How to go about setting up a business in Cyprus
Cyprus has come a long way in its objective to attract foreign investments. Procedures needed to start a business and register a company have been simplified and in most cases foreign participation can be up to 100%. Now that Cyprus has joined the European Union, EU citizens can open their own business without any restrictions apart from categories in financial services, which are still subject to strict regulations
With its strategic location, the island of Cyprus has a lot to offer as the gateway between Europe, The Middle East, Asia and Africa. With one of the lowest Corporate Taxes in Europe and with no risk of Double Taxation as Cyprus has signed a treaty with over 40 countries, it makes sense that so many foreigners are opening businesses on the island. Apart from the financial aspect, Cyprus also has a well-developed technical and financial infrastructure and qualified human resources. Communicating is easy as most people speak fluent English and for those who need to communicate in another language there are qualified translators for almost all nationalities.
For companies that deal with transportation, imports and exports, Cyprus has 2 International Airports one in Larnaca and the other in Paphos. There are 3 shipping ports, in Limassol, Larnaca and Vasilikos and a modern motorway that connects to all the major cities on the island. Dividends of companies that own ships are exempt from tax. Low operating costs, and favorable tax regulations have resulted in many multinational companies operating in Cyprus.
Cyprus has a beautiful climate with over 340 days of sunshine a year, and is an idyllic destination for people who want to work hard but also need their peace and tranquility. Were better to relax than on the beach with the deep blue water of the Mediterranean Sea?
How easy is it to register a trade name and start a company?
If you are contemplating starting a business in Cyprus, you are well advised to do some thorough research on Cyprus, its people and business practices. Foreigners tend to choose business opportunities in the Leisure and Hotel Industry as well as Property and Development. To start a business in Cyprus you would first have to establish a base which should include a bank account, an accountant, and a lawyer who will be able to give you some good advice on local business practices and how to go about establishing and registering a company in Cyprus
Helpful information and advice is readily available from the following organizations
www.centralbank.gov.cy Cyprus Central Bank
www.ccci.org.cy Cyprus Chamber of Commerce
www.oeb-eif.org Employers’ and Industrialists’ Federation
Registering a Company
The most common types of businesses that are registered in Cyprus are:
- Public or Private Company, Limited Liability
- Limited of General Partnerships
- Business Trade Names
Anyone is entitled to register a company in Cyprus. This has to be done through a licensed lawyer who will prepare the Articles of Association and all the necessary documents which need to be filed with the Registrar of Companies. The first step is to register the name of the company. You can connect directly with the official website of the Registrar to check if the name you want is available or being used by another company.
Once you are sure you can register the name chosen, your lawyer can fill in the application forms that need to be submitted. To proceed and register a company you will need to provide your lawyer with the following information.
- Description of companies objectives and goals
- How much the nominal share capital will be
- Who the shareholders will be
- Names, Addresses and Passports of directors and secretary
- Companies proposed business address
- Certified copies of passports of owners of company
- Bank references
To comply with the Anti-Money Laundering Law and the guidelines issued by the CBA, additional information could be requested. There are four forms that need to be filled in order to apply for company registration. Once this is done you will be able to open bank accounts in your company’s legal name. Under normal circumstances the whole procedure should not take longer than 2 weeks.
Company Taxation in Cyprus
It is advisable to become a tax resident in Cyprus in order to be able to take advantage of the low corporate tax rates that Cyprus has to offer. To be able to benefit from these low taxes the majority of the board members must reside in Cyprus. All companies are obliged to register for VAT and Income Tax and it is essential that you have a tax identification number.
How easy is it to employ foreigners in Cyprus?
If you need to hire foreign personnel they must first apply for a resident permit from the department of immigration. In order for them to be granted a resident permit they must have a legal contract from your company which shows how much they will be earning and the time period of the contract. The department of immigration will also request a copy of their passport, a medical certificate and medical insurance, criminal record and a bank guarantee from the employer. All employers have to register with the Cyprus Social Insurance Scheme which is jointly funded by the employer, the employee and the government. This system provides benefits and security for the employee.
Buying an existing business is sometimes a better idea because you will be purchasing an established business with a proven track record. Always get an independent evaluation on the business you propose to buy and get an accountant to go over their financial records. Start cautiously and within a strict budget, do not overestimate your income levels, it often takes years to see a profit, and don’t underestimate your costs, this is a recipe for disaster! Make sure you will have enough working capital to last you until the business takes off.
Starting a new business in a foreign country can be risky, and many have made the mistake of thinking that it is easy, but every culture is different and what might work well in your country could unsuccessful in Cyprus.
Whatever you do, the golden rule is not to sign anything that you do not understand fully!