Frequently Asked Questions
Corporate taxation in Cyprus
How to qualify for tax exemption in Cyprus?
All tax-resident companies are charged for corporate income tax of 12.5% on their worldwide income. However, foreign-source income originating from a Permanent Establishment (PE) abroad may be exempted from corporate income tax subject to anti-avoidance rules override as the following conditions are satisfied:
- More than 50% of foreign PE’s activities directly or indirectly result in investment income, and
- The foreign tax levied on the income of foreign PE is significantly lower than the tax burden in Cyprus.
In addition, a non-tax resident company whose control and management are executed from outside of Cyprus is exempt for all its foreign income. Any income originating from Cyprus would be subject to a tax rate of 12.5%.
What activities restriction are placed on a private limited company in Cyprus?
Except financial services related businesses such as bank, insurance, money services… with required permission from local financial regulatory bodies, a private company can freely conduct its business with both local and foreign entities.
Business operation in Cyprus
What types of companies can be incorporated in Cyprus?
Business owners can choose to establish a company in Cyprus under the form of private/public limited company by shares or by guarantee. In addition, foreign investors can also select to open its branch or representative office for their foreign entity. The most common Cypriot company is a private limited company.
How to name a private limited company in Cyprus?
The name of a private limited company should at least meet the following conditions:
- Not identical or similar to existing company names;
- Containing “limited” or “ltd” as its last word;
- Not misleading or undesirable in the opinion of the Registrar.
The name approval process has to be completed before applying for company registration.
Minimum number of director/shareholder
There should be at least one director/shareholder. The maximum shareholder of a private company is fifty. The sole shareholder cannot be the company’s secretary.
Minimum registered capital
There is no specific obligation over the minimum registered capital of a private company. However, a public company’s minimum capital is 25,629 EUR.
What types of shares are allowed to issue by a Cyprus company?
Registered shares with par value, preference shares, redeemable shares and shares with no voting rights.
What are the requirements to maintain a Cyprus private company?
- Maintaining at the minimum one director/one shareholder
- Maintaining local company secretary/registered address in Cyprus
- Filing annual return
- Filing tax return with audited financial records.