Cyprus company formation

A Cyprus company may take the form of either a private company or a public company. Every company is required to have a company secretary and a registered office address in Cyprus, which may also be used as the business address of the company. Every Cypriot company is required to maintain proper books of account, prepare audited financial statements and submit an annual corporate income tax return. Specialist uses of Cyprus companies include:

Holding companies

Cyprus serves as an effective gateway to the EU, receiving dividends free of withholding tax and paying dividends to shareholders without deduction of withholding tax. Cyprus also has some particularly advantageous tax treaties.

Finance and treasury companies

A Cyprus company can receive interest on loans to EU group companies with no withholding tax and can pay interest without deduction of withholding tax. Cyprus companies trading in securities (e.g. shares, bonds, repos) have no tax liability because income and gains on disposal of such securities are exempt from tax.

Ship owning and management companies

Cyprus operates an ‘Open Registry’ regime with a Tonnage Tax System (TTS), which covers ship owning, ship management (crew and technical management) and chartering. There is no tax on shipping profits, dividends paid from shipping profits, estate duty or capital gains tax and no stamp duties on documents or mortgage deeds. There is also no income tax for seafarers on Cyprus-flagged ships.

Oil and gas exploration and extraction companies

Combined with Cyprus’ permanent establishment exemption, exploration and extraction activity can be undertaken free of Cypriot tax.

Private Company

The private company is the most common business vehicle in Cyprus. A private company must have at least one shareholder and cannot have more than 50 members. It also only requires a minimum of one director to be appointed, and does not limit the maximum number of directors. The transfer of shares must be restricted.

Public Company

A public company must have at least seven shareholders. The shares are freely transferable and available to public subscription. A public limited company requires at least two directors and must also register its memorandum and articles of association with the Cyprus Registrar of Companies.

Overseas Companies

Establishing a presence in Cyprus can be effected through a subsidiary or a branch of an overseas company. Both procedures are cost and time-effective.

The differences between a branch and a subsidiary are that a branch office must have the same name as that of its parent company, and acts as an extension to the head office. A branch does not acquire a separate legal personality and therefore the liability for all activities undertaken fall on the parent company.

Partnerships

Partnerships are regulated by the Partnerships and Business Names Law (Cap. 116). A general partnership is one in which all partners are general partners and have unrestricted liability for all the obligations of the partnership. A limited partnership is one in which at least one partner is treated as a general partner and has unrestricted liability for all the partnership obligations, with the other partners having limited liability up to the amount contributed (or remaining unpaid) by them to the partnership. Since the introduction of Amending Law 144(I)/2015, a limited liability partnership (LLP) can also be established.