Incorporations in Cyprus

The companies incorporated in the Republic of Cyprus have been considered as one of the major investors into the economy of the Russian Federation for the last years due to its indisputable advantages. After the fall of the “Iron Curtain”, the Republic of Cyprus became one of the first jurisdictions the Russians had turned to set up their businesses. If you opt for Cyprus as a place of your business, we can surely assist you in making all necessary steps to set up a business of your own.

The Cyprus companies are normally registered as limited liability companies, as evidenced by the extension “Limited” of “LTD” in their names indicating its business form. The minimal authorized capital of the company is EUR 1,000.00, and the maximum amount of the authorized capital is unlimited, however, allotment of shares is subject to non-recurring duty in amount of 0,6% of the amount of the authorized capital. The Company may carry on different types of business activities, however subject to some restrictions, e.g. a company may not act as an insurance company or be engaged in banking (financial) activity, as these operations are licensed.

Incorporation of a company in the Republic of Cyprus

A Cyprus company must appoint at least one director – either an individual or a legal entity. In Cyprus there are no restrictions applicable to directors’ nationality. There must be at least one shareholder and a secretary appointed in the company, whilst the appointment of a secretary is mandatory. Appointment of local (citizen of Cyprus) secretary is a plus, as it is them who are responsible for filing the papers or all or any documents whatsoever on the company’s behalf.

Tax residency of a Cyprus company is determined on a rather formal basis, meaning that is tax residency lies where the company management is. For instance, if the majority of the Board consists of the directors citizens of Cyprus - the chances are that the company shall be treated as a Cyprus tax resident, and if the Board consists of the other nationalities in such a case there are likely to be difficulties in obtaining a certificate confirming Cyprus tax residency from the tax authorities. That is the reason why we recommend that there be appointed nominee directors from Cyprus.

Cyprus is a party to a number of DTTs (Double Taxation Treaty) entered into by and between many countries including Russian Federation and majority of European and CIS countries alike.

The last amendments made to the European legislation in terms of VAT payment suggest that the place of supply of services is the place where a supply is made and where VAT may be charged and paid. Thus, if a company has been paying for services for the amount over EUR 15,600.00 during a year, then it should charge and account for VAT according to Cyprus VAT rules, and file VAT accounts on a quarterly basis.

Who can benefit from a Cyprus company?

A Cyprus company is a perfect tool for those who are looking forward to owning an interest in other entities, or making stock market investments.

Taxation

Cyprus as a jurisdiction with its specific features. Since the country joined the EU in 2003 the Cyprus Law abolished the difference (distinction) between domestic and foreign companies. Incorporation procedures have always been basically the same, however, as to taxation issues  - different rules applied making it different for domestic and foreign entities, that is: local entities were subject to 42,5% income tax; meanwhile the foreign companies were charged 4,25%. As of January 1, 2003 a new tax code has become effective whereby a uniform tax rate of 10% was applied to both domestic and foreign entities. The corporate tax rate was further amended in 2013 to reach 12,5%.

Mandatory Audit

Companies incorporated in Cyprus must file their audited annual accounts. The first accounts become due 18 months as of the date of incorporation at the latest. Some types of income are subject to Tax Defense Contribution. The said tax applies selectively, however, the businesses that may enter into the interest bearing loan transactions, or are likely to be engaged in bank deposits operations, should consult an expert as regards the Tax Defense Contribution issues, and which cases it may apply.

It goes without saying, that annual audit rules were always in place, however for the past 10 years or so ever harsher and stricter measures were imposed by the authorities so as not to leave a space or an opportunity that may somehow encourage bending such rules. As one would expect, those measures were far from liberal ones, and once again they served as a reminder of an old maxim that not knowing is not an excuse – failure to comply may lead to a criminal offense.

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*All inclusive Set includes checking availability of a business name; incorporation of a new business or the cost of a ready-made company; set of incorporation documents certified by Apostille; provision of a Cyprus registered office address and a registered agent services for 1 year; nominee director and shareholder services for 1 year; a Power of Attorney certified by Apostille; a corporate seal (stamp); a settlement account opened with a Cyprus bank (gratis!).

Similar Jurisdictions

Malta, Singapore, Hong Kong, UK

Additional Services – Acquiring Cyprus citizenship, Residence Permit

An amount of investment contributed to the Cyprus economy is a crucial criterion to ascertain your chances to become a Cyprus citizen, and a Cyprus business can serve as an appropriate vehicle to achieve that goal. One should bear in mind, that if some certain precedent conditions are met (EUR 15 mln. annual turnover, or EUR 500,000.00 in tax payments contributed to the state coffers), and providing a running business, this may well increase your chances and lead to your being eligible for a permanent residence permit and eventually a citizenship.