Cyprus


The first human settlement on Cyprus can be traced to around 10,000 BC and by 3,700 BC the island was well inhabited. It fell successively under Assyrian, Egyptian, Persian, Greek, and Roman domination. For 800 years, beginning in 364 AD, Cyprus was ruled by Byzantium. After brief possession by King Richard I (the Lion-Hearted) of England during the Crusades, the island came under Frankish control in the late 12th century. It was ceded to the Venetian Republic in 1489 and conquered by the Ottoman Turks in 1571. The Ottomans applied the millet system to Cyprus, which allowed religious authorities to govern their own non-Muslim minorities. This system reinforced the position of the Orthodox Church and the cohesion of the ethnic Greek population. Ottoman rule of the island lasted for three centuries until control was given to the United Kingdom in 1878. Many of the Turks who had settled on the island stayed there, though a lot subsequently left in the 1920s following the formal annexation of the island by the United Kingdom in 1914 and its becoming a crown colony status in 1925. Cyprus gained independence in 1960 following years of guerrilla struggle against the British rule. Tensions between the Greek Cypriot majority and Turkish Cypriot minority came to a head in December 1963, when violence broke out in the capital of Nicosia. Despite the deployment of UN peacekeepers in 1964, sporadic intercommunal violence continued forcing most Turkish Cypriots into enclaves throughout the island. In 1974, a Greek Junta-sponsored attempt to seize control of Cyprus was met by military invasion from Turkey, which soon controlled more than a third of the island. In 1983, the Turkish-occupied area declared itself the ‘Turkish Republic of Northern Cyprus’, but it is recognized only by Turkey. The election of a new Cypriot president in 2008 served as the impetus for the UN to encourage both the Turkish Cypriot and Greek Cypriot leaders to reopen unification negotiations. In September 2008, the president of the Republic of Cyprus, and the Turkish Cypriot leader started negotiations under UN auspices aimed at reuniting the divided island. The talks are ongoing and the leaders continue to meet regularly. The entire island entered the EU on 1 May 2004, although the EU acquis - the body of common rights and obligations - applies only to the areas under direct government control, and is suspended in the areas administered by Turkish Cypriots. However, individual Turkish Cypriots able to document their eligibility for Republic of Cyprus citizenship legally enjoy the same rights accorded to other citizens of European Union states.

Service packages

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Service item Express Standard Optimum
Company registration
Legal address per year
Secretarial services for the first year
Fees and duties for the first year
Apostilled bound set of incorporation documents
Compliance fee
Nominee service per year
Bank Account Pre-approval
Price

2 913 USD

4 297 USD

4 797 USD

I want to order «»

Contact method: and / or

Core Services

2 400 EUR

— Incorporation

including incorporation tax, state registry fee, including Compliance fee

not included

— Annual government fees

1 200 EUR

— Corporate legal services

including registered address and registered agent, NOT including Compliance fee

135 EUR

—Delivery of documents by courier mail

DHL or TNT, at cost of a Courier Service

500 EUR

— Apostilled set of Statutory documents

Optional services

1 140 EUR

Nominee Director

Paid-up “nominee director” set includes the following documents

Nominee Shareholder

Related services

410 EUR

Tax Certificate

Company’s tax residence certificate for access to double tax treaties network

255 EUR

Certificate of Good Standing

Document issued by a state agency in some countries (Registrar of companies) to confirm a current status of a body corporate. A company with such certificate is proved to be active and operating.

Deed of Trust

Compliance fee

Compliance fee is payable in the cases of: renewal of a company, liquidation of a company, transfer out of a company, issue of a power of attorney to a new attorney, change of director / shareholder / BO (except the change to a nominee director / shareholder)

250 EUR

Basic

simple company structure with only 1 physical person

50 EUR

For legal entity in structure under GSL administration

additional compliance fee for legal entity in structure under GSL administration (per 1 entity)

100 EUR

For legal entity in structure not under GSL administration

additional compliance fee for legal entity in structure NOT under GSL administration (per 1 entity)

350 EUR

For client with high risk Status

Cost of incorporation, including first year servicing 2913
Cost of nominee director services per year, including an apostilled set of documents 1384
Cost of annual service, starting from the second year 1456
Open account in 26877
Incorporation timescale for a turnkey company 10 to 30 working days
Country 26756

General information shortly

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Total area Population Capital Unemployment Corruption perceptions index rank
9.250 sq. km 862.011 (2012) Nicosia 13.8% (2013) 29
Location An island in the north eastern Mediterranean Sea
National currency Euro (EUR) (until 1 January 2008 - Cyprus Pound (CYP). 1 CYP approx. = 2 USD)
Conditional reduction of currency EUR
Against USD 1.3
Climate, average max and min t° Mediterranean with hot, dry summers and cool winters; avg. maximum temperature (August) +35°; avg. minimum temperature (January) 0°
Time difference from Moscow -1 hour
Dialing code 357
State language Greek and Turkish
Ethnic groups Greek Cypriots 77%; Turkish Cypriots 18%; other minorities 5%
Literacy rate 97.6%
Credit rating BB+
Government type Presidential republic
Executive branch Council of Ministers appointed jointly by the President and Vice President
Legislative branch Unicameral parliament: House of Representatives (80 seats; 56 assigned to the Greek Cypriots, 24 to Turkish Cypriots, but only those assigned to Greek Cypriots are filled; members are elected by popular vote to serve five-year terms)
Judicial branch Supreme Court (judges are appointed jointly by the President and Vice President)
GDP per capita rank 37 (2012)

