov.cy/mlsi/
EU nationals can work and live in Cyprus without restrictions.
However:
If they are members of a regulated profession (for example, doctors, lawyers, accountants), they must contact the relevant Cyprus professional body. They will learn how they can get a professional license or get recognition for the license they already have (mlsi.gov.cy)
An EU national who relocates to begin employment in Cyprus must apply for a registration certificate from the Ministry of the Interior. They must apply within four months from the date of entry to the Republic.
The application is done in form MEU1 and must be accompanied by a long list of documents, which includes:
See the complete list in our article Cyprus Yellow Slip.
For the rights of EU workers across the EU, see the brief and informative “Moving & working in Europe” from the European Commission: Moving & working in Europe
Cyprus has adopted a new policy for employing third-country nationals: foreign companies establishing independent offices in Cyprus can apply under the BFU.
Employees who have worked legally in Cyprus for 7 years can apply for citizenship.
Under the BFU, as of June 2024, employees of foreign interest companies will be able to apply for citizenship after 5 years (4 with proof of good knowledge of Greek).
Third-country national employees can buy real estate (a house, apartment, or land) but need permission from the government.
Our firm of legal professionals can provide expert help and advice on all stages of relocating your business to Cyprus. We offer professional services for registering all types of companies, from the Cyprus company to the SE and relocating your employees from your country of origin to Cyprus.
We assist in moving your tech startup or business operations to Cyprus, setting up corporate bank accounts, and obtaining residence permits for company owners and staff.
What are the tax incentives for relocating a business to Cyprus?
The primary tax incentives for relocating a business to Cyprus are a low corporate tax, no tax on dividends or interest, a favourable Intellectual Property (IP) tax regime, and exemptions for companies qualifying to register with the Business Facilitation Unit (BFU).
The corporate tax is 12.5% in Cyprus, among the lowest in Europe. Companies pay no tax on income from dividends and interest and are allowed exemptions for foreign exchange gains.
Moreover, 80% of the profits from qualifying IP assets are exempted. Qualifying assets include patents and copyrighted software programs but not trademarks and copyrights. As for the BFU, your company qualifies for it if you satisfy two criteria: first, you have invested 200,000 euros as funds in a credit institution approved by the Central Bank of Cyprus; second, most of your shares are held by foreigners (third-country nationals) or third-country nationals hold shares worth at least 200,000 euros.
In such a case, highly skilled personnel with an annual income of over 100,000 euros are entitled to a 50% tax exemption for ten years. Other income scales also carry exemptions.
How much does it cost to set up a company in Cyprus?
The costs for setting up a company in Cyprus are (in euros) 10 for name approval, 165 for the company incorporation forms (with additional fees for obtaining certified copies of documents) and an annual fee of 350 payable to the Registrar of Companies by June 30 each year.
Moreover, you will need 1,000 euros for share capital (recommended) and a monthly amount to rent office space. You need to have a registered office in Cyprus.
Why do companies choose to relocate to Cyprus?
Companies choose to relocate to Cyprus for many reasons, which include the favourable tax regime, relatively low cost to buy or rent land (compared to other EU states), the key geographical position (a trading hub between continents), the common-law legal system which is excellent for business, and the stable financial system of an EU member state.
Other advantages are that English is spoken everywhere and used in official sites and documents, while the local workforce is highly dependable and skilled. Moreover, the infrastructure is excellent, with office space, banking and technological facilities widely available for business entrepreneurs.
Is Cyprus a good place to relocate a business?
Cyprus is an excellent place to relocate a business for geographical, tax, legal and infrastructure reasons. Please see questions 1 and 3.
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 (the company will be a tax resident of Cyprus if management is Cypriot-connected). 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.
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