The Mediterranean Sea island nation of Cyprus has long been a preferred investment location due to its strategic position, advantageous tax regulations, and comprehensive asset protection rules.
However, while launching a firm, investors often have to choose the company’s organizational structure. The Cyprus Limited Company is one of the most widely used corporate structures for entrepreneurs. This organizational entity has various perks like tax benefits, shareholder’s limited liability, ease of incorporation, and high degrees of confidentiality.
This guide will cover the step-by-step procedure to incorporate a limited company in Cyprus. Further, it will go through the benefits, eligibility requirements, and post-registration requirements of a limited company in Cyprus.
Various Forms of Limited Companies in Cyprus
The following are the various forms of Cyprus limited companies that can be incorporated by individuals:
Private Limited Company (Ltd)
A private limited company is the most common form of corporate entity in Cyprus. A private limited corporation may have up to 50 stockholders, and each shareholder’s responsibility is only up to the value of their investment in the organization. A private corporation has the benefit of safeguarding individual possessions by limiting the owners’ responsibility to their ownership interests.
Public Limited Company (PLC)
A public limited company is a business whose stocks can be traded on a stock market and may be sold to the general public. There is no cap on the number of stockholders, and each stockholder is individually liable for the amount of their investment.
Besides these two primary forms of limited corporations, there are more structures, like the following:
Company Limited by Guarantee without Share Capital
Company Limited by Guarantee with Share Capital
Procedure to Register a Cyprus Limited Company
A private limited company (LTD) is the most typical and well-liked business structure in Cyprus, although a public limited company (PLC) can be incorporated in Cyprus.
The following steps must be taken in order to create a limited company in Cyprus:
1. Approval of the Business Name
You must choose a unique name for the business and make sure it’s available. The suggested name must adhere to the standards established by the Cyprus Registrar of Companies.
2. Gather the documents
Gather all the paperwork needed for registering a limited company in Cyprus including the memorandum and article of association, and business registration form. These documents include information about the organization’s rules, goals, and share capital.
3. Submit the documents
Documents for the business should be notarized before being submitted to the Registrar of Companies, together with the required paperwork and payments.
4. Create a Bank Account
Open a bank account and deposit the required capital for opening a limited company in Cyprus.
5. Acquire the Certificate of Incorporation
You will receive a Certificate of Incorporation after the paperwork has been examined and accepted, proving that your business has been legitimately registered and established in Cyprus.
6. Register for tax
Register your business with the Cyprus Tax Department for taxation reasons. This entails acquiring a Tax Identification Number (TIN) and, if necessary, enrolling for VAT.
Paperwork necessary for a Cyprus Limited Company
To set up a limited company in Cyprus, you will have to prepare the documents stated below:
- Memorandum of Association: This document contains information about the firm, including its name, registered address, goals, share capital, and shareholders.
- Articles of Association: The internal policies and procedures regulating the business activities, as well as the duties and privileges of the directors and the stockholders, are outlined in the Articles of Association.
- Application Form HE1: This form contains information like the suggested business name, registered office address, directors’ and stockholders’ information, share capital, and other pertinent information.
- Evidence of registered address: Provide documentation, like a lease contract or electricity invoice, that demonstrates the organization’s official address.
- Power of Attorney (if required): You might be required to produce a power of attorney for someone who is going to be representing you to finish the application procedure on your par
- Other documents: Based on particular situations, other records, including bank references, can be needed.
Eligibility requirements for a limited company in Cyprus
Here are the criteria that must be fulfilled in order to set up a limited company in Cyprus:
- Business name: It is crucial to choose a name for your company that is both original and distinct from any already existing companies.
- Registered office address: A Cyprus Limited Company must have a registered office in Cyprus, where all formal paperwork will be delivered.
- Directors: Additionally, you must possess a minimum of one director, who may be either an individual or a legal entity.
- Shareholders: A minimum of one shareholder, who may be an individual or a legal organization, is necessary for a Cyprus Limited Company. The shareholder’s nationality is not subject to any restrictions.
- Company Secretary: It is necessary to designate a company secretary, who is obliged by law to reside in Cyprus.
Post-registration compliances of a limited company in Cyprus
A Cyprus Private Limited Company (LTD) must comply with a number of post-registration regulations after it is incorporated.
These comprise the following:
Accounting Documents
Make sure you have precise accounting documents, particularly a record of each transaction, receipt, and payment your business makes.
Annual Financial Records
Yearly financial reports should be prepared and filed in compliance with IFRS or another accepted accounting system. The report for the business must be created, comprising a balance sheet, an income statement, and a statement of cash flows.
Annual General Meeting
You must hold an annual general meeting (AGM) within 18 months of your organization’s formation as well as annually thereafter. Here, you convene with the stockholders of the business to make judgments regarding crucial issues like the endorsement of the financial accounts, the employment of auditors, and the nomination of the directors.
