How to start a business in Cyprus?
Investors coming from different nations often have many options when opening a business in Cyprus. It is one of the countries with the most attractive business environment in the EU thanks to the Cypriot residence by investment programs. Under the provisions of the programs, foreign investors are allowed to establish companies or businesses.
The sound business environment will help you live comfortably in Cyprus with an investment that guarantees permanent citizenship or residence. The 21st-century advancement in technology has made it quite easy for one to open a business since most processes have been automated. In this article, we are going to discuss the dynamics of how to start a business in Cyprus.
What are the benefits of opening a business in Cyprus?
Cyprus is located at the crossroads of Asia, Europe, and Africa in the Mediterranean sea.
After joining the EU back in 2004, significant advantages were offered to foreign investors in Cyprus, including the foreign ownership of businesses, increased demand on the property, and signing of treaties to protect the interests of foreign investors.
In order to avoid double taxation of investors, the Cypriot government signed double tax treaties with more than 40 nations.
Cyprus joined the Economic and Monetary Union (opens in a new tab) in 2008, and as a result, the country eliminated the exchange rate risks, and fiscal transparency rose to its place.
Cyprus offers its investors one of the lowest corporate tax rates in Europe, only 10%, which encourages more investors to open firms in the country.
The items below are also not taxable in Cyprus:
- Dividends and dividend income
- Profits from permanent establishments overseas
- The Cypriot government also implies no withholding taxes on interest, dividends, and royalties paid from Cyprus.
How to start a business in Cyprus
Opening business in Cyprus up a business is a pretty straightforward process.
The Cypriot government has been known to be very supportive of foreign investors to attract foreign capital by using a low red tape and an advantageous tax system.
It will not take you more than ten days to successfully complete the business registration process in Cyprus.
Entrepreneurs are advised to start a business from among those regulated by the Company Law, such as public limited companies, limited liability companies, or a company limited by guarantee as well as generally limited partnerships.
To set up a company in Cyprus, the investor must start by selecting a unique name and proposing it to the Registrar of Companies.
He must then deposit the memorandum of association, elaborated and notarized by a qualified lawyer, together with the specified documents into the Official Receiver and the Registrar of Companies at the Companies Section.
The ministry of taxation will provide you with a tax number and a VAT after registration. The final step involves registering your company in Cyprus with the Department of Registrar of Companies (opens in a new tab).
Types of companies to start in Cyprus
Foreign investors have the same choices for investment as Cypriot citizens. Though the most popular business type is limited liability companies, there are other types of businesses you can set up in Cyprus.
A sole proprietorship: Commonly used for small and single-investor enterprises.
A partnership: It is not often chosen, but it can be either limited or general.
An Unlimited partnership company: They are limited liability companies that are limited by guarantee.
Representative offices, branch offices, and subsidiaries are also available for foreign investor companies. Cyprian law firms usually offer guidance to investors who wish to start any of the above business types in Cyprus.
Steps in starting a business in Cyprus
The company law in Cyprus has stated several requirements that must be met by investors when starting a business in the country. Before the company can be registered, the investor is invited to choose the category of business they will be operating their company’s economic activities under.
Once the investor has completed this critical step, they must follow each of the following steps to open a company.
- Reserve a name for your company, which reflects the core activity of your business.
- Draft all the necessary documentation for the business, including the Articles and Memorandum of Association of the company.
- Open a corporate bank account in a local bank, which will hold the share capital.
- Appoint the director and secretary for the company since all companies in Cyprus must have these two positions.
- Submit the relevant company registration documents to the Cyprus Companies House.
- Register the business for a taxation number, VAT, social insurance as well as pension purposes.
- Obtain the required business licenses according to the field your company specializes in for the commencement of business.
Once the investor has completed the above steps and has already obtained the certificate of registration for the business, the firm can now go ahead and hire workers and begin its economic activities.
It is quite straightforward to start a business in Cyprus, and besides that, it is very affordable.