Corporate info

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Shelf companies permitted Legal system Incorporation timescale for a turnkey company Cyrillic alphabet permitted in company name Local registered office
Yes based on English common law, with civil law modifications 10 to 30 working days No Yes
Types of entity Private company limited by shares, Exempt private company, Public company limited by shares, Company limited by guarantee, Branch of overseas company, General partnership, Limited partnership, Sole Proprietorship, Trust
Incorporation timescale for a new company 15 to 25 working days (3 to 6 working days with payment of acceleration fee)
Company suffix Limited; Ltd.
Sensitive words Asset Management, Asset Manager, Assurance, Bank, Banking, Broker(s), Brokerage, Capital, Credit, Currency(ies), Custodian(s), Custody, Dealer(s), Dealing, Deposit(s), Derivative(s), Exchange, Fiduciary(ies), Finance, Financial, Fund(s), Future(s), Insurance, Lending, Loan(s), Lender(s), Option(s), Pension(s), Portfolio, Reserve, Savings, Security(ies), Stock, Trust, Trustees
Local registered agent No
Information to be kept at the registered office register of directors and secretaries; register of members; books containing the minutes of any general meeting; register of holders of debentures; copies of instruments creating charges and mortgages, register of charges, book of mortgages, other
Seal required, type of seal Every Cyprus company must have a seal with its name engraven in legible characters on it. A company whose objects require or comprise the transaction of business in foreign countries may also have for use in any territory, district, or place an official seal, which shall be a facsimile of the common seal of the company, with the addition on its face of the name of every territory, district or place where it is to be used.
Redomiciliation (to, from) permitted permitted

Director and secretary

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Minimum number of directors Residency requirements for directors Corporate directors permitted Disclosure to local agent Disclosure to public
1 No Yes Yes Yes
Directors’ meetings/frequency/location No requirements
Company secretary required Yes
Residency requirements for a secretary No
Qualified secretary required No
Corporate secretary permitted Yes

Shareholder and beneficiary

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Minimum number of shareholders Residency requirements for shareholders Corporate shareholder permitted Disclosure to local agent Disclosure to public
1 No Yes Yes Yes
Meetings/frequency/location Yes / annually / no requirements
Beneficiary info disclosure to No

Shares and share capital

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Minimum authorized share capital Minimum issued share capital Minimum paid share capital Authorized capital payment deadlines Bearer shares permitted
No 1 share No requirements No requirements No
Issued capital payment deadlines Immediately upon issue or according to the terms of issue specified in the relevant resolution
Standard currency EUR
Standard authorized share capital 1000
Standard par value of shares 1
Shares with no par value permitted No

Taxes

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Min. rate for corporate tax Capital gains tax VAT Withholding tax Exchange control
12.5% Regular rate 19% 0%/0%/10% No
Personal tax 20-35%
Capital gains tax. Details Cyprus companies are considered tax resident in Cyprus and are subject to Cyprus tax on their worldwide income if they are managed and controlled in Cyprus. It is also planned to introduce a rule according to which companies incorporated in Cyprus must be recognized as tax residents of the country. Cyprus companies are taxed at a rate of 12.5%.
VAT. Details VAT is paid on the sale of goods and services, as well as the purchase of goods and services from the EU countries, and the import of goods into Cyprus from non-EU countries. The legislation provides for 3 rates of VAT: the basic rate is 19%, in some cases, reduced rates of 9% and 5% are provided.
Other taxes Special defence contribution tax, , Social insurance contributions, Immovable property transfer fees
Government fee Yes, but exemptions apply
Stamp duty Yes

Accounts

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Requirement to file accounts Publicly accessible accounts Audit required Requirement to file Annual Return Publicly accessible Annual Return
Yes Yes Yes Yes Yes
Requirement to prepare accounts Yes
Double tax treaties network 61
OECD member No
Offshore/onshore status according to the RF laws No

GENERAL INFORMATION

General

Cyprus is an island situated in the north eastern Mediterranean Sea. It covers the area of 9,250 sq. km and has a population of 862.011 (2012). The capital city is Nicosia. The currency is Euro (EUR); which replaced on 1st January 2008 the Cyprus Pound (CYP), equivalent to approximately 2 USD. Cyprus enjoys a Mediterranean climate, with abundant sunshine year round, with the average maximum temperature of the hottest month (August) being +38° and the average minimum temperature of the coldest month (January) being 5°. Cyprus is just 1 hour behind Moscow and its international dialing code is 357. The official languages are Greek and Turkish, but English is widely spoken and mostly used in business, government and courts. Greek Cypriots form the largest ethnic community (77%), Turkish Cypriots comprise the second largest community (18%) and the remaining 5% represent other minorities. Cyprus has a literacy factor of 97.6%.

History

The first human settlement on Cyprus can be traced to around 10,000 BC and by 3,700 BC the island was well inhabited. It fell successively under Assyrian, Egyptian, Persian, Greek, and Roman domination. For 800 years, beginning in 364 AD, Cyprus was ruled by Byzantium. After brief possession by King Richard I (the Lion-Hearted) of England during the Crusades, the island came under Frankish control in the late 12th century. It was ceded to the Venetian Republic in 1489 and conquered by the Ottoman Turks in 1571. The Ottomans applied the millet system to Cyprus, which allowed religious authorities to govern their own non-Muslim minorities. This system reinforced the position of the Orthodox Church and the cohesion of the ethnic Greek population. Ottoman rule of the island lasted for three centuries until control was given to the United Kingdom in 1878. Many of the Turks who had settled on the island stayed there, though a lot subsequently left in the 1920s following the formal annexation of the island by the United Kingdom in 1914 and its becoming a crown colony status in 1925. Cyprus gained independence in 1960 following years of guerrilla struggle against the British rule. Tensions between the Greek Cypriot majority and Turkish Cypriot minority came to a head in December 1963, when violence broke out in the capital of Nicosia. Despite the deployment of UN peacekeepers in 1964, sporadic intercommunal violence continued forcing most Turkish Cypriots into enclaves throughout the island. In 1974, a Greek Junta-sponsored attempt to seize control of Cyprus was met by military invasion from Turkey, which soon controlled more than a third of the island. In 1983, the Turkish-occupied area declared itself the ‘Turkish Republic of Northern Cyprus’, but it is recognized only by Turkey. The election of a new Cypriot president in 2008 served as the impetus for the UN to encourage both the Turkish Cypriot and Greek Cypriot leaders to reopen unification negotiations. In September 2008, the president of the Republic of Cyprus, and the Turkish Cypriot leader started negotiations under UN auspices aimed at reuniting the divided island. The talks are ongoing and the leaders continue to meet regularly. The entire island entered the EU on 1 May 2004, although the EU acquis - the body of common rights and obligations - applies only to the areas under direct government control, and is suspended in the areas administered by Turkish Cypriots. However, individual Turkish Cypriots able to document their eligibility for Republic of Cyprus citizenship legally enjoy the same rights accorded to other citizens of European Union states.

