Business In Cyprus For Beginners

Establishing a business in Cyprus is a promising venture, given the island’s strategic location, favorable tax regime, and robust legal framework. However, navigating the legal and administrative procedures is crucial to ensuring your business is compliant and well-positioned for success. This guide will walk you through the essential steps of setting up a business in Cyprus, highlighting the key legal requirements, documentation needed, and ongoing obligations to maintain your business in good standing.

Step 1: Contact a Lawyer

The first and most crucial step in establishing a business in Cyprus is to contact a lawyer. In Cyprus, only licensed lawyers are authorized to draft the Memorandum and Articles of Association (M&A) and handle the necessary court procedures involved in company incorporation. Engaging a lawyer early on is a strategic move, as they can also help you determine the most suitable type of incorporation for your business goals. In Cyprus, the main types of companies include:

• Private Limited Liability Company (Ltd)
• Public Limited Company (PLC)
• Partnerships (General and Limited)
• Sole Proprietorship

It’s also important to note that if your business involves certain products or services, a special license may be required. Therefore, clearly defining the scope of your services before establishing your company is essential. This ensures that you meet all necessary conditions to obtain the required license after incorporation.

Step 2: Apply for a Business Name

Once you’ve decided on the structure and services of your business, the next step is to apply for a business name. After submitting your application, if the name is approved, you can proceed with the business incorporation process. It’s important to understand that these are two separate procedures. An approved business name remains registered for six months. If you do not proceed with the incorporation within this period, you must renew the name, or you risk losing it. To avoid this, you can register multiple names and move forward with the one that works best for you.

When choosing a name, thorough research is necessary to ensure it doesn’t violate any regulations or infringe on someone else’s intellectual property. If the chosen name is rejected, you will have to restart the process.

Step 3: Incorporate Your Company

Once you have an approved business name and have decided on the company structure, you are ready to apply for incorporation with the Registrar of Companies. The time required for incorporation depends on the workload of the Registrar at the time of application. The Registrar offers an accelerated procedure, which, for an additional fee, can complete the incorporation within 7-14 working days. If you opt not to use the accelerated process, incorporation may take a month or more, but the cost will be lower, making it a good option for those not in a hurry.

Upon successful incorporation, you will receive several essential documents from the Registrar, including:

• Certificate of Incorporation
• Certificate of Shareholders
• Certificate of Directors and Secretary
• Certificate of the Registered Office

With these certificates, you can open a bank account, draft and sign agreements, and generally start your business operations. However, before commencing operations, you must register with the Tax Department to obtain a Taxpayer Identification Code (TIC), which typically takes about four days.

Congratulations! Your Company is Ready

Now that your company is established, it’s crucial to be aware of your ongoing obligations to avoid legal issues.

1. Declare the Ultimate Beneficial Owner (UBO): It is extremely important to declare the UBO of the company within 90 days of incorporation. If there are changes, you must update this information within 45 days. The annual update must be done between October 1st and December 31st. Failure to meet these deadlines can result in severe fines, amounting to €300 daily until the declaration is made after the deadline.
2. Hire Auditors: You are required to hire auditors who will help you comply with regulations on issuing invoices and receipts. Within the first 18 months, you must file your financial statements, and then continue to do so annually. Failure to submit these on time will result in fines.
3. Pay Municipality Taxes: Depending on the jurisdiction of your registered office, there may be municipality taxes charged annually. Failure to pay these taxes can result in fines and, potentially, criminal prosecution.

With these key steps and obligations in mind, you are now ready to start your business in Cyprus. Good luck!