Cyprus is an island in the eastern Mediterranean, located south of Turkey and west of Lebanon, with its capital being Nicosia. Cyprus gained independence from Britain in 1960 and joined the European Union in 2004, although it still retains some aspects of British influence, with a legal system based on common law.
If you are wondering whether it is possible for foreigners to establish a company in Cyprus, the answer is yes. Foreign investors can set up and establish companies and start their businesses in Cyprus.
If you have many questions about starting a business in Cyprus, you are in the right place to find answers to these questions.
Is Cyprus a Good Place to Establish a Business in Europe?
Many foreign investors holding non-EU nationalities are looking for investment opportunities in Europe, and Cyprus can be considered one of the best countries in Europe to invest in. It offers many advantages for investors when establishing a company in Cyprus, including:
- The corporate income tax rate is 12.5%, one of the lowest corporate tax rates in the European Union.
- There are no taxes on dividend profits.
- Cyprus has more than 65 agreements with other countries to avoid double taxation.
- Cyprus can play a key role if you are looking to establish residency and tax residency in the EU.
- As an EU member state, Cyprus is not listed on the blacklists. Setting up a company in a country on the blacklist could complicate your tax situation.
- Given that many jurisdictions are planning to introduce global minimum taxes, Cyprus is expected to become increasingly popular as its corporate tax rate is close to compliance with such regulations.
- The Cypriot passport has been ranked among the top ten strongest passports in the world.
Is Cyprus a Good Place to Establish a Company in Europe?
In addition to the many tax incentives, Cyprus offers the following benefits:
- 0% tax on any income from trading in securities such as stocks and others.
- 0% tax on all profits from selling real estate abroad.
- 0% tax on dividend profits paid to shareholders, whenever desired.
- 0% tax on any profits paid by any company in which it holds shares.
- 0% stamp duty on many occasions.
- 0% tax on profits of permanent establishments abroad, such as hotels, casinos, restaurants, factories, and more.
- 0% tax on any income from selling its shares.
- 2.5% tax on intellectual property rights.
How to Establish a Company in Cyprus
If you wish to establish a company in Cyprus, you will have several clear options, including: forming a Limited Liability Company or establishing a branch of a foreign company in Cyprus.
You can create a private company in Cyprus, and here we will discuss the key legal procedures you must follow. Below are the essential steps for setting up a company in Cyprus.
Steps to Establish a Company in Cyprus
There are several procedures that must be completed in the first stage of setting up a company in Cyprus, whether it is a Limited Liability Company or a branch of a foreign company. Here is a list of the most important steps:
- Choose a Company Name: You need to go to the Cypriot Ministry of Labour and submit a list of proposed company names to check availability and ensure the name can be used for your company. This process usually takes two to three business days. Choosing a unique company name is one of the most important steps in establishing a company in Cyprus.
- Submit Company Formation Documents: Enter all the required details in the company registration form, confirming the registered address as the company’s main headquarters. This form is then submitted to the company registry.
- Provide Required Documents: Attach a scanned copy of the first page of your identity card or passport, along with the occupation and full addresses of the company’s shareholders, directors, and secretaries, as well as the company documents outlining the company’s purpose, activities, and the subscribed capital amount.
- Company Requirements: According to the company law, a Limited Liability Company in Cyprus must have between one and 50 members. However, there is no minimum capital requirement for a private limited company.
- Public Limited Company Minimum Capital: The minimum capital for a public limited company is €25,629.
- Assign Directors and Secretaries: You may appoint a nominee shareholder, director, and secretary, and sign an agreement with them clearly stating that the nominee director, secretary, and shareholder have no financial interest in the private limited company and are willing to work based on this agreement.
How to Establish a Company in Cyprus
Once a company is established in Cyprus, you need to open a bank account. Keep in mind that the Bank of Cyprus is not the fastest, as it can take up to four months to open a corporate bank account. Therefore, consider alternatives such as Hellenic Bank, Astrobank, and Alpha Bank.