Government

Cyprus is a presidential republic. The executive arm of the Government is the Council of Ministers appointed jointly by the President and Vice President (the latter being vacant due to non-participation of the Turkish Cypriots in the government). Legislative power lies in the hands of the unicameral parliament – House of Representatives (80 seats; 56 assigned to the Greek Cypriots, 24 to Turkish Cypriots, but only those assigned to Greek Cypriots are filled; members are elected by popular vote to serve five-year terms). Judicial power is represented by the Supreme Court, with judges appointed jointly by the President (and Vice President).

Economy

The economy of Cyprus is based on a liberal enterprise system. The Government’s role is limited to regulation, planning and the provision of public utilities. In the 1990s and 2000s the economy of Cyprus demonstrated spectacular growth and its currency enjoyed relative stability. This prosperity came under pressure in 2009 in the face of the global financial crisis. The economy tipped into recession, contracting by 1.7%, and showed little or no growth in the following 2010 and 2011. A massive munitions blast in July 2011 at a Cypriot naval base triggered country-wide energy outages. Financial sector problems surfaced in early 2011 as the Greek fiscal crisis deepened. Two of Cyprus’s biggest banks are among the largest holders of Greek bonds in Europe and have a substantial presence in Greece through bank branches and subsidiaries. Cyprus’s exposure to Greek debt led to the rise of the borrowing costs, which resulted in the budget deficit of 7.4% of GDP in 2011, a violation of the EU's budget deficit criteria - no more than 3% of GDP. To meet these challenges, the Cypriot Government is promising to implement measures to cut the cost of the state payroll, curb tax evasion, and revamp social benefits. It is also hoped that the natural gas recently discovered off the Cyprus’s southern coast, in the area known as Block 12, will contribute to the improvement of the economic situation. The estimated gross resource ranges from 5 to 8 trillion cubic feet and is worth of approximately USD 47-76 billion. Block 12 field covers approximately 100 sq. km. and will require additional appraisal prior to development. The economic slowdown made an inevitable impact on unemployment, increasing it to 13.8% (2013). Cyprus’s GDP per capita rank is 37 (to compare: Russia is the 55th). The country ranks 29th in Transparency International’s Corruption Perceptions Index for 2012 (whereas Russia is ranked 133rd).

GENERAL CORPORATE INFORMATION

Legal System

Cyprus legal system is based on English common law, with civil law modifications. Cyprus company law is regulated by the Companies Law, Cap. 113, as amended from time to time, as well as by the case law (being as an ancillary source of law in Cyprus).

Types of Entities

The principal forms of business organisation in Cyprus are: Private company limited by shares, Exempt private company, Public company limited by shares, Company limited by guarantee, Branch of overseas company, General partnership, Limited partnership, Sole Proprietorship and Trust.

Company Name and Incorporation

The most common structure is the private company limited by shares. It is possible to buy a shelf company of this type or to incorporate a new one. The Registry timescale to incorporate a new company ranges from 15 to 25 working days, but can be reduced to 3-6 working days by payment of acceleration fee. The timescale for a new turnkey entity is from 10 to 30 working days.

Suffixes to denote limited liability in company names are ‘Limited’ or ‘Ltd’.

Every company name must first be approved by the Registrar of Companies. Company names may be expressed in Greek or any language using the Latin alphabet. Names in Cyrillic alphabet are not allowed. The Registrar can decline any name it considers undesirable or any name that is identical or similar to an existing company’s name, or implies illegal activity or royal or government patronage. The following names, their derivatives or foreign language equivalents require consent or a licence: Asset Management, Asset Manager, Assurance, Bank, Banking, Broker(s),Brokerage, Capital, Credit, Currency(ies), Custodian(s), Custody, Dealer(s), Dealing, Deposit(s), Derivative(s), Exchange, Fiduciary(ies), Finance, Financial, Fund(s), Future(s), Insurance, Lending, Loan(s), Lender(s), Option(s), Pension(s), Portfolio, Reserve, Savings, Security(ies), Stock, Trust, Trustees.

Incorporation Procedure

The first step in formation of a Cyprus company is to apply for approval of its name by the Registrar of Companies. After the proposed name is approved, the Memorandum and Articles of Association of the company must be signed by subscriber(s) and for at least one share. After incorporation the subscribers of the Memorandum will become members of the company. The Memorandum of Association establishes the basic structure of the company and states its name, objectives, share capital and division of the share capital into shares of a certain par value, and any other matters which affect the basic existence of the company. The Articles of Association govern relations between various members of the company. They deal with the procedures for calling meetings of shareholders, passing resolutions and transferring shares including any restrictions which may apply. A company may alter or add to its Memorandum and Articles of association by passing a special resolution.

The next step of the incorporation procedure is to file the Memorandum and Articles of Association together with the relevant registration forms with the Registrar of Companies. There are three such forms: HE1 – a form which the lawyer handling the incorporation signs under oath to confirm that the company’s registration is in full compliance with the laws; HE2 – a form which states the registered office address; and HE3 – a form which states the first director(s) and secretary.

On completion of registration, the Registrar of Companies issues a Certificate of Incorporation which specifies the name of the company, date of its incorporation, and its reference number. The Certificate of Incorporation will be accompanied by the Certificate of Registered Office, Certificate of Shareholders, and Certificate of Directors and Secretaries.

Restriction on Activities and Bank Account

There are a number of restrictions on the activities of a private company. It cannot undertake the business of banking, insurance or rendering of financial services to the public unless a special permission is granted.

Cyprus companies may open accounts with banks both within and outside Cyprus.

