Cyprus is a prime location for international and local entrepreneurs looking to set up a business. The island’s strategic location, favorable tax regime, and EU membership make it an attractive jurisdiction for companies. However, understanding the legal framework is essential for smooth company formation. This article outlines the critical steps and legal requirements to set up a business in Cyprus.

Key Legal Requirements:

1. Company Name Approval:
   • Before anything else, the proposed name for your company must be approved by the Cyprus Registrar of Companies. It’s important to ensure the name is not too similar to existing businesses, and it should not be misleading or offensive.
   • A lawyer can help you check the name’s availability and submit an application for approval. This step usually takes 3 to 5 working days.
2. Memorandum and Articles of Association:
   • These are the foundational documents of the company. The Memorandum outlines the company’s objectives and scope, while the Articles of Association govern the company’s internal management, including director responsibilities and shareholder rights.
   • These documents must comply with the Companies Law, Cap. 113, and need to be carefully drafted to reflect the business structure and goals. Your lawyer ensures these are tailored to your company’s needs while staying within legal parameters.
3. Shareholders and Directors:
   • A private limited company in Cyprus requires at least one shareholder and one director, who may be either individuals or legal entities. Importantly, there are no residency restrictions for shareholders or directors.
   • While directors can be non-residents, appointing local directors may be beneficial, particularly for tax residency purposes, as Cyprus companies can take advantage of the low corporate tax rate of 12.5% when managed and controlled from within Cyprus.
4. Registered Office:
   • All Cyprus companies must have a registered office in the country, where official documents and communications will be sent. This address must be accessible for legal purposes.
5. Minimum Share Capital:
   • While Cyprus does not impose a minimum share capital requirement for private limited companies, it’s customary to start with a nominal amount, usually €1,000. However, the amount may vary depending on the nature of the business.

Procedure:

1. Filing with the Registrar of Companies:
   • Once the company name is approved and the Memorandum and Articles of Association are drafted, your lawyer will submit the documents along with the necessary forms (HE1, HE2, HE3) to the Cyprus Registrar of Companies.
   • The Registrar will review the documents, and if everything is in order, your company will be officially registered. This process typically takes about 10-15 days.
2. Tax Registration:
   • After registration, your company must register with the Tax Department. If the company’s annual turnover exceeds €15,600, VAT registration is also required. Your lawyer will guide you through the tax registration process to ensure compliance.
3. Bank Account Opening:
   • Once the company is registered, you will need to open a corporate bank account in Cyprus. This requires submitting the company’s incorporation documents and proof of its operational purpose. A lawyer can assist with liaising with banks and fulfilling the KYC (Know Your Customer) requirements.

Why Cyprus?

Cyprus offers a number of advantages for business owners, including:

• Low Corporate Tax: At 12.5%, it is one of the lowest corporate tax rates in the European Union.
• Double Tax Treaties: Cyprus has an extensive network of double tax treaties with over 60 countries, providing benefits for international businesses.
• EU and International Law Compliance: As an EU member, Cyprus adheres to strict regulatory frameworks, providing businesses with stability and credibility.

With the right legal advice, company formation in Cyprus is straightforward, offering long-term advantages for both local and international entrepreneurs.