When planning to establish an EU Company, common question is - what advantages you get by choosing Cyprus Private Limited Company.
Cyprus, being a part of EU, since 2004, is a stable jurisdiction with a great reputation. Cyprus is also known as International Financial Centre, which is one of the most popular choices for tax planning. Cyprus is very attractive with the fact that while it is EU company, it can enjoy one of the lowest tax rates in Europe.
The Republic of Cyprus occupies the southern part of the island of Cyprus in the Eastern Mediterranean Sea, with cross roads to Europe, Asia and Africa. It covers 9251 sq.km and it is the third largest and the most populous island in the Mediterranean.
Cyprus is well known for its beautiful beaches and sunshine for over 300 days a year. According to the Greek mythology, Aphrodite was born in Cyprus, hence the island is called the island of love and beauty.
Biggest cities in Cyprus are Nicosia, Limassol, Larnaca and Famagusta. The population of Cyprus was estimated at 940.100 at the end of 2015, compared with previous year an increase of 0,2 % was recorded. With 74,5% Greek Cypriot community, 9,8% Turkish Cypriot community and 15,7% foreign residents.
Officially recognized languages in Cyprus are Greek and Turkish. Practically English and Russian languages are also widely used and spoken by most of population.
Cyprus is a common law jurisdiction, as fundamental principle of precedent applies, but Cyprus law is also extensively codified. The law of Cyprus is a legal system which applies within the Republic of Cyprus. Cyprus has a two-tier Court system, meaning that between the first instance courts and the Supreme Court there is no intermediate judicial remedies. The first tier is constituted by the District Court as the Court of first instance for civil matters and the Criminal Court, as the Court of first instance for criminal matters. The second tier is the Supreme Court, where all appeals are heard and this is often referred to as Appellate Court.
GENERAL Type of Entity Cyprus Private Limited Company Legal System Common Law Primary Corporate Legislation Cyprus Companies Law, Cap.113 Shelf Companies Permitted Yes Company Formation Time 5 – 7 working days Minimum Mandatory Government Fees EUR 350 Corporate Taxes 12.5% Double taxation treaty availability Yes
Default Currency Euro Alternative currencies permitted Any Minimum paid up capital requirement No Standard authorized capital EUR 1000
Mandatory minimum number of directors One Domicile Anywhere Corporate directors Permitted Records of directors publicly available Yes Meeting location requirements Anywhere (Cyprus advisable for purposes of tax residency)
Mandatory minimum number of shareholders One Shareholder information on public record Yes Nationality Restrictions None Meeting location requirements Anywhere (Cyprus advisable for purposes of tax residency)
Required Yes Local or qualified No (Cyprus advisable for residency and compliance)
ACCOUNTS AND BOOKKEEPING
Must prepare and maintain Yes Audit requirements Yes Local Auditor Yes Account filing requirements Yes Public record of company accounts No
Re-domiciliation to or from jurisdiction allowed Yes Mandatory filing of annual return Yes
Cyprus Private Limited Company
Cyprus Private Limited Company is the most commonly used type of a vehicle in Cyprus. Cyprus Private Limited Company has two main characteristics – it is a separate legal personality, and member liability is limited up to the amount of his/her subscribed shares.
Main characteristics of Cyprus Private Limited Company are:
- Company name must always end with "Limited" or "Ltd".
- Minimum number of shareholders is 1 and must not exceed 50;
- Minimum number of directors is 1;
- Mandatory secretary requirement;
- One man companies are possible (where one natural or legal body fills all three above positions);
- Public invitation to buy shares is not allowed
- Company must have its Registered Office;
- Locally authorized auditor must be appointed
- Each year company must prepare a Balance Sheet and Profit and Loss Accounts. Authorized accountant, qualified to practice the profession in Cyprus must be appointed and copies must to be filed with the Department of Inland Revenue.
- Annual return must be filed with the Registrar of Companies, containing details of share capital, register of members, register of directors, details of secretary and registered office. It must be accompanied by the Company`s audited accounts for the same year.
- Any changes in company structure (increase of share capital, new issue of shares, changes to the Company`s officers and changes in the Company`s assets must be filed and registered with the Registrar of Companies as well).
Cyprus Private Limited Company
Tax residency in Cyprus is based on the mind and management concept, and all tax resident companies are taxed on all their income and derived from all sources in Cyprus and form abroad. Cyprus company that is not considered tax resident, is taxed only on certain income that arises from sources from within Cyprus.
Standard Corporate income tax (CIT) rate in Cyprus is 12,5%, with CIT law provisions for exemptions and deductions the rate can be reduced even lower.
CIT law in Cyprus provides for exemptions for several types of income:
- profit from sale of securities,
- dividends form other Cyprus company or form abroad in most cases are exempt,
- interest arising not form ordinary activity of company (e.g., bank deposit interest),
- profit form permanent establishment abroad,
- capital gains related to foreign exchange (with the exception of forex arising from trading in foreign currencies and related derivatives)
There is no withholding tax (WHT) on dividends, interests and royalties (in most cases), paid to Cyprus non-resident shareholders.
Companies are regulated under The Cyprus Company Law, Chapter 113, as amended 2011
Other relevant laws:
- The Cyprus Income Tax Law of 2002 (L.118(1)/2002), as amended;
- The Special Contribution for the Defence of the Republic Law of 2002 (L.117(I)/2002), as amended;
- The Assessment and Collection of Taxes Law of 1978 (L.4/1978), as amended;
- The Stamp Duty Law of 1963 (L.19/1963), as amended;
- The Capital Gains Tax Law of 1980 (L.52/1980), as amended;
- The Immovable Property Tax Law of 1980 (L.24/1980), as amended;
- The Social Insurance Law of 2010 (L.59(I)/2010), as amended.
Main reasons to choose Cyprus:
- Cyprus is a Member State of the European Union and is an International Financial Centre that offers one of the most attractive legal and tax system in the European Union and globally
- Legal system is very stable, and the companies’ law is based on the English Companies Act of 1948
- Cyprus has concluded a wide list of double taxation treaties (DTTs)
- Cyprus offers simple and straightforward process to register Cyprus Private Limited Company
- Bank account for Cyprus Private Limited Company can be opened very quickly and efficiently
- Cyprus offers the ability to register for VAT