Doing business in Cyprus
- How quickly can I set up a business?
- What is the minimum investment needed?
- How can I raise finance?
- What are the legal requirements for setting up my business?
- What structure should I consider?
- What advice can you give me in regards to payroll and taxation requirements?
- Is there anything else that I should know?
How quickly can I set up a business?
On average it takes 10 working days to set up a private limited company in Cyprus, which is really the main option for a company type in the country.
If an investor seeks to set up a regulated entity under the Cyprus Securities and Exchange Commission, under the Central Bank of Cyprus, or under any other regulator (such as the insurance regulator), then the timeframe varies depending on the type of license they seek to obtain.
What is the minimum investment needed?
There is no minimum investment as a requirement for private limited companies and it really depends on the scale of the project.
For a regulated entity, the minimum capital requirements are determined based on the license they seek to obtain.
How can I raise finance?
Other than the company’s equity participants, you can raise finance through traditional banking. However, in recent years Cyprus has seen increasing expansion of alternative financing either through its fund industry or through its fintech industry and this is something that we believe will dominate in the foreseeable future.
What are the legal requirements for setting up my business?
To set up in Cyprus you need to approach a professional services firm registered with a local institute with a license to practise. The firm will guide you from A to Z as to the procedure, requirements, and cost of setting up.
The set-up of a company requires that the management and control – i.e., decision making – is conducted in Cyprus.
This implies that the majority of the members of the Board of Directors are Cyprus tax residents, have the relevant experience and capacity to act on behalf of the company and also the need to prove real substance in Cyprus with a local presence (office space, potentially payroll, website, telephone line).
Once the substance is determined, the service provider will prepare all relevant documentation to be submitted to the Registrar of Companies in Cyprus. This includes the proposed Director(s), company’s secretary, registered office and also the memorandum and articles of association of the company. The articles should define the activities of the company and also the rights and obligations of the shareholder(s).
What structure should I consider?
The main option as a structure is that of a private limited company as defined by the Company Act of Cyprus which implies that any liability is limited to the level of the company and in rare circumstances it reaches its shareholder(s).
In case someone seeks to set up a regulated entity there are various structures to consider depending on the type of license they seek to obtain but this should be determined following the advice of their local service provider.
What advice can you give me in regards to payroll and taxation requirements?
The main to-do business locations in Cyprus are Nicosia (being the capital and the decision-taking city) and also Limassol.
• Registration of an employer/employee is supervised and regulated under the Ministry of Labour, Welfare and Social Insurance.
• Depending on the citizenship of the employee, relevant immigration rules apply and these are provided and regulated by the Ministry of Interior, always in compliance with the European Union labour laws.
• The employers are obliged to contribute to the social insurance fund, social cohesion fund, redundancy fund, the industrial training fund and the national healthcare system whereas the employees are obliged to contribute to the social insurance fund and the national healthcare system.
• The corporation tax rate is 12.5% on taxable income.
• There are numerous incentives that can reduce the corporation tax rate such as for example the Intellectual Property R&D tax credit and the Notional Interest Deduction on new capital introduced in the company or even the exemption from tax of sale of titles.
• There are also various incentives on an individual level such as no withholding tax on dividends for non-Cyprus tax residents, Cyprus tax residency status under the 183-days or the 60-days rule and the non-dom status whereby the individual is exempt from tax on dividend and interest income.
Is there anything else that I should know?
Cyprus, being a full member of the European Union, is an established business hub and a popular tourist destination and benefits greatly from its strategic geographical position in the Eastern Mediterranean as it is a crossroad of three continental zones acting as a vital gateway to Europe, the Middle East, Africa, and Asia.
Cyprus has one of the most attractive tax regimes. In addition to being fully compliant with EU and international regulations, the tax system in Cyprus attributes its worldwide recognition to its large network of double tax treaties with a total of 65 countries. Furthermore, Cyprus adheres to all OECD standards, which the international community believes promotes the most beneficial practice.
In recent years Cyprus has seen an increasing interest as an ideal home for relocating their businesses, as well as setting up new business, as it provides an ideal destination for professionals and families to live and work due to the all-year-round sunshine, its beautiful beaches, its welcoming people and the ease of doing business.
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