Relocating your business to Cyprus

You have two options if you want to relocate your business to Cyprus:

• you can either set up your own business or
• transfer an existing business.

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, doing what is called “a cross-border conversion”.

In this guide, you will find the basic ways in which a business can be relocated to Cyprus and the actions you need to take.

Cyprus in brief

Cyprus is a favorite destination to relocate a business. 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 carry out business.

*The World Bank has discontinued Doing Business, so there is no report for 2021; it works on a new database, coming soon.

Start your own company in Cyprus

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, that has contributed significantly to economic growth. This is because the limited liability company can move efficiently in the business environment, giving members protection in the 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 EUR 1,000. Each share must have a nominal value of EUR 1.

If you are an EU national, see below for the rules that apply to you.

If you are a third-country national, and your company will have at least EUR 200,000 share capital, you can benefit from the Business Facilitation Unit (BFU) scheme, see below. 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.

Concerning private liability companies registered in Cyprus

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 for registering the whole document package.

Process (how to register your company)

To register the company with the Cyprus Registrar of Companies, you should do the following:

• Choose a unique trading name, which the Registrar must approve. You will mention at least three names in case your first choice is already taken and used by another business.
• Once the name is approved, draft the Memorandum and Articles of Association (M&A). These must be filed with the Registrar.
• Open a bank account at a Cyprus bank. Here, you will deposit the amount of the share capital.
• Appoint the directors and secretary.
• Submit all the documentation to the Registrar of Companies.

  Find the list of documents at the Registrar’s official website at: Applying to incorporate a Company, Business Entities

• Register the company for tax, VAT, social insurance and pensions. Once this is done, Inland Revenue will give you a unique tax identification number.

The business license will be issued for the company. Now the company can start work.

The M&A should include information concerning:

• The shareholders;
• The company directors and secretary;
• Share capital and structure of shares; and,
• Income tax and financial statements.
• The M&A should be notarised.

The Registrar of Companies offers help with the M&A at:

https://www.companies.gov.cy/en/business-entities/.

Some details on tax registration

To register your company with the tax department, you need to 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 of profits 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.

Tip

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.

Setting up a branch of a foreign business in Cyprus

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.

To set up a company branch in Cyprus, the parent company must:

• Apply and get approval for the name from the Registrar of Companies.
• Submit to the Registrar an original M&A of the parent company. If the documents are not originally in the English language, you must translate them.
• Hand in a report about the parent company to the Registrar.
• Provide information about the representative/ agent of the parent company in Cyprus. The representative/ agent is authorised to represent the company in transactions with third parties.
• Complete and file the AE 1,2, and 3 forms.

Report from the parent company to the Registrar

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:

• Name and form;
• The address of the parent company and foreign branch, and the address of the parent company seat, if different from the registered office;
• Registration number (from the Registry where it belongs);
• The issued share capital of the parent company;
• Details about the bankruptcy or liquidation of the parent company, if applicable;
• If the parent company belongs to a non-EU member state, the report must state the applicable law in that country.

Other details that need to be submitted:

• The names and addresses of the director(s) and secretary of the parent company;
• The names and addresses of the persons authorized to receive any documentation regarding the parent company in Cyprus.

Specific rules which apply to the parent company are:

• The parent company has the right to buy and own property in the Republic of Cyprus; and,
• it is considered in law responsible for the actions of the foreign branch.
• The registration fee for opening a foreign branch in Cyprus is EUR 380.
• The process must be done with the Registrar’s e-filing system.

For all the details, see: companies.gov.cy/en/business-entities/overseas-company

How to transfer a business from Cyprus to the UK

According to the High Commission of Cyprus in the UK, Britain is the second most important trading partner for Cyprus in all aspects of a 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.

This means that:

• The legal system is the same as that of the UK (structure, regulations, court rules); and,
• The Cyprus company law (Cap 113) is based on the British Companies Act.

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).

How to transfer business from another EU member state to Cyprus

If you are an EU national and you wish to transfer your business to Cyprus, you can:

• Set up a local company from scratch (see above); or,
• Set up a European Company (Societas Europaea, “SE”); or,
• Convert your existing company into a Cyprus company (cross-border conversion).

Background of the SE

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 favorable for operation.

How to set up a European Company, SE

To set up a European Company (SE), you need:

• To have your registered office and head office (the place where you carry on business) in the same country;
• Have a “presence” in other EU countries, such as subsidiaries and holdings;
• A minimum subscribed capital of EUR 120,000; and,
• Talk with your employees about a way for the employees to be consulted and informed about company matters (this is an express EU requirement for SEs).

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/...

The benefits of registering an SE are many and include:

• It is a transnational legal form. It is recognized immediately by all the European Union member states;
• It has legal personality across the EU. It can operate (for example, buy and sell property) across the EU; and,
• The SE doesn't need to set branches across the EU. The SE itself can do business in all the EU member states.

Cross-border conversions

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 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).

How to do a cross-border conversion in Cyprus

The company wishing to transfer to Cyprus must:

• pass an extraordinary resolution (this usually means a 75% majority of the members vote in favour);
• apply to the Cyprus Registrar of Companies; and,
• submit to the Registrar a list of documents.

This list (Article 354 C) includes:

• A copy of the extraordinary resolution;
• A copy of the M&A;
• A certificate of good standing and financial strength. This certificate must be issued from a public authority of the country of origin;
• A report from a director declaring details of the company; and,
• Official proof that the company does not face administration or criminal proceedings in the country of origin.

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.

Latest on cross-border conversions

A new Directive on cross-border conversions will be 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.

How to relocate your employees to Cyprus

To relocate your employees to Cyprus, note that there are different rules for EU nationals and nationals of a third country.

Also, note that whatever the form of your business, or your country of origin, as long as you carry on business in the Republic, you need to 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: working and living in Cyprus

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:

• A valid passport or identity card, both copy and original;
• An employment confirmation from the employer; and,
• A Cyprus social insurance confirmation.

The full list and updated checklist at: http://www.moi.gov.cy/moi/crmd/

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

Third country nationals

Cyprus has adopted a new policy for the employment of third-country nationals: foreign companies that establish 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 January 2022, 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 (house, apartment, or land) but need permission from the government.

Our services

Our firm of legal professionals can give you 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.