A Comprehensive Guide For Setting Up A Cyprus Limited Company

Through this article, our aim is to provide you with the necessary information to navigate the company formation process effectively

Let’s explore the advantages of a Cyprus LLC and get your business ready for incorporation.

Overview of a Cyprus Limited company

Before getting into the details of setting up a limited company in Cyprus, why don’t we take a look at what makes Cyprus so attractive to business owners globally?

Typical uses of a Cyprus Limited company

A Cyprus limited company is a popular choice for many business owners and investors due to its numerous benefits, such as favorable tax rates, a strategic location, and a stable political and economic environment. Here are some of the typical uses of a Cyprus limited company:

Trading global

A Cyprus limited company is normally used for trading such as import/export, manufacturing, and distribution. The country is a member state of the European Union, which provide trading companies with access to prosperous and global markets.

Asset protection

A Cyprus limited company can be used as an instrument for asset protection, offering a high level of confidentiality and privacy, which can be important for businesses and individuals looking to protect their assets.

Furthermore, Cyprus has an extensive network of double tax treaties with other countries, which provide additional protection for foreign investors and their assets.

Investment vehicle

A Cyprus limited company can be used as an investment vehicle for individuals or groups looking to invest in various assets, such as real estate, stocks, and bonds. The company structure can provide benefits such as limited liability, tax efficiency, and easy transferability of ownership.

Intellectual property holding

A Cyprus limited company can be used as an intellectual property holding company to manage and protect patents, trademarks, and copyrights.

Cyprus has a well-established legal framework for IP protection and is a signatory to various international treaties and agreements related to IP, such as the World Intellectual Property Organization (WIPO) and the European Patent Convention. This provides businesses with a high level of protection for their IP assets.

Types of limited companies in Cyprus

In Cyprus, there are several main types of limited companies that businesses can choose to establish, including

Private limited liability company by shares (LTD)

This is the most common type of company in Cyprus. It is a private entity that can have up to 50 shareholders, and the liability of the shareholders is limited to the amount of their share capital. Private limited companies are required to have a minimum share capital of €1,000, and they are not allowed to offer their shares to the public.

Public limited liability company by shares (PLC)

A public limited company is a company whose shares are listed on a stock exchange and can be offered to the public. It can have an unlimited number of shareholders, and the liability of the shareholders is limited to the amount of their share capital. Public limited companies are required to have a minimum share capital of €25,000, and they are subject to more extensive reporting and regulatory requirements than private limited companies.

In addition to these two main types of limited companies, there are also other structures such as:

• Limited liability company by guarantee without share capital
• Limited liability company by guarantee with a share capital
• Variable capital investment company

It is important to consult with legal and financial professionals to determine the most appropriate legal structure for your particular circumstances.

Pros and cons of incorporating a limited company in Cyprus

Are you considering incorporating a limited company in Cyprus? Before you make a decision, it’s essential to weigh the potential benefits and drawbacks. Let’s delve into the advantages and disadvantages of setting up a company in Cyprus to uncover more insights.

Advantages of a limited company in Cyprus

There are several advantages to forming a limited company in Cyprus, which include:

• Limited liability protection

The shareholders’ liability is limited to the amount of share capital, meaning personal assets are protected in case the company faces financial difficulty or gets sued.

• Tax benefits

Cyprus has a favorable tax regime for companies, with a corporate tax rate of 12.5%, which is one of the lowest in the European Union. Cyprus also has a network of double taxation treaties with many other countries, which can help to reduce the overall tax burden for businesses.

• Easy to set up

The process of setting up a limited company in Cyprus is relatively straightforward and can be completed quickly, usually within a few days. The cost of incorporation and maintenance is also relatively low compared to other European countries.

• Flexible corporate structure

A limited company in Cyprus can have one shareholder, and the shareholder can also be the sole director of the company. This means it is easy for small businesses or entrepreneurs to set up and manage their companies.

• Access to the European market

Cyprus is a member of the European Union, meaning businesses registered in Cyprus have access to the European market and can benefit from the EU’s regulations and policies.

• Intellectual property protection

Cyprus has strong laws protecting trademarks, patents, and copyrights. This can benefit businesses that rely on their intellectual property to generate revenue.

Potential limits of a limited company in Cyprus

While there are many advantages to forming a Limited Company in Cyprus, there are also some limitations that businesses should be aware of. These include:

• Reporting requirements

Limited companies in Cyprus are required to maintain proper accounting records and submit annual financial statements to the Cyprus Registrar of Companies. Failure to comply with these reporting requirements can result in fines and penalties.

