- Audit obligation: Yes
- Continent: Europe
- Disclosure of beneficial owners: No
- EU VAT ID available: Yes
- Local manager required: No
- Minimum paid-up capital: None
- Obligation to submit an annual report: Yes
- Tax system: Preferential tax
Cyprus tries to attract foreign investors by offering long-term low taxes and flexible company law regulations. The crisis in the Cypriot banking system has not affected these regulations, so the country continues to be one of the best jurisdictions for company registration.
The most commonly used type of company in Cyprus is the limited liability company . Limited liability companies must have equity of at least EUR 1,000, . The company is only required to have one Director, one company secretary and one shareholder. The Shareholder and Director can also be foreign persons, but it is expedient to hire domestic persons to act as the Director and the company secretary in order to maintain Cypriot tax residency. There are no restrictions on whether they should be legal entities or natural persons. The Cyprus Registrar of Companies keeps a record of the data of the Directors, the Company Secretary and the Shareholder and the Registered Address of the Company.. The company must have a local address, which qualifies as its official registered seat. The business is entitled to transfer its official address to another country at any time provided that the Memorandum and Articles of Association of the company allows such changes and that the new seat can provide the authorities with the acceptable documentation.
The 12.5% corporate tax rate offers a favorable tax environment for companies registered in Cyprus. Moreover, this tax rate is not the lowest in the EU, therefore Cyprus is not regarded as a jurisdiction for offshore company registration. In addition to corporate tax, companies are also required to pay a fixed amount of EUR 350 as duty every year payable to the Cyprus Registrar of Companies t. Also, several types of income are exempt from corporate tax by local regulations. One of the most important advantages of Cyprus is that the profit coming from the sale of securities is exempt from taxes provided that certain minor conditions are met. Securities are broadly defined since a business share (stake) and portfolio investment of financial instruments both belong to this category. The dividend paid out by Cypriot companies is also free from corporate tax provided that certain minor conditions are met . It is important to stress here that 80% of the royalty earned from intellectual property is free of tax provided that the conditions for the Intellectual Property Regime are satisfied. Dividend, royalty and interest payments paid by local companies to foreigners are fully exempt from withholding tax in Cyprus. In addition to all this, Cyprus is one of the countries which has signed the largest number of international Double Taxation Treaties, which provide additional opportunities for tax planning.
Companies are required to prepare Audited Annual Financial Statements to be submitted to the local tax authorities and the Cyprus Registrar of Companies .