What to consider when opening a business in Cyprus
If you are a foreign investor considering opening a business in Cyprus, it is recommended that you follow the steps above in registration and also consider several facts outlined below.
Depending on the operations your company will be undertaking, it must meet various requirements that relate to ownership and the shareholding structure of the company.
- The company must register its own legal address in Cyprus, with virtual offices now being availed for this purpose.
- The entrepreneur can reserve a trading name for his company online.
- The company will be required to register for taxation and employment rights after registration.
- Individual licenses and permits may be required to register for businesses that specialize in certain activities.
Reserving a trading name for a business in Cyprus
The first step when opening a company in Cyprus is selecting and booking a trading name. To make sure that the investor’s name is approved, lawyers recommend that they submit at least three name proposals along with the desired name.
Preparation of a Cyprus company incorporation documents
The Memorandum as well as the Articles of Association are among the most important documents to submit when setting up a limited liability company in Cyprus.
The Memorandum and Articles of Association should contain the details about the company directors, the secretary, and the shareholders.
They also include information on the share capital and how shares will be distributed among the company’s shareholders.
The required statutory documents should be drafted either in English or Greek and must be notarized. Cyprus attorneys can help you prepare the legislative documents to open up your business.
These are the most important documents when considering the parameters of how to start a business in Cyprus.
Online company registration procedure in Cyprus
The registration process available online includes the following steps:
An online application form should be filled out and submitted to the Registrar of Companies (opens in a new tab) in order to obtain a username that is usually processed in four business days.
After the processing and receipt of the username and password, the investor can log into the online platform and fill out an application form for name approval and reservation.
Once one of the proposed names is approved and reserved, the investor will immediately be issued a code to facilitate the following procedures:
Scanned copies of the Articles of association and a lawyer’s statement must also be submitted.
Once all the above documents have been successfully submitted, the company registration will be fully processed within two or three working days.
Foreign investors prefer the online company registration procedure since they can complete it quickly in the convenience of their home or office. Additionally, it reduces the cost of delivering hard copies of the documents to the relevant offices.
If you are a foreign investor considering registering your Cypriot business online, there are Cypriot agents that can help you complete the whole procedure remotely.
You might not require any help if you are conversant with online platforms. The government of Cyprus is also giving incentives to foreigners who are willing to invest in the country.
It is also giving guidelines on how to start a business in Cyprus.
Tax & VAT registration when starting a company in Cyprus
One very important procedure when opening a business in Cyprus is tax registration.
The process should be completed together with the business incorporation process.
The investor will be issued a tax identification number with the registration certificate. However, VAT registration has a procedure that must be completed separately since it is not mandatory.
Value-added tax or VAT registration for companies in Cyprus only becomes mandatory when a business reaches the £35,000 selling threshold.
Based on the company VAT number, companies carrying out their trading activities within the EU can acquire EORI numbers easing their trading procedures.
Experienced lawyers and online registration platforms in Cyprus offer more details concerning the procedures involved in acquiring EORI and VAT numbers.
Fees for opening a Cypriot corporate bank account
As stated earlier, the share capital of your company must be deposited in a corporate bank account to open a business in Cyprus.
The operation reduces some fees depending on the selected banking services the investor would like to access.
Finance professionals in Cyprus can recommend the best banks for foreign investors to deposit their share capital when starting a company in Cyprus.
Those investors that require other services like virtual office packages can get the services through our personalized offers.
You can use the virtual office as your company’s legal address during the business registration process.
Furthermore, it is cost-effective, especially if you are operating under a strict budget.
How can you hire employees in Cyprus?
A critical advantage of starting a business in Cyprus is its highly educated labor force. They are mostly fluent in English, and hence communication is rarely a problem.
The minimal working age in Cyprus is 15 years of age.
Staff can be hired through the numerous employment agencies in Cyprus. You can also acquire information regarding personnel hiring from the Cyprus Human Resource Management Association (opens in a new tab) as well as the Cyprus Chamber of Commerce and Industry (opens in a new tab).