Registered Office

Cyprus companies must maintain a registered office address within Cyprus and keep at that address the following information and documents: register of directors and secretaries; register of members; books containing the minutes of any general meeting; register of holders of debentures; copies of instruments creating charges and mortgages, register of charges, book of mortgages and other.

Seal

Every Cyprus company must have a seal with its name engraven in legible characters on it. A company whose objects require or comprise the transaction of business in foreign countries may also have for use in any territory, district, or place an official seal, which shall be a facsimile of the common seal of the company, with the addition on its face of the name of every territory, district or place where it is to be used.

Annual Renewal

Cyprus companies are renewed annually and the renewal normally includes: payment of fees for nominee directors and shareholders (if any), secretary, registered office and government fee for filing with the Registrar of an Annual Return containing the details of all directors, shareholders, registered office and share capital or changes in the same.

Redomiciliation

The redomiciliation of companies both to and from Cyprus was made possible with the enactment in 2006 of law 124(I)/2006 amending the Companies Law, Cap. 113.

COMPANY STRUCTURE

Directors

A Cyprus company is required to have a minimum of one director who can be a natural person or a body corporate. Director’s details are disclosed to the local agent and appear on the public file. There is no legal requirement that the directors be Cyprus residents. But in order to qualify as a tax resident and consequently take advantage of the double tax treaty network it is necessary that the company be managed and controlled in Cyprus, thus should have a majority of the directors based in Cyprus and all board meetings of the company should take place in Cyprus.

Secretary

All Cyprus companies must appoint a company secretary who may be a natural person or a body corporate, a resident or non-resident. There are no special requirements for qualifications of the secretary. The law prohibits that the sole director be appointed as secretary. Besides, no company may have as secretary a corporation the sole director of which is a sole director of the company. However the last two rules do not apply to private companies with just one shareholder.

Shareholders

Cyprus companies may have one or more shareholders, individuals or corporations of any nationality or residence. Shareholders’ details are disclosed to the local agent and appear on the public file. General meetings are to be held either in Cyprus or abroad annually, with the first annual general meeting to take place within eighteen months of the company’s incorporation.

Beneficial Owner

Amendments to the Prevention and Suppression of Money Laundering and Terrorism Financing Law (2007) came into force in Cyprus on 23 February 2020, introducing a public register of beneficial owners and a number of new requirements for companies to file beneficial ownership information.
Full and unrestricted access to the register is provided to certain government authorities of the Republic of Cyprus, whereas all other persons can only access the following information by making a request for a fee (EUR 3.50 per company): name; month and year of birth; citizenship; country of residence; nature and scope of control.
Any changes must be filed with the Registrar within 14 days. In addition, the company must annually confirm the accuracy of the information contained in the register."

Share Capital and Shares

The share capital of a private limited company can be denominated in any currency. There is no minimum authorized share capital as the law simply provides for a minimum of one share to be issued and paid immediately upon issue or within time specified in the relevant resolution. No payments deadlines are set for the authorized capital. Usually the share capital is EUR 1,000 which is divided into 1,000 shares of EUR 1 each. Bearer shares or shares with no par value are not permitted.

WINDING-UP AND RESTORATION

Winding-Up and Strike-Off

The winding-up of a company may be accomplished in one of the following ways:
• by a court order;
• subject to the supervision of the court;
• voluntarily by special resolution of shareholders of the company.

Winding-Up by Court
A company may be wound up by the court if:
• the company has by special resolution resolved that the company be wound up by the court;
• the company does not commence its business within a year from its incorporation or suspends its business for a whole year;
• the company is unable to pay its debts;
• the court is of opinion that it is just and equitable that the company should be wound up.
For the purpose of conducting the proceedings in winding up a company and performing such duties in reference thereto as the court may impose, the court may appoint a liquidator.

Voluntary Winding-Up
In order for the company to be put into voluntary liquidation by members, the directors of the company must make a statutory declaration that they have made a full inquiry into the affairs of the company and are of the opinion that it will be able to pay its debts in full within a stated period of time not exceeding 12 months from the commencement of the winding up. This declaration of solvency must be made and filed with the Registrar of Companies within five weeks immediately preceding the date of special resolution to voluntarily wind up the company and it must contain a statement of assets and liabilities based on the most recent financial statements of the company.

After the declaration of solvency is filed with the Registrar, the company must pass a special resolution in general meeting that it be wound up voluntarily (which date would be deemed to be the date of commencement of winding up) and give notice of this resolution in official Gazette within 14 days of the date of such resolution. The company will cease business from the commencement of the winding up except in so far as required for its beneficial winding up.

The liquidator is appointed by general meeting. Within 14 days of his appointment the liquidator should publish a notice of his appointment in the Gazette and deliver to the Registrar a note of his appointment on a special form C.41. On appointment of liquidator all directors’ powers normally pass to him.

Once the company’s affairs are fully wound up, the liquidator shall prepare a liquidation report and call a final general meeting to present this report to them for approval. The meeting should be called on at least one month’s notice published in the Gazette. Within one week of the date of the meeting the liquidator shall file with the Registrar a copy of the accounts and make a return to the Registrar notifying him of the holding of the final meeting and of its date. The company is deemed to be dissolved on expiry of three months of the date of filing of such return.

Strike-Off
Voluntary winding-up procedures are rather lengthy, complicated and costly. A simpler way is available for companies which do not carry any activities, nor any assets or liabilities and when there are no disputes among shareholders. In this case the director of the company informs the Registrar of Companies that the company has stopped operation and does not have any assets or liabilities. Certain resolutions and letters must be prepared and signed by ultimate beneficiaries to enable the director to proceed accordingly at the Registrar. Also, audited accounts must be prepared until the date the company was involved in business and the audited accounts must show that the company does not have any assets or liabilities.
In consequence of the director’s letter, the Registrar of Companies will strike off the name of the company from the register within 6 to 12 months time. The Registrar will publish its decision to strike the company off the register in the official Gazette.

