Cyprus Financial Information

The Cyprus Resident vs. Non-Resident Company

A Cyprus company, under the Income Tax Law of 2003 (118(I) 2002) can be either Tax Resident in Cyprus or Non-Tax Resident.

1. Tax Resident Company
   A tax resident company is a company whose management and control is exercised in Cyprus. Hence the majority of directors must be in Cyprus. It pays 10% tax on its worldwide business profits (5% on interest income, 0% on dividend income). It can claim relief under the Cyprus double tax treaty network.
   
2. Non-Resident Company
   A non-resident company is a company where the management and control is exercised outside of Cyprus. Hence the majority of the directors must be outside Cyprus. A non-resident company is taxable at 0% on its worldwide income. Any income generated in Cyprus is taxed at 10%.

Incorporation Procedure

The establishment of a Cyprus company requires its incorporation with the Registrar of Companies. The incorporation procedure takes 7 – 10 working days from the day of application to the Registrar of Companies.
The procedure can be reduced by 2 – 3 working days if a name is chosen from our list of pre-approved names.
In relation to Cyprus companies which are owned beneficially by non-residents of Cyprus, the Central Bank of Cyprus requires submission of a Statistical Declaration form.

Incorporation Requirements

Aspen Consultants require that the standard questionnaire is completed and signed by the applicant for the incorporation of the Cyprus company.
As part of our due diligence review we require the following documents for all the beneficial owners and directors of the company to be incorporated: a bank reference letter, a certified copy of the passport and a copy of the utility bill showing current residential address.

Cost in Set up and Operating a Cyprus Limited Company

The costs of establishing and operating a Cyprus IBC can be classed as follows:

• Company Law Requirements
  The company Law requires that a company maintains proper accounting records in accordance with the International Accounting Standards.
  The first reporting period can be up to 18 months from the date of incorporation. Financial statements for a 12-month accounting period have to be prepared annually after that. A Cyprus registered auditor is required to be appointed in the cases where the company:
  

1. is required to prepare consolidated accounts, or
2. is a Public Limited company, or
3. fails to meet the small company criteria

• Tax Returns
  Tax resident companies have to prepare and submit their annual tax returns (IR4) to the Tax Authorities by 31 December following their year-end. The IR4 must be signed by a registered auditor.
  Non-resident companies, although not required to submit an annual tax return, are still subject to the provision of the Company Law for the appointment of a Cyprus registered auditor.
  

• Returns to the Registrar of Companies
  All Cyprus companies must submit their audited financial statements (or unaudited when the Company Law exemptions apply) to the Registrar of Companies together with their annual return HE32.

Operating a Cyprus Limited Company

The operations of a Cyprus Company can be performed without the need for a fully-fledged office in Cyprus.
In the case where nominee directors are used for the establishment of the Company, the beneficial shareholders or the decision makers can be issued with specific Powers of Attorney to enable them to engage the Company into business activities as prescribed by the Memorandum and Articles of Association.
Aspen Consultants undertake to perform the day-to-day activities of the Cyprus Company.
The bank accounts of a company can be operated by signatories known to the beneficial shareholders.

Banking in Cyprus

The banking system in Cyprus is highly developed and efficient, capable of coping with the ever increasing needs of the business community in a fast growing economy. Most of the banks in Cyprus offer the facility of internet and electronic e-banking.

The banks operating in Cyprus include:

The commercial banks of Cyprus have strong international connections, which enhance their ability to provide banking services on an international level.

Cyprus has very strict bank confidentiality laws. However, as part of the global anti-terrorism and anti-money laundering policy, the banks require to know the identity of the beneficial owner of the bank account.