General Business Information
The Republic of Cyprus is an eastern Mediterranean island strategically located at the crossroads of three continents; Europe, Asia, and Africa. A European Union member since May 1, 2004 and a member of the Euro-Zone since January 1, 2008 Cyprus also enjoys excellent business relations and flight connections with the Middle East.
With one of the lowest corporate tax rate in the European Union (EU) at only 12.5%, the island is an ideal jurisdiction for Holding Companies. Moreover, it has 49 bilateral tax treaties, including with the United States. Cyprus has no withholding tax imposed on dividend income, interest, or royalty payments effected to non-Cypriot beneficiaries. Profits from overseas permanent establishments are tax exempt.
Cyprus’ banking sector has been undergoing considerable restructuring since March 2013, when Cyprus became the fifth Eurozone country to receive bailout assistance. Despite the recent downsizing of its financial sector, Cyprus continues to offer efficient and high-quality accounting, legal, and other professional services, which are one of the strong points of the economy. The labor force is largely multilingual and highly qualified and the labor costs are low compared to the EU average. Cyprus has an advanced telecommunications network and infrastructure, as well as a wide network of air-routes offering excellent connections with Europe, Africa, and Asia, as well as modern ports and first-rate sea connectivity.
Cyprus ranks among the 10 leading maritime nations in the world and is a highly reputable international shipping center with a merchant fleet exceeding 21 million gross tonnage (accounting for 16% of the EU fleet) and nearly 2000 vessels. It constitutes one of the largest ship-management centers in the world with around 50 ship-management companies and marine-related foreign enterprises that conduct their international activities in the country. Cyprus has also developed into a transshipment center for Asia Pacific trade with Europe and with shipping markets situated along the coasts of the Levant and Black Sea, or the North Adriatic. The island is a natural hub for other main-line deep sea trades passing through the Mediterranean, to North Africa and the Middle East. [Source: US Embassy in Cyprus]
Starting a Business in Cyprus
In order to enhance foreign investment intensity, the FDI policy has been liberalized for both EU and non-EU nationals. Subsequently, administrative procedures have been simplified and no limitations apply in most sectors of the economy, as per the minimum level of investment and the foreigners/ participation percentage.
International companies may invest and establish business in Cyprus on equal terms with local investors. Foreign investors can register a company directly with the Registrar of Companies, and obtain any license, if needed, from the appropriate authority depending on the nature of investment. Investors may address to the Investors Service Centre of the Ministry of Commerce, Industry, and Tourism for further guidance and direction on a case by case basis. [Source: Invest Cyprus]
A number of new measures have been put into place designed to reboot the economy in the wake of the massive restructuring of the country’s banking sector. The measures, among other things, aim at helping stimulate economic growth.
The new measures include the following:
- The amount of time required to issue planning permission has been reduced to a maximum of one month for small projects and three months for large projects.
- Building coefficients have been increased by 30% in residential areas for large commercial developments. The coefficient will be increased by 25% on the outskirts of residential areas for large commercial or office developments. It will increase by 20% in certain tourist zones for large-scale property and from 10% to 15% for areas available for golf courses.
- The green light has been given for casinos.
- Permits for joint tourist developments such as condo hotels will now be given.
- Foreign nationals are encouraged to invest in Cyprus by being given permanent residency status.
- According to the President of the Republic, foreign investors who held deposits prior to 15 March, and who lost at least €3m as a result of the resolution of Laiki Bank and the restructuring of Bank of Cyprus, are eligible to apply for Cypriot citizenship.
- The Council of Ministers approved a plan on May 24, enabling foreign nationals to gain citizenship if they meet certain criteria set out by the Interior Ministry.
- The first option given to foreign nationals would require them to deposit €2 million in the state treasury to purchase shares or bonds with the state-run investment company and also donate €0.5 million towards the government’s Research and Technology Fund.
- A second option would require them to invest at least €5 million in projects ranging from the purchase of houses, offices, shops and hotels, provided that the land is put to use. They can also purchase established and active companies in Cyprus or buy shares in companies that are registered in Cyprus.
- They would also be eligible for citizenship if they purchase financial assets such as state bonds that were registered and issued in Cyprus including those issued by the Solidarity Fund.
- Foreign nationals would also be eligible if they have cooperated with a company which has done work for the public sector.
- To qualify for citizenship via the second option, applicants will have to present documents which prove they have been active for the last three years on the island.
- A third option would require the candidate to have deposits or own a company of which he is the main beneficiary of up to €5 million in a local bank for at least the last three years.
- A fourth option would involve making investments or donations, again of at least €5 million towards the state coffers.