Restoration

The mechanism for reinstatement of a struck-off company is set out in the Company Law, Cap. 113 in section 327. Reinstatement is provided in paragraph (7) of this section with simple application at court, within twenty years from publication in the Gazette of the notice of strike-off. Provided that the court is satisfied that indeed the conditions in the law are fulfilled, it will issue an order of reinstatement which will be filed with the Registrar. The company is then considered as never struck off (as if always in good standing), so the court order has a pretty strong effect for the protection of a member of the company, a creditor or the company itself. It is also useful to know that the strike-off does not mean the liability for the directors or a member is eliminated during the strike-off.
The conditions for reinstatement checked by the court are: if the company was having activities during strike-off, or was operating in any way, or if the court deems fair to reinstate it. So the conditions are not demanding or strict, they are rather loose and discretionary on the court (‘deems fair’).

TAXATION

Personal Taxes: Income tax

Chargeable income (after all allowances) is taxed as follows:
up to EUR 19,500 0%
EUR 19,500 to 28,000 20%
EUR 28,001 to 36,300 25%
EUR 36,301 to 60,000 30%
above EUR 60,000 35%

Proceeds from the sale of securities (stocks, bonds, etc.) are not subject to income tax. Capital gains are not subject to income tax.
50% of income from employment in Cyprus may be exempt from income tax for 10 years if the remuneration exceeds EUR 100,000 per year, and the individual was not a tax resident of Cyprus before the start of employment (from 2015, this exemption does not apply if the individual has been tax resident in Cyprus for at least three years out of five).

Personal Taxes: Special Defence Contribution (SDC)

A Special Defence Contribution is only levied on persons who are both tax resident and domiciled in Cyprus.
SDC is charged at the following rates:
  • 17% on dividends
  • 30% on interest, except interest from corporate and Cypriot government bonds, for which the tax rate is 3%
  • 2.25% on rental income.

There is no personal income tax on the income taxed by SDC, the exception is rental income.

Capital Gains Tax (CGT)

This tax is levied at a rate of 20% on transactions with immovable property situated in Cyprus, as well as with shares in non-listed companies that own immovable property in Cyprus.

Corporation Tax

Cyprus companies are considered tax resident in Cyprus and are subject to Cyprus tax on their worldwide income if they are managed and controlled from Cyprus. It is also planned to introduce a rule to treat companies incorporated in Cyprus as tax residents of the country. Cyprus companies are taxed at the rate of 12.5%.
The following types of income are exempt from corporation tax:
  • Dividends, unless they are deductible for corporation tax purposes by the foreign company that is distributing them.
  • Profit arising from the disposal of securities, including stocks, shares, stock indices on securities, bonds and options on them.
  • Profits arising from an overseas permanent establishment are not subject to corporation tax unless (a) more than 50% of the permanent establishment’s income is investment income and (b) the overseas income is significantly lower than that in Cyprus (less than 6.25%).

Capital Gains Tax

This tax is levied on gains accruing from disposal of immovable property situated in Cyprus and of shares in non-listed companies that own such immovable property if the value of the shares is at least 50% related to it. The tax rate is 20%.

Special Defence Contribution (SDC)

SDC is paid on the following types of income:
  • 30% on "passive" interest. Such interest does not include interest earned by collective investment funds, interest earned on loans issued by companies, interest earned in the ordinary course of business of the company. That interest is only subject to corporation tax.
  • 17% on dividends only if (a) more than 50% of the income of the foreign company paying the dividends is investment income and (b) the foreign corporation tax is significantly lower than the Cyprus tax (i.e. below 6.25%).
  • rental income is taxed at the effective rate of 2.25% (this tax is payable in addition to corporation tax).

VAT

VAT is imposed on the sale of goods and services to, and purchase of goods and services from, EU countries, as well as on the import of goods into Cyprus from outside EU. Cyprus VAT legislation provides for three rates: the standard rate of 19% and the reduced rates of 9% and 5% applicable in certain cases. VAT registration is compulsory where total sales of goods and/or services in Cyprus exceed EUR 15,600 in any period of 12 months, as well as in some other cases when the VAT registration threshold may not exist or when it may be lower.

Withholding Tax

Cyprus does not levy withholding tax on dividends, interest and royalties paid to non-residents, except where royalties are paid in respect of rights used in Cyprus. These royalties are taxed at a rate of 10% (5% for film rights) and may be reduced under Double Tax Treaties (DTTs) or the relevant EU directive.
Cyprus may levy withholding tax at the rate:
  • 10% when paying for "technical services" performed in Cyprus by non-residents
  • 10% in respect of remuneration for non-resident individuals performing professional activities in Cyprus
  • 5% in respect of remuneration for the development of the continental shelf.

The tax may be withheld on certain other income payments.
The draft budget law 2021 plans to introduce a withholding tax on dividends, interest and royalties payable to EU backlisted countries.

Stamp Duty

It is payable on a document if it relates to property situated in Cyprus or to an act to be performed or done in Cyprus. Stamp duties on commercial contracts are charged at rates that vary according to the contract amount, but are capped at EUR 20,000 per document.

Capital Tax

EUR 105 is payable upon the formation of a new company and EUR 20 is payable upon the issue of shares.

Social Security Contributions

Employers must make contributions to:
  • Social Insurance Fund – 8.3%,
  • Redundancy Fund – 1.2%,
  • Professional Training Fund – 0.5%,
  • Social Cohesion Fund – 2%,
  • Health Insurance Fund – 2.9%,
  • Holiday Fund – 8% (unless exemption applies).

Employees also pay contributions to the Social Insurance Fund – 8.3% and the Health Insurance Fund – 2.65%. There are limits on the sums of contributions. Rates and limits are updated periodically.

Transfer Tax

Transfers of immovable property are subject to transfer tax ranging from 3% to 8% of the market value of the property as estimated by the Land Registry department.

Foreign Exchange Control

There is no foreign exchange control in Cyprus.

ACCOUNTS

Annual Return

Each year the company registered in Cyprus must prepare and submit to the Registrar of Companies an Annual Return of the company containing the details of all shareholders, directors, registered office and share capital and any changes thereof. This information is available to public. In case of non-compliance, the Registrar of Companies may strike the company off the register.
The Annual Return must be completed within 42 days after the annual general meeting for the year, and the company must immediately forward to the Registrar of Companies a copy signed by a director or a secretary of the company. Attached to the Annual Return must be copies of all documents produced to the annual general meeting, and namely all accounts, director’s report and auditor’s report (all this information will be publicly available).

