Business entities in Cyprus

business entity types in CyprusBecause of its attractive tax system, Cyprus is often a first-choice jurisdiction for the registration of companies aiming at trading with European Union customers and / or holding EU subsidiaries and other assets. The most commonly Cyprus business entity used is the limited liability company. Alternatively, foreign multinationals planning to conduct operations in Cyprus can also register a branch of their overseas office. See below for further information the different legal entities available in Cyprus.

  • Trading with a Cyprus entity

    The Cyprus Limited Liability Company (Limited Company)

    • It is possible to setup a Cyprus limited liability company with only i) one shareholder without a mandatory minimum capital contribution ii) one company secretary and iii) one director. Only the company secretary is legally required to be resident in Cyprus;
    • Entities managed from Cyprus are deemed as tax resident and hence subject to corporate income tax on their worldwide income, while those managed from overseas are only subject to corporate income tax on their Cyprus income. However, both resident and nonresident companies are required to submit their financial statements and a tax return each year to the Cyprus Tax Department;
    • Best uses for an Cyprus LLC: such entity is commonly used to setup an international trading entity, doing business with EU resident customers and suppliers.

    The Cyprus Free Zone Company (Larnaca Free Zone Company)

    • Foreigners can register their business in the only special economic zone existing in Cyprus, the Larnaca free zone, an industrial estate located near to the airport of the same name approximately 50km from the capital Nicosia;
    • The Government does not provide any more corporate holidays to businesses registered in the zone. The main advantages of the zone include i) subsidized industrial space and ii) good industrial infrastructure;
    • Transactions conducted from the free zone can also benefit from i) exemption from VAT for non-EU goods in transit ii) deferred VAT payment on merchandise imported into the EU;
    • Best uses for an Cyprus free zone company: light manufacturing activities of products re-exported to the rest of the European Union.

    The Cyprus Public Limited Company (Public Company Limited by Shares)

    • Minimum business setup requirements for a Cyprus public company include: i) 7 shareholders ii) 2 directors iii) a minimum capital of €25,000, of which at least 25% must be paid up before incorporation and iv) one company secretary, who is the only person required to be resident in Cyprus;
    • Cyprus PLCs are also required to i) appoint one auditor and ii) submit audited financial statements to the tax authority and the Cyprus Registrar of Commercial Entities every year;
    • Best uses for an Cyprus public limited company: registration of this business entity is recommended when the promoters intend to seek significant capital amounts from third party investors or list the company on the Cyprus Stock Exchange or another European stock exchange.
  • Trading with an overseas entity

    The Cyprus Branch Office

    • Foreign companies willing to do business in Cyprus can register a branch of their entity. Such registration will not require a minimum investment, but a resident country representative must be appointed;
    • Best uses for a Cyprus branch office: the main benefit offered by branch registration in Cyprus is the ability for the head office to prepare only one set of financial statements. However, the head office has also unlimited liability against any debt or loss of the branch office.

    The Cyprus Representative Office

    Cyprus regulations do not distinguish representative offices from branches. Consequently, representative offices are subject to the same business setup and annual filings requirements applicable to a branch office.

  • Holding assets with a Cyprus entity

    The Cyprus holding company

    • Cyprus entities are commonly used as holding vehicles for EU subsidiaries because i) dividends received from global subsidiaries are not subject to local corporate income tax and ii) dividends distribution to overseas shareholders and not subject to Cyprus withholding tax;
    • It is additionally possible to structure a holding company as tax resident to avail the 56 double taxation avoidance treaties signed by Cyprus. However, this advantage must be weighed against the risk of dividend income becoming subject to special defense contribution, levied on all resident companies at a 17% rate;
    • Best uses for an Cyprus holding company: Holding European subsidiaries and IP assets.

    The Cyprus offshore trust (international trust)

    • Foreigners can register international trusts legally tax exempt in Cyprus if i) all assets, settlors and beneficiaries are nonresidents and ii) one of the trustees is resident in Cyprus;
    • The trust must additionally be registered with the Cyprus Trust Registrar, although the information will not be accessible to the general public;
    • Best uses for a Cyprus trust: Cyprus offshore trusts are attractive for family wealth management and asset protection.
  • Table of Comparison between Cyprus entities

     LLCFree zone companyPLCBranchHolding companyOffshore trust
    Locally known as?Limited CompanyLarnaca free zone companyOpen Limited CompanyBranchHolding companyInternational trust
    Operations and logistics
    Doing business in Cyprus permitted?YesYesYesYesYesNo
    Allowed to sign contracts with local Clients?YesYesYesYesYesNo
    Allowed to invoice local Clients?YesYesYesYesYesNo
    Allowed to import raw materials?YesYesYesYesYesNo
    Allowed to export goods?YesYesYesYesYesNo
    Accounting and tax
    Corporate tax rate on local income?12.50%12.50%12.50%12.50%12.50%Not allowed
    Corporate tax rate on foreign income if resident entity?12.50%12.50%12.50%12.50%12.50%Not allowed
    Corporate tax rate on foreign income? (non-resident entity)0%0%0%Always resident0%0%
    Statutory audit required?NoNoYesYesNoNo
    Annual tax return to be submitted?YesYesYesYesYesNo
    Access to DTAAs?YesYesYesYesYesNo
    Company law
    Issued share capital required?€1€1€25000None€1€1
    Resident director/representative required?NoNoNoYesNoYes
    Cyprus shareholder required?NoNoNoNoNoNo
    Minimum number of directors?112111
    Minimum number of shareholders?117Parent company11
    Public register of shareholders and directors?YesYesYesYesYesNo
    Immigration
    Can the entity hire expatriate staff?YesYesYesYesYesNo
    How long to get work permit approved3 months3 months3 months3 months3 months3 months
    Engagement fees
    Estimate of engagement costs€9,535Contact us€10,335€9,705€9,735€15,585
    Draft invoicedraft invoice for Cyprus LLCContact usdraft invoice for Cyprus PLCdraft invoice for Cyprus branch officedraft invoice for Cyprus holding companydraft invoice for Cyprus offshore trust company

Frequently asked questions

Contact us

For additional information on our business setup services in Cyprus, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Grace Odhiambo, directly:
client relationship officer - Grace
Cyprus chamber of commerce and industry (CCCI) Government web portal of the Republic of Cyprus Cyprus tax department (direct taxation) - Cyprus inland revenue department Cyprus Investment Promotion Agency - invest in Cyprus (CIPA) Cyprus ministry of finance Central bank of Cyprus