Company formation in Cyprus

Before deciding to set up a new company in Cyprus, read the information below to understand the characteristics of a Limited Liability Company (LLC):

Shareholders: the company is required to have a minimum of 1 shareholder and maximum 50 shareholders (in a Cyprus company with one shareholder, the director and company secretary can be one person; If there are two or more shareholders, the company secretary and director must be different people). There are no restrictions on the nationality of the shareholders.

Director: there must be at least 1 director.

Company secretary: the company must have 1 secretary.

Minimum share capital: there is no minimum share capital requirement.

Legal address: the company must have a registered office address in Cyprus.

Liability: the company has limited liability only with its share capital.

Accounting: each company incorporated in Cyprus is required to prepare annual financial statements and be audited by an independent certified auditor. A company in Cyprus must submit its audited accounts and annual return within 18 months from the date of incorporation to the RCOR. Afterwards they must be filed annually. The audited accounts are also filed with the Income Tax Department.

• A company which is a tax resident of Cyprus is subject to tax on income arising or accruing from sources both within and outside Cyprus.
• A non-Cyprus tax resident company is taxable only on income accrued or arising from sources within Cyprus.
• The basic CIT rate is 12,5%.
• Tax exemptions:
• profits from sale of securities
• capital gains from the sale of IP assets
• interest income not accruing from or not closely connected with the ordinary activities of the business
• profits of a permanent establishment abroad
• income from dividends
• forex gains (other than FOREX gains arising from trade and related derivatives)

• An individual who is tax resident in Cyprus is taxed on income accruing or arising from sources both within and outside Cyprus.
• The individual who is not a tax resident in Cyprus is only taxed on income accruing or arising from sources within Cyprus.
• PIT rates are as follows:
• €0 to €19,500 - 0%
• €19,501 to €28,000 - 20%
• €28,001 to €36,300 - 25%
• €36,301 to €60,000 - 30%
• €60,000+ - 35%

• The standard rate is 19%.
• The reduced rates are:

• 9% (all restaurant and catering services; accommodation in hotels, tourist lodgements; transportation of passengers and their accompanying luggage within the Cyprus using urban; movement of passengers in inland waters and their accompanying luggage; provision of services and supply of goods by nursing homes, which are not exempt transactions and so on)
• 5% (the supply of foodstuff; the supply of pharmaceutical products and vaccines that are used for health care, prevention of illnesses and as treatment for medical or veterinary purposes; entry fees to circus, festivals, etc; entry fees at sports events and fees for using athletic centers and so on)
• 3% (books, newspapers, and periodicals; audiobooks for disabled persons; splints, supports, and other fracture items and devices; certain prosthetic items; street cleaning, refuse collection, and waste treatment services, other than the supply of such services by public authorities, local authorities, and bodies governed by public law and so on)
• 0% (the exportation of goods; supply, modification, repair, maintenance, chartering and hiring of sea-going vessels, which are used for navigation on the high seas and carrying passengers for reward or used for the purpose of commercial, industrial, or other activities; transportation of passengers from the Cyprus to a place outside the Cyprus and vice versa using a seagoing vessel or aircraft; supplies of gold to the Central Bank of the Cyprus and so on)
• Exemptions: rental of immovable property for residential purposes; financial services (with certain exceptions); hospital and medical caring services and so on.
• Every individual or company is required to register as VAT payer, if at the end of any month the value of taxable supplies recorded in the last 12 months exceeds €15,600 or at any point in time the value of taxable supplies is expected to exceed €15,600 in the next 30 days.

Double taxation avoidance agreements in Cyprus: Andorra, Armenia, Austria, Azerbaijan, Barbados, Belarus, Belgium, Bosnia, Bulgaria, Canada, China, Czech Republic, Croatia, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Iran, Ireland, Italy, Jersey, Jordan, Kazakhstan, Kingdom of Bahrain, Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, Luxembourg, Malta, Mauritius, Moldova, Montenegro, Netherlands, Norway, Poland, Portugal, Qatar, Romania, Russia, San Marino, Saudi Arabia, Serbia, Seychelles, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Swiss Confederation, Syria, Thailand, The States of Guernsey, Ukraine, United Arab Emirates, United Kingdom, USA, Uzbekistan.