Financial Statements

In addition every Cyprus company must annually prepare and submit its audited accounts to the tax authorities. This requirement is obligatory irrespective of whether the company had any dealings or not. In the latter case, dormant audited accounts must be prepared.
The company must file the audited accounts with the Income Tax office within one year of the financial year-end. Failure to submit accounts, apart from government authorities’ sanctions against the company itself, entails severe sanctions against its directors. In particular, for failure to submit director’s report and accounts directors are liable to a fine of up to EUR 17,100 and/or one-year imprisonment.

Tax Returns

The tax period is a calendar year. Tax returns are completed based on audited financial statements.
Companies must file tax returns electronically and pay corporation tax in three stages – provisional payments by 31 July and 31 December of the current year and the balance by 1 August of the following

REGULATED COMPANIES AND TRUSTS

Shipping Companies and Yacht Registration

Maritime activities in Cyprus are governed by the Merchant Shipping Law which is based on the corresponding UK legislation. A non-resident may register a ship under the Cypriot flag by forming a private limited liability company under the provisions of the Cyprus Companies Law and by transferring the ownership of the ship to this Cyprus company. The authority dealing with ship registrations is the Department of Merchant Shipping of the Ministry of Communications and Works. The Cyprus Merchant Shipping Law makes no distinction between ‘ships’ and ‘pleasure crafts’ in terms of registration requirements.

Cypriot merchant shipping legislation allows for the provisional registration of a vessel and most owners usually choose to have their ship provisionally registered first. This will allow them time (up to 9 months, including a 3 month extension) during which they will be able to complete the administrative formalities for permanent registration. In order to obtain a provisional registration certificate, relevant application is submitted to the Ministry of Communications and Works through the Registrar of Ships. The application must be accompanied by the following documents, in original and bearing the apostille and/or notarized:
  • Company set of documents in original (including certificates and memorandum and articles of association);
  • Appointment of authorized representative (a local lawyer) and power of attorney authorizing the person to sign all applications;
  • Certificate of Seaworthiness issued by a recognized surveyor;
  • Bill of Sale (or builder’s certificate if the boat is new);
  • Deletion of Certificate from the previous registry (if applicable);
  • Director’s Resolution on purchase and registration under the Cyprus flag;
  • Declaration of Ownership;
  • Declaration of Conformity;
  • EC Type Examination Certificate;
  • Owner’s Manual.

The owner of the vessel is expected to ensure that the ship does not leave the port where she is lying unless she has been duly surveyed and certificated by her classification society on behalf of the Cypriot government.

The permanent registration under the Cyprus flag must be completed within 9 months after the provisional registration. It is not necessary for the vessel to be present in a Cyprus port. Certain additional documents have to be submitted to the Registrar of Ships in Cyprus for this purpose, and namely, Certificate of Survey and Cyprus Tonnage Certificate. After receipt of all the documents as required by the Registrar of the Cyprus Ships, they will proceed with the permanent registration of the vessel and the issue of the certificate of Cyprus Registry.

One more type of registration available in Cyprus is parallel registration. Cyprus law provides for the two forms of it:
  • ‘Parallel in’ registration allows a foreign flag vessel on bareboat charter to be registered in ‘parallel’ under the Cyprus flag for a period of up to 2 years, which is renewable.
  • ‘Parallel out’ registration allows a Cyprus flag ship to be bareboat chartered to a foreign person or company and registered ‘parallel’ in a foreign register for the duration of the charterparty.

As regards taxation, until the end of 2020 no tax is payable on income derived by the Cyprus ship owner from the operation of such ship (with the exemption of any fishing enterprises using Cyprus as their base) or on dividends paid to the shareholders out of profits made from the operation of a Cyprus ship.

Insurance Companies

Cyprus insurance undertakings are regulated by the Insurance Companies Control Service, represented by the Superintendent of Insurance, and governed by the Insurance Services and other Related Issues Laws of 2002-2011 and the Insurance Services and other Related Issues Regulations of 2002-2009. Any insurance company must first be registered as an international insurance company with the Registrar of Companies and then apply for the required licence to the Superintendent of Insurance. In order to be granted the licence, the company must submit the following documents and meet the following conditions:
  • The company must submit an application on the prescribed form, together with the relevant application fee;
  • The company must submit its memorandum and articles of association certified by the Registrar of Companies;
  • The company must have a paid-up share capital of at least:

EUR 683,441 for general (non-life) business
EUR 1,025,161 for life business
EUR 1,708,601 for reinsurance;
  • The company must have an adequate minimum guarantee fund of at least:

EUR 2,500,000 for general (non-life) business, classes 1 to 9 or 16 to 18
EUR 3,500,000 for general (non-life) business, classes 10 to 15
EUR 3,500,000 for life business and reinsurance undertakings
EUR 1,000,000 for captive reinsurance undertakings;

These figures are subject to annual adjustment due to changes in the European index of consumer prices published by Eurostat;
  • The company must submit an initial balance sheet in the appropriate form, with confirmation by the company’s auditors of availability of the minimum guarantee fund and the share capital;
  • The company must submit a written declaration of the date chosen as the accounting reference date;
  • The company must submit a three-year business plan detailing the nature of the risks, the guiding principles concerning reinsurance, the assets making up the minimum guarantee fund, details of set-up costs and projected profit and loss accounts and balance sheets, in order to demonstrate that the company has adequate financial and human resources;
  • The company must submit details of all directors and managers (including academic qualifications, certificates of clean criminal record and non-bankruptcy) who must be fit and proper persons. All executive directors and managers must be resident in Cyprus, unless the Superintendent of Insurance grants an exemption;
  • The company must submit details of all major shareholders (natural or legal persons who have direct or indirect qualifying holdings) who must be fit and proper persons;
  • The company must have provided a guarantee that it will conduct its business in accordance with sound insurance principles, in a manner that will both safeguard policyholders’ interests and not come into conflict with moral or public order issues;
  • The name of the company must comply with Insurance Law and the Companies Law. In particular, it may not be similar to the name of an existing company so as to risk causing confusion;
  • The company maintains its central administration and registered office in Cyprus;
  • The company must have arranged adequate reinsurance.