In the meantime, licensed local lawyers by the Cyprus Bar Association can apply for a social insurance number and a freelance certificate on your behalf.
After completing all this, schedule an appointment at the Civil Registry and Migration Department to apply for the yellow slip, which is named after the yellow-colored registration certificate.
Opening a Company Bank Account in Cyprus
The second stage of establishing a company in Cyprus is ensuring that you complete the procedures to open a company bank account in Cyprus. As mentioned, the procedures required to open a company bank account at the Bank of Cyprus can take up to 4 months. However, this is still the preferred option for investors looking to establish a company in Cyprus.
Foreign investors need to schedule an appointment with the Bank of Cyprus and provide the following documents to complete the formation of the company:
- Copies of the passport's vital pages for all shareholders, beneficial owners, directors, and secretaries.
- Copies of the CVs of shareholders, beneficial owners, directors, and secretaries.
- The planned activities of the company, whether a representative office or a separate legal entity, as required by company law.
- Utility bills for all company board members.
- Names of all signatories on the bank account.
Completing the Procedures for Establishing a Foreign Company in Cyprus
Every company in Cyprus, including representative offices, must maintain appropriate accounting records according to international financial reporting standards and the provisions of company law.
Companies must keep financial data and tax returns for six years.
If a foreign company ends its business activities in Cyprus by closing its registered local office, it is obligated to notify the Civil Registry and Migration Department immediately.
Assume that employees of any limited liability company or similar entity are required to stay outside Cyprus for more than three months. In this case, they must obtain a re-entry permit from CRMD or a prior consular visa from the Cypriot embassies or consulates abroad.
In exceptional cases where you don't have enough time to obtain the re-entry permit before leaving Cyprus, or if the length of absence from Cyprus was not known beforehand, you must inform the Civil Registry and Migration Department (CRMD). This also applies if the destination country does not have a Cypriot diplomatic or consular mission. This ensures re-entry to Cyprus without the need for a re-entry permit or consular visa.
Cost of Establishing a Company in Cyprus
The required costs for establishing a company and registering a new limited liability company in Cyprus are as follows:
- New company registration: €1300
- Opening a bank account: €700
- Nominee director fee: €400
- Nominee secretary fee: €400
- Registered office fee: €400
- Nominee shareholder fee: €400
Does Cyprus Impose Withholding Taxes?
Cyprus does not impose withholding tax on dividends, interest, and royalties paid to non-residents. However, Cyprus does impose a 10% annual tax on royalties earned from rights used within Cyprus.
Establishing a Company in Europe and Obtaining Residency
There are several important options for obtaining residency in Europe through investment and establishing companies. These are great opportunities for residency in some of the best European countries and acquiring European citizenship through investment.
If you're interested in learning more about the top investment options in Europe for residency, here are some of the available options:
- Establishing a company in Spain.
- Establishing a company in Italy.
- Establishing a company in Malta.
Let's explore the key features and requirements of each of these options.
Establishing a Company in Spain for Residency
Spain is ranked among the top and strongest economies in Europe and the world. This makes it attractive to many foreign investors seeking to enter the Spanish market and invest in businesses. One of the main incentives offered by the Spanish government to foreign investors is the opportunity to obtain Spanish residency through investment.
Advantages of Establishing a Company in Spain
Due to its economic strengths and the presence of major cities with various factors that help investments succeed, Spain has become a large commercial and economic hub. Here are the key advantages of establishing a company in Spain:
- Spain is home to major global companies and some of the most successful businesses worldwide.
- Spain provides the essential infrastructure and resources needed for investment and business projects.
- There is a wide range of investment opportunities allowed by the Spanish government for new startups and businesses.
- Spain is a culturally diverse country, which aligns with different investment goals and helps businesses and people integrate smoothly.
- The possibility of obtaining residency by investment and establishing a company in Spain.
Given these benefits, Spain is considered one of the best alternatives to establishing a company in Cyprus.