Tax Filing
Your business must submit annual tax returns to the Cyprus Tax Authority each year, disclosing the firm’s financial and other pertinent data, including the organization’s earnings, expenditures, and taxes owed.
Requirements For Auditing
Immediately after the company is incorporated, an auditor has to be appointed. The auditing firm’s financial statements must be examined, and an audit report must be given.
Alterations To The Company’s Information
You must notify the Cyprus Registrar of Companies of any modifications that your business develops, such as altering the registration office, replacing directors, or adding additional stockholders.
Vat Returns
If the business has been registered for VAT, make sure to submit regular VAT returns, pay any outstanding VAT debts, and file refund claims as soon as possible.
Registration time for Cyprus Limited Company
The amount of time needed to register a Cyprus Limited Company may differ based on a number of variables, like the application’s quality and accuracy, the amount of work of the necessary agencies, and any unique circumstances. Nevertheless, as a general rule, the procedure to register a Cyprus Limited Company usually takes between one and two weeks.
The average timeline is summarised as follows:
- Name Reservation: Selecting a distinctive name for your business can take about one to two working days. It might take a longer time, though, if the suggested name needs to be reviewed further or if any names are in contention.
- Document Preparation: The Memorandum and Articles of Association and the Application for the Incorporation of a Company (Form HE1) are among the documents that must be prepared after name reservation. The amount of time needed to prepare a document can change based on the unique needs you have.
- Review of the paperwork: The time it takes the authorities to examine and process documents is usually between 3 and 5 working days.
- Certificate of Incorporation: Following the conclusion of the review procedure, the Certificate of Incorporation is typically issued in 1 to 3 working days.
Benefits of Setting up a Cyprus Limited Company
A Cyprus Limited Company is a desirable alternative for business owners and entrepreneurs due to its many advantages.
Here are a few significant benefits:
Access to EU Market
Cyprus belongs to the European Union (EU), giving companies access to the over 500 million consumer market within the EU. This membership promotes trade and presents chances for the EU to grow and collaborate.
Stable Legal System
Cyprus has a solid and trustworthy legal system built on the ideas of English common law. Businesses have a strong legal foundation and protection for their activities and investments because of this openness.
Tax advantages
Cyprus has one of the lowest corporation tax rates in the EU, at 12.5%, making it a favorable tax environment for businesses. Furthermore, Cyprus has a vast network of double tax agreements, enabling withholding taxes on profits, interest, and royalties to be decreased or removed. Companies can improve their tax planning methods by operating in this tax-efficient atmosphere.
Limited liability protection
The responsibility of shareholders is constrained to the capital invested, as such private possessions are safeguarded in the event that the business experiences financial difficulties or is sued.
Common Purpose for Cyprus Limited Company
Many entrepreneurs and investors prefer a Cyprus limited company because of the nation’s many advantages, including low rates of taxation, an excellent location, and a stable political and financial climate.
A Cyprus limited corporation is frequently used for the following purposes:
- International trade: Typically, a Cyprus limited company is utilized for production, distribution, and trade-related activities including import and export. The nation is a part of the European Union, which gives trading enterprises access to thriving international economies.
- Safeguarding your assets: A limited company in Cyprus may be employed as a tool for safeguarding assets since it provides an exceptional degree of anonymity and secrecy, which can be crucial for organizations and people wishing to secure their assets.
- Investment vehicle: A Cyprus limited company may be employed as an investment vehicle by people or organizations wanting to make investments in a variety of assets, including securities, bonds, and residential properties. Limited liability, tax efficiency, and simple ownership transferability are a few advantages that the company form can offer.
Conclusion
A Cyprus Limited Company provides business owners and investors with a number of advantages, such as restricted liability, advantageous tax treatment, accessibility to the marketplace of the European Union, and a reliable legal framework. Additionally, such a business structure is easy to incorporate as it necessitates having a minimum of 1 director and 1 stockholder.
Contact our specialists at OnDemand International if you want to form a limited company in Cyprus. To ensure the smooth formation and management of your Cyprus Limited Company, our specialists can offer insightful guidance on compliance, tax planning, and other pertinent topics.
FAQ’s
Yes, non-Cyprus citizens can form a Cyprus Limited Company. In addition to that, the directors and stockholders of such a business can be of any nation.
In order to establish a limited company in Cyprus, you must first secure approval for the business name. Then, you must compile the required paperwork and submit it, along with the application form, to the Cyprus Registrar of Companies. You will obtain the incorporation certificate and your business will be founded once the Registrar accepts your request for incorporation.
Creating a Cyprus limited company has many advantages, such as tax reductions, limited liability protection, asset protection, and more.
- A Cyprus limited corporation must have at least one shareholder and one director.
- A Cyprus Limited Corporation must maintain a Cyprus-registered office.
Yes, Cyprus Limited Corporations are expected to keep accurate financial records and compile their yearly accounting records in compliance with IFRS.