It is also possible to set up a captive insurance company – a company that is operated by a non-insurance parent in order to provide insurance cover for companies within a multinational group.

Investment Firms

The provision of investment services in Cyprus is governed by Investment Services and Activities and Regulated Markets Law of 2007 which sets out the procedure for registration and regulation of Cyprus Investment Firms (CIF). To provide investment services to public, a CIF must obtain a licence (authorisation) from the Cyprus Securities and Exchange Commission (CySec).

Investment Services and Activities
Investment services and activities include the following:
• Reception and transmission of orders in relation to one or more financial instruments;
• Execution of orders on behalf of clients;
• Dealing on own account;
• Portfolio management;
• Investment advice;
• Underwriting and/or placing of financial instruments on a firm commitment basis;
• Placing of financial instruments without a firm commitment basis;
• Operation of Multilateral Trading Facilities.

In addition, the following regulated ancillary services can be rendered:
• Safekeeping and administration of financial instruments for the account of clients, including safe custody services;
• Granting credits or loans to an investor for transaction purposes;
• Advice on capital structure, industrial strategy and related matters;
• Foreign exchange services;
• Investments research and financial analysis;
• Services related to underwriting.

Initial Capital
The initial capital of the CIF depends of the range of services it proposes to render:

A CIF that provides the following investment services and holds clients’ money or/and financial instruments must have an initial capital of at least EUR 200,000:
• Reception and transmission of orders;
• Execution of orders on behalf of clients;
• Portfolio management;
• Investment advice.

A CIF that provides the investment services of reception and transmission of orders and investment advice and does not hold clients’ money or/and financial instruments(and, consequently, may not place themselves in debt with their clients) may have an initial capital of at least EUR 80,000 or EUR 40,000 plus professional indemnity insurance covering all Member States or some other comparable guarantee against liability from professional negligence with an insurance undertaking, representing an amount of at least EUR 1,000,000 per claim, and in aggregate at least EUR 1,500,000 per year for all claims.

A CIF that provides the following investment services or/and performs the following investment activities must have an initial capital of at least EUR 1,000,000:
• Dealing on own account;
• Underwriting and/or placing of financial instruments on a firm commitment basis;
• Placing of financial instruments without a firm commitment basis;
• Operation of Multilateral Trading Facility.

Licence Requirements and Conditions
In order to be granted the license (authorisation), the CIF must meet the following conditions set out in the relevant law and CySEC directives:

Adequate capital
The CIF must have (and maintain at all times in the future) the minimum required issued and fully paid-up share capital depending on its core activities; at the final stage of the applications assessment by CySEC it shall request that the entire initial capital be blocked until authorization is granted.

Suitable shareholders
The shareholders holding voting shares or otherwise exercising influence over the management and business strategies must be sufficiently experienced to ensure sound and prudent management of the company.

Suitable persons who effectively direct the business
The management of a CIF must be undertaken by at least two persons (four eyes principle) who should be of sufficiently good repute and sufficiently experienced as to ensure the sound and prudent management of the CIF. The Board of Directors shall consist of at least two executive Directors and two independent non-executive Directors. The majority of the Directors shall be residents of Cyprus. The managing director is usually responsible for the day to day operations of the company, administering and applying the decisions of the Board and acts as one of the persons who effectively direct the business of the company.

Head offices in Cyprus
A CIF’s head office must be situated in the Republic and shall be fully staffed.

Suitable staff
Employees must be of sufficiently good repute and have the necessary skills, knowledge and expertise for performing their assigned responsibilities.

Member of the Investor Compensation Fund
A CIF must be a member of the Investment Compensation Fund for Clients of Investment Funds.

Adequate organizational procedures
The CIF must comply with various organisational requirements:
• establish adequate policies and procedures in order to ensure that it complies with its obligations under the Law and relevant directives by maintaining an independent compliance unit;
• maintain effective organizational and administrative procedures to protect clients from any conflicts of interest;
• ensure continuity of services and activities;
• take necessary actions to minimize operational risks by establishing a risk management unit to implement and adopt policies for risk management;
• have proper corporate governance in place with well defined lines of responsibility etc.

Trusts

The International Trusts Law was first enacted in Cyprus in 1992 and was substantially amended in 2012.

Definition
Under the law of 1992, both beneficiaries and settlor should have been non-residents (to prevent tax avoidance by Cyprus residents). But since this limitation also created a high level of uncertainty for non-resident settlors/beneficiaries who wished to relocate to Cyprus, the definition was narrowed to say that they should be non-residents during the calendar year immediately preceding the creation of the trust, allowing now the non-resident settlor/beneficiary to relocate to Cyprus after the establishment of the International Trust. At least one of the trustees must be resident in the Republic of Cyprus during the whole duration of the trust.

Registration
It is expressly provided that an international trust is exempt from any obligation for registration. However, the trust deed (or any instrument creating the trust) is subject to stamp duty of EUR 427, but the tax authorities do not retain the copy of the document.

Duration
Under the law of 1992, a trust could only exist for a period of 100 years whereas charitable trusts and non-charitable purpose trusts were allowed to exist in perpetuity. The new Law states that there is no longer any limit on the period for which a trust continues to be valid and enforceable and that no rule against perpetuities or remoteness of vesting or any analogous rule applies to a trust. Therefore, an International Trust can now exist indefinitely.