How to Establish a Company in Spain
Establishing a company in Spain involves several simple steps, which can be summarized as follows:
- Obtain a tax identification number (NIE) in Spain, which takes about 3-5 business days. You can apply for the NIE in Spain through the police station or at the Spanish consulate in your home country if you're living abroad.
- Obtain a certificate of uniqueness, proving that the company name you are choosing is unique and not already in use. The investor must propose three names to the Spanish company registry, and one will be approved if available.
- Open a bank account in Spain under the company’s name and deposit the minimum required capital for the investment.
- Draft a shareholder agreement, specifying each shareholder's ownership percentage, and appoint a company director.
- Sign and officially notarize the company's incorporation contract.
- Register the company with the Spanish tax authorities to obtain the final tax identification number (CIF) and an official stamped certificate of incorporation.
- Register the company and its employees with the Spanish Social Security Authority.
Establishing a Company in Italy for Residency
Italy has a strategic geographic location economically, as it is in the heart of Europe with easy access to North African and Asian countries, facilitating trade exchanges with these regions. Additionally, Italy is a key member of the European Union, ensuring access to approximately 550 million people.
Advantages of Establishing a Company in Italy
The advantages of establishing a company in Italy include:
- Global Reach: All Italian products can easily reach global markets and gain significant recognition quickly.
- Strong Economy: Italy is one of the strongest economies in Europe, allowing foreign investors to access greater opportunities both locally and globally.
- Variety of Business Options: Italy offers a wide range of companies that can be established, depending on factors such as budget, investment size, and the number of employees.
- Incentives for Entrepreneurs: Italy provides incentives for entrepreneurs and new companies, especially in research, development, and educational programs.
- Low Barriers for Foreign Investors: Italy allows foreign investors to establish businesses with minimal restrictions and provides support to facilitate the investment process.
How to Establish a Company in Italy
Establishing a company in Italy is similar to the process in Cyprus, as both are characterized by ease of procedures. The steps to establish a company in Italy are as follows:
- Choose a Suitable Company Name: Ensure that the name is available and not already in use, while also adhering to Italy's naming conventions.
- Draft the Articles of Association: This document should include the company’s purpose, capital, organizational structure, and governance rules.
- Submit Required Documents to the Chamber of Commerce: Register the company officially with the local Chamber of Commerce.
- Open a Bank Account: Open a corporate bank account with an Italian bank and deposit the required company capital to complete the establishment process.
- Register with the Tax Authorities: Obtain a tax identification number and VAT number from the Italian tax authority.
- Register Employees with Social Security: Hire employees and register them with the Italian Social Security Authority.
Establishing a Company in Malta for Residency
Malta is another European country that allows foreign investors to establish companies and obtain residency in return. Malta is considered one of the best and easiest European countries for residency.
Advantages of Establishing a Company in Malta
- Low Taxes: Malta has one of the lowest effective tax rates in the European Union.
- Full Ownership: Foreign investors can establish and fully own a company in Malta.
- Double Taxation Agreements: Malta has agreements with over 70 countries to avoid double taxation.
- No Customs Duties: There are no customs duties on documents or share transfers.
- Strategic Location: Malta’s location in the Mediterranean provides easy access to major European capitals and North Africa.
- Pleasant Climate: Malta offers a pleasant climate and natural resources, making it an ideal place for residency.
How to Establish a Company in Malta
If you're interested in establishing a company in Malta, here are the key steps:
- Choose the Type of Company: Decide between a limited liability company, general partnership, or branch of a foreign company.
- Select a Company Name: Ensure the name meets the legal naming criteria and isn’t duplicated.
- Prepare Legal Documents: Ensure all necessary documents are legal and complete.
- Pay Company Registration Fees: Submit the required fees for company registration.
- Obtain Company Registration Certificate: Receive the official certificate after registration.
- Register for VAT: Register the company for VAT with the Maltese tax authorities.
Establishing a Company in Cyprus in the Easiest Way with the Fewest Steps
After understanding the key aspects of establishing a company in Cyprus and outlining the best options for investors seeking to establish a company for European residency, you can now complete the company establishment process in the easiest way possible and with the fewest steps by requesting assistance from Zajel.