• Lack of anonymity

While Cyprus has strong data protection laws, businesses should be aware that their financial statements and other corporate documents are publicly available through the Cyprus Registrar of Companies. This lack of privacy could be a concern for businesses that value confidentiality.

• Language barrier

Although the most widely used language is English, some of the documents used for registration are still written in Greek. This can be quite a challenge for businesses that do not prepare beforehand to overcome this cultural barrier.

Procedure for setting up a Cyprus Limited company

While it is possible to incorporate a public limited company (PLC) in Cyprus, the most common and popular structure for businesses is a private limited company (LTD).

An LTD is the most practical legal structure in Cyprus, as it offers a high level of formation success and flexibility, while also providing limited liability protection to its shareholders.

In the following section, let’s explore the full process of setting up a Cyprus LTD.

Initial requirements

The initial requirements for opening your Cyprus LTD are as follows:

• Company name

The first step is to choose a unique name for your company that is not already in use. The name must also comply with the regulations set by the Cyprus Registrar of Companies.

• Registered office

You must have a registered office in Cyprus where all official correspondence will be sent.

• Shareholders

It is required for an LTD to have at least one shareholder, who can be a natural person or a legal entity. There is no restriction on the nationality of the shareholder.

• Directors

You must also have at least one director, who can be a natural person or a legal entity, with no restriction on nationality.

• Memorandum and Articles of Association

The company is required to have a Memorandum of Association and Articles of Association that set out its objectives, rules, and regulations. These documents must be submitted to the Cyprus Registrar of Companies.

• Share capital

The minimum share capital of your company must be €1,000 minimum. The share capital can be in any currency and can be paid in whole or in installments.

• Registration

Once all the above requirements are met, you can register your LTD with the Cyprus Registrar of Companies. The registration process typically takes a few days, and a certificate of registration will be issued once the company is registered.

In addition to the above requirements, it is also recommended that you pay attention to other obligations such as licenses, tax registration, and ensuring compliance with anti-money laundering regulations.

Steps to Incorporate an LTD in Cyprus

The incorporation can be broken down into four main stages, including

Step 1: Preparing the required documents

Step 2: Choosing the business name for your company

Step 3: Submission of all the requested documents

Step 4: Pay all the necessary fees

The details for each step can be found in this article about opening a company in Cyprus

Each stage of the process involves careful attention to detail, and even a minor mistake can result in significant delays or legal issues. As such, you should prepare all documentation in advance and seek legal guidance throughout the process to increase the success rate in registration.

Post-incorporation compliance for Cyprus LTD

After incorporating a Cyprus Private Limited Company (LTD), there are several post-incorporation compliance requirements that the company must meet. These include:

• Accounting records

Ensure you maintain proper accounting records, including records of all transactions, receipts, and payments of your company, which must be kept in Greek or English for at least six years.

• Financial statements

The company must prepare annual financial statements, including a balance sheet, income statement, and cash flow statement. These statements should be prepared in accordance with International Financial Reporting Standards (IFRS) and audited by an independent auditor.

• Annual general meeting

You will be required to hold an annual general meeting (AGM) within 18 months of incorporation and once every calendar year. This is where you meet with the company’s shareholders and make decisions on important matters such as the approval of financial statements, the appointment of auditors, and directors’ elections.

• Tax returns

It is required that your company file annual tax returns with the Cyprus Tax Authority annually, notifying details of the company’s income, expenses, and tax payable.

• Shareholders’ register

Your company has the responsibility to maintain a register of its shareholders at its registered office, which includes details such as the shareholders’ names, addresses, and shareholdings.

• Register all necessary documents

You must also register for tax, VAT, social insurance, and all trade mark to stay in compliance with Cyprus regulations.

• Changes in company details

If your company makes any adjustments such as changing the registered office, removing directors, or onboarding more shareholders, you’re required to inform the Cyprus Registrar of Companies of these changes.

Depending on your company type, the compliance may differ. But these post-incorporation compliances are crucial for the smooth functioning and legal operation of a Cyprus LTD.

Conclusion

In conclusion, setting up a limited company in Cyprus can reveal many potentials for your business but for this to work out, finding help from your local legal authorities or professional is highly recommended.

If the information above still not stratified your needs, feel free to contact us for more information via service@bbcincorp.com or view our Cyprus incorporation package to accelerate your incorporation process quickly.

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