Governing Law and Validity
The new Law makes clear that any ambiguity or uncertainty arising in relation to the validity of a Cyprus International Trust shall be determined in accordance in with the Laws of the Republic of Cyprus without reference to any foreign law. It specifically states that the inheritance laws in force in Cyprus or in any other jurisdiction will not affect in any way the transfer or disposition or validity of any international trust offering further protection in relation to asset protection concerns. A Cyprus International Trust will not be considered void, voidable or liable to be set aside by reason that the applicable laws of another jurisdiction prohibit or do not recognize the concept of a trust or because the law in another jurisdiction invalidated or eliminated the rights, claims, interests, obligations or liabilities conferred or imposed on any person by reason of a personal relationship to a settlor or any beneficiary or by way of a right to inheritance. An international trust shall not be void or voidable in the event of the settlor’s bankruptcy or liquidation or in any action or proceedings against the settlor or at the suit of his creditors notwithstanding any provision of the law of Cyprus or any other country. An International Trust may be set aside by the settlor’s creditors to the extent that is proven to the satisfaction of the Cyprus Court that the International Trust was made by the settlor with the intent to defraud the creditors. The onus of proof of this intent shall be on the creditors, and they must claim within two years.

Reserved Powers of the Settlor
Under the new Law, the settlor is entitled to reserve any right, power or interest in the trust property without this affecting the validity of the trust. The settlor has now the right to: revoke or amend the terms of a trust; advance, distribute, pay or otherwise apply income or capital of the trust property or to give directions regarding these matters; act as a director or an officer or to give directions as to the appointment or removal of directors or officers; issue binding directions to the trustee in relation to the purchase, retention, sale, management, lending, pledging or charging of the trust property; appoint or remove any trustee, enforcer, protector, beneficiary, investment manager or investment adviser; change the proper law of the trust or the forum of administration of the trust; and limit the powers or discretion of any trustee by requiring that they are only exercised with the consent of the settlor.

Confidentiality
Confidentiality is of paramount importance. No one is obliged or allowed to disclose to anybody any information or documents in connection with settlor, beneficiaries, trustees and their duties or accounts or property of the trust. However, a beneficiary is entitled to request from the trustees information about the accounts of the trust. Furthermore, the court may order the disclosure of information or documents in criminal or civil proceedings cases, where the disclosure is material for the outcome of the proceedings.

Taxation and Reporting
Under the previous law, International Trusts have enjoyed a favorable and beneficial tax treatment, a treatment that has been safeguarded and promoted by the new Law as well. The new law implements a uniform taxation system which will apply on all beneficiaries. A beneficiary who is a Cyprus tax resident will be subject to every form of taxation imposed in Cyprus, whereas a beneficiary who is not a Cyprus tax resident will be subject to taxation on the income and profits earned in Cyprus. Thus, a Cyprus international trust will be exempted from taxation where the beneficiaries are not tax-resident in Cyprus and where there is no income from Cyprus sources. There are no reporting requirements in Cyprus for the International Trusts.

International law relations

Двигайте таблицу
Party to the Hague Convention (Apostille) Legal system Double tax treaties network OECD member Offshore/onshore status according to the RF laws
Yes based on English common law, with civil law modifications 61 No No

Public authorities and legal acts

Двигайте таблицу
List of laws and regulations
Act name Scope of law
Banking Business (Temporary Restrictions) Law 1939 banking licences
Banking Law 1997 secrecy, confidentiality, offshore banking
Central Bank of Cyprus Law 1975 secrecy
Companies Law Cap. 113 establishment, operation and winding up of companies
Cyprus Trustee Law Cap. 193 regulation of trustees
Income Tax Law No. 118(I) 2002 personal and corporate tax
International Collective Investment Schemes Law 1999 international collective investment schemes
International Trusts (Amending) Law 2012 international trusts
Investment Services and Activities and Regulated Markets Law / Investment Firms Law investment business
Partnership and Business Names Law Cap. 116 names of legal entities
Tax treaties entered Armenia, Austria, Bahrain, Barbados, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Canada, China, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Guernsey, Greece, Hungary, Iceland, India, Iran, Ireland, Italy, Jersey, Kuwait, Latvia, Lebanon, Lithuania, Luxembourg, Malta, Mauritius, Moldova, Montenegro, Norway, Poland, Portugal, Qatar, Romania, Russia, San Marino, Serbia, Seychelles, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Syria, Tajikistan, Thailand, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, USA
List of state regulatory authorities
Cyprus Government http://www.cyprus.gov.cy/portal/portal.nsf/citizen_en?OpenForm&access=0&SectionId=citizen&CategoryId=none&SelectionId=home&print=0&lang=en
Cyprus Tourism Organisation http://www.visitcyprus.com/wps/portal
Cyprus Government Gazette http://www.cygazette.com/Gazette.dll/%7B2F91525A-9EF2-4E10-816D-7A272D7B1556%7D
Supreme Court of Cyprus http://www.supremecourt.gov.cy/judicial/sc.nsf/DMLScourt_en/DMLScourt_en?opendocument
Central Bank of Cyprus https://www.centralbank.cy/el//home
Ministry of Justice and Public Order http://www.mjpo.gov.cy/mjpo/mjpo.nsf/index_en/index_en
Department of the Registrar of Companies and Official Receiver of the Ministry of Commerce, Industry and Tourism http://www.mcit.gov.cy/mcit/drcor/drcor.nsf/index_en/index_en
Inland Revenue Department of the Ministry of Finance http://www.mof.gov.cy/mof/taxdep.nsf/index_en/index_en?OpenDocument
Department of Customs and Excise of the Ministry of Finance http://www.mof.gov.cy/mof/customs/customs.nsf/index_en/index_en
Cyprus Securities and Exchange Commission http://www.cysec.gov.cy/en-GB/home/
Department of Merchant Shipping of the Ministry of Communications and Works http://www.mcw.gov.cy/mcw/dms/dms.nsf/index_en/index_en
Cyprus Bar Association http://www.cyprusbarassociation.org/v1/index.php/en/
Unit for Combating Money Laundering (MOKAS) at the Attorney General’s Office http://www.law.gov.cy/law/mokas/mokas.nsf/index_en/index_en
Cyprus Branch of the Society of Trust and Estate Practitioners (STEP) http://www.step.org/branches/step-cyprus
Insurance Companies Control Service http://mof.gov.cy/en/publications/1-insurance-companies-control-service
Insurance Association of Cyprus http://www.iac.org.cy/

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