Benefits and problems of registering a company in Cyprus in 2024

Benefits of Cyprus company registration

• Our Clients looking to set up a business in Cyprus will enjoy a fast, stress-free and cost-effective process because:
  • A Cyprus LLC can be 100% foreign owned and requires only 1 shareholder and director of any nationality who can either be an individual or a corporate entity and must not be resident in Cyprus;
  • Foreign owned companies are permitted to invest in every business sector in Cyprus without any restrictions or stringent licensing requirements except for a few regulated sectors such as banking and financial services and media;
  • Using Healy Consultants Group’s services, our Client can obtain a Cyprus company registration number and tax number and commence the operations in Cyprus within a period of 2 weeks;
  • Following business registration, Healy Consultants Group can open a corporate bank account with one of the leading banks in Cyprus including Bank of Cyprus and Alpha Bank without our Client traveling to Cyprus;
  • Entrepreneurs registering business in Cyprus will enjoy considerably lower administrative and operational costs compared to most of other countries in the EU region.
• Our Clients doing business in Cyprus will benefit from various tax incentives including:
  • The standard corporate tax rate in Cyprus is 12.5%, which is one of the lowest corporate tax rates in Europe. Additionally, the government does not impose any capital gains tax;
  • A Cyprus holding company enjoys exemption form withholding taxes on dividends paid to a resident company whether they are received from a foreign company or another Cyprus resident company;
  • Local companies will benefit from a wide network of double taxation treaties. The government of Cyprus had signed over 55 DTAs with at least 47 countries, including China, India, Ireland, Singapore, the United Kingdom and the United States;
  • Companies will enjoy exemption from corporate income tax on income sourced from operations abroad as well as exemption from capital gains tax and estate duty on income from immovable property outside Cyprus.
• Other advantages prompting foreign entrepreneurs and investors to consider doing business in Cyprus include;
  • Up to 80% of income generated by Cypriot companies engaged in activities related to Intellectual Property (IP) is exempt from taxes; only 20% of the total profits is liable for taxes;
  • Although seen as a tax neutral jurisdiction, Cyprus is listed on the OECD ‘white list’ of global jurisdictions that are fully compliant with the international standards of tax;
  • Tax resident companies can carry forward their tax losses incurred within a fiscal year for the subsequent 5 years and the same can be offset against the taxable income;
  • As a member of the European Union, Cyprus enjoys all the benefits of the EU regulations and treaties including, and particularly, the free movement of capital within and outside the EU region.
• Cyprus laws are investor friendly due to the reasons given below:
  • An opportunity to acquire Cyprus citizenship is offered to all the investors in Cyprus. A Cyprus citizenship has all the benefits that an EU citizenship has, i.e., the right to live, work, and move freely within the entire EU area;
  • Cypriot laws allow the investors to retain their anonymity and hold their property under an international trust;
  • 100% tax exemption on inward and outward dividends.

Problems of Cyprus company registration

• Our Clients looking to register a company in Cyprus should be aware of the following:
  • All shareholders and directors’ details of a Cyprus company are available for public viewing on the Cyprus Department of Registrar of Companies website; which may not be ideal for foreign investors seeking anonymity;
  • For a company to tax advantage of the multiple Cyprus’ tax treaties and the 12.5% corporate tax rate, a company is required to appoint at least one director who must be resident in Cyprus;
  • Foreign entrepreneurs and investors looking to set up their business in Cyprus must commission the services of a local corporate service provider or law firm to assist with the company incorporation process;
  • Foreign and local companies looking to open a corporate bank account in Cyprus must be introduced to the specific bank by a locally registered fiduciary who must complete a thorough due diligence process with the Client.
• It is difficult to acquire citizenship by investment in Cyprus. In October 2020 the Cypriot government abolished its golden visa program for wealthy investors;
• Cyprus is a member of the EU, as a result, the information regarding founders and shareholders of the Cyprus incorporated companies are already in the public domain.
• Other disadvantages and impediments to doing business in Cyprus for foreign investors may include:
  • Setting up a company with a large share capital in Cyprus can be costly because the government fees for company registration is pegged on the amount of authorised share capital allocated for the new company; usually at 0.6%;
  • Foreign companies looking to secure a non-resident corporate bank account in Cyprus will be required to register and obtain a local tax number and the signatory may also be required to visit the bank branch for a bank interview;
  • Although, largely, the business language in Cyprus is English, official corporate documents for company registration are generated in Greek and will be a challenge for foreign nationals without the grasp of the language;
  • Tax resident companies are required to annually submit to the Cyprus Inland Revenue Department all the financial accounts and file tax returns by the 31^st of March following end of the fiscal year.

Best uses for a Cyprus company

• Cyprus is an ideal location for establishing a regional headquarters for a company with a global presence. Located in the eastern Mediterranean between Europe, Middle East and North Africa, Cyprus is an optimum jurisdiction to centralize and coordinate a company’s intercontinental operations;
• Additionally, for Clients looking to establish abroad to minimize tax implications, Cyprus is a good choice of jurisdiction for legal tax optimization;
• The government of Cyprus provides a range of incentives to encourage international film producers to invest in Cyprus. These incentives include:
  • a cash rebate of up to 35% on all the expenditures incurred whilst producing the film or a tax credit up to 50%;
  • a tax discount up to 20% on all the investment incurred in infrastructure and equipment of the production; and
  • a VAT refund on all the qualified expenditures acquired for production;
• Cyprus is an attractive place for new entrepreneurs aiming to engage in young and innovative businesses. These innovative start-up companies are provided with numerous tax benefits including a deduction of the qualified expenditure incurred from the investor’s taxable income of up to 50% of the taxable income or €150,000, whichever is lesser.