Cyprus has long been recognised as a strategic location for international business due to its advantageous tax system, sophisticated business infrastructure, and membership in the European Union. However, registering a company in Cyprus comes with certain responsibilities and requirements that companies need to be aware of and adhere to. In this article, we will delve into the primary obligations of Cyprus Registered Companies and other critical considerations.
1. Annual Financial Statements
All Cyprus Registered Companies are generally required to prepare annual financial statements in accordance with International Financial Reporting Standards (IFRS). These statements should be audited by a qualified accountant based in Cyprus and submitted to the Cyprus Tax Authority. Notably, there are exemptions:
A company is exempted from the submission of financial statements in the year of its incorporation.
Additionally, if a company is in the year following its incorporation and has convened a general meeting during its initial year, it too is exempted.
2. Annual Returns
Every company must submit an Annual Return (HE32 form) to the Cyprus Registrar of Companies, detailing its structure, such as shareholders, directors, and registered office. Accompanying this should be the company’s audited financial statements unless it qualifies for the aforementioned exemptions. Submission dates vary:
New companies: The drafting date is the day after eighteen (18) months from its incorporation date.
Existing companies: The drafting date is the anniversary of the last filed annual return.
3. Tax Obligations
Cyprus offers one of the EU’s most competitive corporate tax rates at 12.5%. Nevertheless, companies are obligated to ensure prompt tax payments and conform to all local tax directives, which may include Value Added Tax (VAT) registration.
4. Maintenance of Statutory Records
Registered entities are mandated to maintain their statutory books and records. This compilation includes the Register of Members, Register of Directors and Secretaries, and the Minute Book, all of which should reside at the company’s official Cyprus address.
5. Annual Levy
Every company listed with the Registrar of Companies is mandated to pay an annual fee of €350 by the 30th of June each operational year. Non-compliance leads to penalties:
Payments made within two months after the deadline (by 31st August) incur a 10% penalty, elevating the total due to €385.
If settled within five months post-deadline (by 30th November), there’s a 30% penalty, increasing the owed amount to €490.
6. Beneficial Ownership Register
As part of the country’s commitment to international transparency standards, Cyprus introduced the requirement for companies to maintain a Beneficial Ownership Register. Companies need to disclose details of the ultimate beneficial owners holding more than 25% interest.
7. Data Protection and GDPR
Being an EU member, Cyprus adheres to the General Data Protection Regulation (GDPR). Cyprus registered companies processing personal data must ensure they are compliant with these regulations, which emphasise data subject rights, transparency, and proper data management.
8. Substance Requirements
To enjoy the benefits of the Cypriot tax regime, companies are expected to have a real substance in Cyprus. This might include physical premises, local employees, and management decisions being taken within the country. These measures ensure that Cyprus is not used for “shell” or “letterbox” companies.
While the advantages of registering a company in Cyprus are numerous, from its robust legal system to its favorable tax regime, it is essential for companies to be fully aware of their obligations. Regular compliance not only helps businesses maintain their standing but also fosters trust with stakeholders and local authorities. Engaging a local law firm or consultant can ensure that all regulations are met, allowing companies to focus on growth and prosperity within the Cyprus business environment.
This article is for general informational purposes only and should not be construed as legal advice