We have a team of expert legal advisors specializing in immigration and company formation in Europe and other countries around the world. We can help you gather and provide the required documents in the correct legal format and ensure all procedures are completed properly.
Don’t hesitate to request assistance now by seeking legal consultation via WhatsApp. Click here to get in touch with us.
You can also learn about the most important services we offer and the available pricing plans by downloading the Zajel app from the Play Store. You can download the app from here.
FAQ
Is Cyprus a good place to establish a company in Europe?
Yes, establishing a company in Cyprus has many benefits, including:
- A corporate tax rate of 12.5%, one of the lowest in the European Union.
- No taxes on dividend profits.
- Cyprus has over 65 agreements with other countries to avoid double taxation.
- Cyprus can play an important role in your plan if you’re looking to establish residency within the European Union and secure tax residency.
- As a member of the European Union, Cyprus is not on any blacklist, unlike some other jurisdictions that may complicate your tax situation.
- With many jurisdictions planning to introduce a global minimum tax, Cyprus is expected to become increasingly popular due to its CIT rate being in line with these regulations.
- Cyprus has one of the top ten strongest passports globally.
Are there any tax advantages when establishing a company in Cyprus?
Yes, there are several tax incentives, including:
- 0% tax on any income from trading in securities such as stocks, etc.
- 0% tax on all profits derived from selling real estate abroad.
- 0% tax on dividends paid to shareholders at any time.
- 0% tax on profits paid by any company you own shares in.
- 0% stamp duty fees on many occasions.
- 0% tax on profits from permanent establishments abroad, such as hotels, casinos, restaurants, factories, etc.
- 0% tax on any income from selling shares.
- 2.5% tax on intellectual property rights.
How can I establish a company in Cyprus?
- Choose a Company Name: Submit a list of proposed company names to the Ministry of Labor to ensure availability and register the name. This process takes about two to three business days.
- Fill out the Company Formation Form: Enter all required data, including confirming a registered address for the company. This form is then submitted to the Companies Registry.
- Attach Documents: Include the first page of your ID or passport, along with details of the profession and addresses of the shareholders, director, and secretary. The company documents should also include the company’s objectives, activities, and the amount of subscribed capital.
- Company Structure: According to Cyprus company law, a private limited company should have between 1 and 50 members, and there is no minimum capital requirement for a private limited liability company. The minimum capital requirement for a public limited company is €25,629.
- Appoint Directors and Secretaries: You can appoint nominee shareholders, a secretary, and a director by signing an agreement specifying that the nominee shareholders, director, and secretary have no financial interest in the company and are working based on this agreement.
- Open a Bank Account: Once the company is established, open a corporate bank account. Keep in mind that the process can take about four months with Cyprus Banks, so consider alternatives such as Hellenic Bank, Astrobank, or Alpha Bank.
- Obtain Social Insurance and Freelance Certificates: Local licensed lawyers can apply for a social insurance number and a freelance certificate for you.
- Schedule an Appointment with the Civil Registry and Migration Department: After completing all necessary steps, schedule an appointment to submit the application for the Yellow Slip, a registration certificate printed on yellow paper.
How can I open a bank account in Cyprus?
To open a bank account for the company in Cyprus, investors must schedule an appointment with a Cyprus bank and submit the following documents:
- Copies of the passport’s bio pages for all shareholders, beneficial owners, directors, and secretaries.
- Copies of the CVs of shareholders, beneficial owners, directors, and secretaries.
- A description of the company’s activities, whether as a representative office or a separate legal entity, as required by company law.
- Utility bills for all company directors.
- Names of all account signatories.
What is the cost of establishing a company in Cyprus?
The fees for establishing a limited liability company in Cyprus are as follows:
- Company Registration: €1,300
- Bank Account Opening: €700
- Nominee Director Fees: €400
- Nominee Secretary Fees: €400
- Registered Office Fees: €400
- Nominee Shareholder Fees: €400