- A fifth option would look at the business activities of any applicant who would have to meet certain criteria over the last three years, and the contributions and investments they have made. They would either need to be a shareholder or main beneficiary of a company for the three years leading up to their application for citizenship and would have had to pay fees of up to €500,000 a year for the purchase of business services. Alternatively if a foreign national has been employing at least five Cypriots then they would only need to have paid up to €350,000 a year on business services and if they have been employing ten, then that amount would come down to €200,000 a year.
- If any candidate had their deposits in Bank of Cyprus or Laiki Bank cut by at least €3 million since March 15 then they would also be eligible for naturalization. If the money which was cut by less than €3 million, candidates could possibly combine it with any of the other options.
[Source: Invest Cyprus]
Information Required for Registering a Business in Cyprus
- A brief description of the main objects of the company, unless the standard
- Memorandum and Articles of Association are to be used. (Even though it is usual for law firms to use standard M&A for holding companies, some other lawyers may adopt Table A of the Company Law or may draft the M&A according to clients’ instructions);
- The amount of nominal share capital (i.e., €1000) and how it is divided (i.e., 1000 shares of €1 each). If the company to be incorporated is a public company there is a minimum share capital of €25.629.
- The names, addresses, passport details of the proposed directors and secretary of the company;
- The proposed registered address of the company;
- Certified copies of the passports of the ultimate beneficial owners of the
- Bank or other references on the good standing of the ultimate beneficial owners;
- The chain of ownership behind the Cyprus Company up to and including the ultimate beneficial owners. Any other information necessary to satisfy the requirements of the Know Your Client requirement “KYC” in order to comply with the Anti-Money Laundering Law and the guidelines issued by the CBA.
[Source: Registering a Company in Cyprus]
Reasons to Invest in Cyprus
- Cyprus is a EU27 Member since May 2004, Economic and Monetary Union Member since January 2008. Foreign investors have the opportunity to access the EU market and vice versa.
- Cyprus is Europe’s eastern outpost at the crossroads of three continents– Europe, Africa and Asia – providing a gateway to and from each one of them.
- Cyprus offers one of the most attractive tax systems in Europe. The country provides a simplified, effective and transparent tax regime that is fully compliant with the EU laws and regulations.
- Dividend income, profits from overseas permanent establishments and profits from the sale of securities are exempt from tax. Also, there is no withholding tax on dividend, interest and royalties paid from Cyprus.
- Most international transactions are exempt from VAT.
- Cyprus has a network of double taxation agreements with more than 48 countries. For a complete listing please visit the Ministry of Finance Double Taxation Agreements Section (http://www.mof.gov.cy/mof/ird/ird.nsf/dmldtc_en/dmldtc_en). Additionally, Cyprus has access to EU Directives that focus on reducing or eliminating foreign withholding taxes.
- Cyprus is a dynamic business centre that offers relatively lower operating costs while also providing top quality services, including accounting, auditing, tax, business administration, legal, investment and funds management.
- Cyprus has developed into an international quality business centre that offers specialized services and rewarding business opportunities catering for the diverse needs of international investors, enhancing the ease of doing business.
- The World Bank’s Doing Business Report 2014 ranked Cyprus 39th out of 189 Economies and 16 out of the EU28 for the ease of doing business.
- Forbes Magazine 2012 Best Countries for Doing Business report ranked Cyprus 25th out of 144 countries.
- Cyprus has a robust telecommunications system, two international airports (Larnaca, Paphos) and two ports (Limassol, Larnaca). Furthermore, the relatively small distances make the island a very friendly and easy to get around business location
- Pro-business, based on common law, Accounting and Legal transparency
- The legal system is based on the U.K. Common Law principles and aligned with the EU laws and regulations (Acqui Communautaire).
- Cyprus provides quality legal services in areas such as international law, corporate administration and management services. Most large legal firms are affiliated or collaborate with international law firms.
[Source: Cyprus Invest]
|Area||9,251 sq km|
|Climate||Hot, dry summers and cool winters|
|Official Languages||Greek, Turkish, English|
|GDP per capita||$24,500 as of 2013|
|Main trading partners||Italy, UK, France, German, Singapore and US|
|Weights and measures||Metric|
|International dialing code||+357|
|Internet domain suffix||.cy|
|Quality of life||Moderate earthquake activity, droughts’ 3rd largest island in the Mediterranean|
[Source: The World FactBook]
American Corporate Services offers experience and expertise for astute investors who wish to establish offshore businesses. Whether an investor wishes to immigrate or simply to establish a business entity, our network of professionals has the ability to advise, assist, direct and enable clients to understand and navigate the process for Cyprus company formation.
Our services include everything you need for starting a new business in Cyprus. In addition to helping to establish a Cyprus business bank account, helping you set up your business to conform to Cyprus accounting standards and to comply with Cyprus taxes, we also offer boutique amenities such as Cyprus secretarial services. We can even help you to create a Cyprus virtual office that will appear to others as though you are actually in Cyprus, even though you may be just about anywhere else on the globe at the time. Our business is making your investment a success.