Contract employment can be agreed on a set period or an undetermined one depending on the nature of your business.
The contract must state the company’s location, the beginning and the end of the contract period, details regarding the work, details regarding the agreed salary, and other benefits offered to the employee. A collective agreement could also be signed, and it usually lasts for two years.
A company can also hire employees for part-time work for a given period of time or hire them to work from home. The part-time cannot exceed 48 hours a week and cannot offer less than 11 hours of rest in 24 hours. There is a series of benefits that employees should be granted. Health benefits are paid out to employees after a period of 156 days.
All those that are unemployed are entitled to an unemployment benefit after a period of 156 days. Maternity allowances are paid out for a period not exceeding 18 months.
Companies in Cyprus are expected to meet certain conditions before they can hire from foreign countries.
Opening a Business in Cyprus
- First, the company must have listed its shares at the stock market, and the company’s direct shareholders should be registered at the Civil Registration Board and the Immigration Control Board.
- Secondly, capital sources must be legitimate and transparent on the parameters of how to start a business in Cyprus
- Third, the company must have administrative offices located and registered in a proper district.
- And fourth, the financial stability of the company must be proven through an audit of annual balance sheets.
Before being a hired employee in Cyprus, one must obtain a residence permit.
To obtain it, he must submit the documents below at the immigration department :
- Tax permit
- Valid medical certificate and insurance
- The labor contract containing the contract duration and salary quotations
- Bank guarantee
- Criminal record
All workers who are EU citizens must be registered with the tax authority at the Inland Revenue Department to receive a taxpayer identification number.
Work disputes are regulated and controlled by the Industrial Relations Code. In the exception of strikes, which are usually mediated by the Ministry of Labor.
Fees for business registration in Cyprus
One of the critical steps in opening a company in Cyprus is paying all the costs required during the process of registration as well as after registration. Fortunately, the fees requested are usually very low, with some procedures being offered free of charge.
Below are some of the fees an investor should consider before starting a business in Cyprus
- The business registration fee
- The company annual maintenance fee
- The accounting fees
- Foreign investors often request other services that incur extra costs. Nominee services are the most common among these.
The main interest points for foreign investors in Cyprus
Cyprus is acclaimed for the advantages it offers to investors, especially those in the transportation sector.
For instance, the profits accrued from Cypriot vessels are not taxed. In addition, dividends for companies owning ships are not taxable.
The Cypriot government has built an excellent infrastructure. With two international airports, three large shipping ports, and a modern road network that connects the ports to the towns to facilitate importation and exportation of goods.
Cyprus hosts an assortment of international and multinational banks and companies that were also attracted by the small operation costs, well-trained human resources, and economic freedom in the country.
In addition to these advantages, Cyprus has a pleasant climate, a friendly culture, and Mediterranean cuisine that attracts tourists to the country all year long.
These are the most ideal conditions of knowing how to start a business in Cyprus. This boosts business in various sectors of the country, making it the ideal investment location.
Why open a business in Cyprus
Cyprus has grown over recent years to become one of Europe’s most important trading hubs, and the European Union benefits greatly from the geographical location of the country.
However, this is not the only attribute that attracts foreign investors to the Mediterranean country. Individuals or partners considering starting a business in Cyprus could also benefit from:
- Offers the lowest tax rates for companies in the European Union; 12.5%
- Had a record-setting $3,285 million inflow in foreign direct investments in 2018
- Had a total FDI stock of $224 million in 2018, which represented 915% of its GDP.
- Ranked 57 in World Bank’s 2019 Ease of Doing Business Report with respect to ease of conducting business.
- Is famous as one of Europe’s safest destinations. Due to this fact, the country flocks with new investors every year.
If you wish to open a business in Cyprus you can get into contact with local specialists or lawyers in the country of your choice and begin your investment journey.