Cyprus is an island country in the Eastern Mediterranean located south of Turkey, north of Egypt, west of Syria and Lebanon, southeast of Greece, and northwest of Israel and Palestine. It is officially called the “Republic of Cyprus”. It is the third largest and third most populous island in the Mediterranean with a population estimated at 1.2 million.
In 1974, civil war broke out between the Turkish Cypriots and the Greek Cypriots which made Turkey invade the island. Once a peace accord was reached in 1974, Turkey controlled 1/3 of the island (called Northern Cyprus) and the rest remained as Cyprus controlled by the Greek Cypriots. Its capital city, Nicosia is the only capital in the world divided in two with a “no man’s land” buffer been manned by UN troops separating Northern Cyprus from the rest of the island. Since 1974, there have been no conflicts between the two sides.
The Cyprus Company Act regulates the formation and activities of corporations in Cyprus. Having been a former British colony and territory from 1878 until its independence in 1960, Cyprus adopted the English Common Law system.
Cyprus joined the European Union (EU) in 2004 which boosted Cyprus as a reliable country for incorporation. Cyprus has always been in the Organization for Economic Cooperation and Development (OECD) White List.
Cyprus Corporation Benefits
Cyprus offers its corporations many benefits including:
• Former British Colony: As a result of over 80 years of British rule, English is the official second language (after Greek) and English Common Law prevails as its legal system.
• EU Membership: Having been a member of the EU since 2004, gives Cyprus credibility as a safe place to incorporate.
• Strategic Location: Its location on the Eastern Mediterranean with short flights to Greece, Turkey, Israel, Lebanon, and Egypt makes it an ideal point to conduct business in these regions.
• Low Corporate Tax Rate: Cyprus has a low Corporation Tax Rate, which is one of the lowest found anywhere in the European Union at a 12.5% rate.
• One Shareholder: The minimum requirement is only one shareholder to incorporate along with one director where either or both can be of any nationality and reside anywhere in the world.
• Ideal for a Holding Company: Cyprus is well known for being a jurisdiction whose taxes are beneficial for holding companies. In addition, there are no controlled foreign company (CFC) regulations, allowing for greater freedom of the formation and actions of corporations as holding companies.
• No Capital Gains Tax on Securities: Cyprus is a popular place for security traders to maintain offices, and there is one reason for this. In Cyprus, corporations do not need to worry about inward or outward taxation dividends or a Capital Gain Tax (CGT) on security sales.
• Easy Bank Accounts: It is extremely easy to open a corporate bank account in Cyprus. Opening a bank account can be done over the phone or online, provided that the documentation is notarized and the necessary documents are included by the directors and shareholders.
• Double Taxation Treaties: Cyprus has over forty double tax treaties (DTT) connecting it safely to other countries and ensuring foreigners owning Cyprus corporations will not pay double taxes on the same income to Cyprus and their home countries..
Cyprus corporations must pick a unique name for incorporation not used by other corporations. Furthermore, documents can be filed in English.
Prior to registering the corporate name, applicants can check to ensure the corporation’s name is unique and then obtain approval for that name through the Registrar of Companies. This can be done electronically.
Office Address and Local Agent
Cyprus corporations must have a registered local office to receive court and government communications. Additionally, the corporation must retain a local registered agent.
Cyprus requires corporations to have at least one shareholder.
Directors and Officers
Cyprus requires corporations to have at least one director. A local company secretary is also required to incorporate in Cyprus.
Private companies in Cyprus are not required to have a minimum authorized capital. For public companies, the minimum share capital is 25,630 EUR.
The corporate tax rate in Cyprus is 12.5%, which is one of the lowest in the European Union.
The annual renewal fees for Cyprus corporations cost about 750 EUR.
Before a company incorporates, the names provided for the shareholder and director need to obtain approval from the Registrar of Companies. If companies wish to seek further confidentiality, they can use nominee shareholders.
Accounting and Audit Requirements
Corporations in Cyprus are required to hire an internal auditor, prepare yearly accounts, and submit financial and business records when requested.
Annual General Meeting
Corporations in Cyprus are required to have annual general meetings. However, these meetings do not have to take place in Cyprus, and can take place anywhere in the world.
Time Required for Incorporation
Forming a corporation in Cyprus takes about one to two weeks for the documents to be registered and the company to be considered incorporated.
In Cyprus, corporations may use shelf companies if they wish to incorporate faster.
Cyprus offers numerous benefits to its corporations including: as a former British colony English Common Law system is used and English is its second official language, Cyprus is an EU member, strategically located close to Greece and the Middle East, only one shareholder and director are required, low corporate tax rate, ideal jurisdiction for holding companies, and easy to open corporate bank accounts.