Partnerships in Cyprus
A partnership is an association of persons united voluntarily to carry together a business with aim to profit. Partnerships in Cyprus are legal business entities that can offer flexible dynamics, sharing resources and responsibilities while minimising risks and fostering collaboration and growth in a highly supportive business ecosystem.
Cyprus partnerships are regulated by the Partnerships & Business Names Law (Cap. 116), which was amended in 2015 to provide for partnerships limited by shares (more commonly known as ‘Limited Liability Partnerships’ or LLPs). A partnership must carry out a business, must have at least two partners, who may be natural or corporate persons, and must be established with a view to generate profit.
The Cyprus Law allows for three types of partnership, as follows:
In a general partnership, all partners are general partners and therefore every partner is jointly and severally liable with all the other partners for the debts and obligations incurred by the partnership that arise while he/she is a partner. This means that the personal assets of each partner can be used to cover any partnership debts. In a general partnership, all partners are actively involved in managing and running the business, and each partner has the power to make decisions that can legally bind the partnership. A general partnership must have at least two partners and a maximum number of 100. A general partnership has no separate legal personality from its members and cannot own property in its own name.
A limited partnership must comprise at least one partner who is designated as the general partner and is responsible for all the debts and obligations of the partnership, as well as one or more persons who are designated as limited partners who will contribute a certain amount or property, valued at a specific amount to the partnership. The general partner(s) is responsible for managing the business and only the general partner has unlimited liability for all the partnership obligations. All the other partners are limited partners who contribute capital but do not take part in management. They are not liable for the debts and obligations of the partnership beyond the amount contributed by them to the partnership, even if it remains unpaid. The contributions of the limited partners should be specified in the partnership agreement. A limited partnership is not considered as a legal entity with separate legal personality.
The concept of Partnerships Limited by Shares – commonly referred to as Limited Liability Partnership (LLPs) – was introduced in 2015. An LLP is similar to the conventional limited partnership. There must be at least one general partner, with unlimited liability for the debts and obligations of the partnership, and one or more limited partners. The liability of the limited partners is restricted to the amount unpaid on the shares they hold in the partnership, in the same way as shareholders in a limited company. As in a conventional limited partnership, only general partners may participate in the management and the operations of the partnership, and be authorised to bind the partnership. Like all other partnerships in Cyprus, LLPs have no separate legal personality and are transparent for tax purposes, with tax being assessed on the partners.
Incorporating a Partnership
Although a partnership exists as of the day on which it commences business, it must inform the Registrar of Companies within 30 days of commencement so that its existence can be registered.
A prerequisite for the registration of a partnership is the selection of a suitable name that meets the criteria of the Registrar of Companies and obtains approval.
The Partnership Registration Form must provide details about all partners, general and limited, the business activities of the partnership, the registered office and the start date.
If approved, the Registrar of Companies will proceed with the publication of the partnership’s registration in the Official Gazette and will issue a certificate of incorporation to evidence the partnership’s legal existence. This will include the partnership’s registration number.
For Limited Partnerships, the amount paid or to be paid by each limited partner, as well as whether such amount has been paid in cash or otherwise, must be notified. For Partnerships Limited by Shares (LLPs) the number of shares to be issued and allotted to each limited partner must be notified.
The notification for any change in the amount paid or in the number of shares owned by each limited partner is notified with the submission of form Σ2 within seven (7) days from its change.
To ensure the smooth operation of the partnership and prevent future conflicts, it is always advisable to draw up a partnership agreement. This legal document specifies the rights, duties and responsibilities of each partner, the respective capital contributions and profit-sharing ratios, and the rules for decision-making and dispute resolution. The agreement should also include procedures for admitting new partners or dissolving the partnership.
Obligations after registration
The partnership must maintain its main place of business within Cyprus. A partnership in Cyprus is required to notify the Registrar of Companies of any changes to partnership’s particulars, such as place of business, change of name, partners’ details or nature of business.
For Limited Partnerships and Partnerships Limited by Shares (LLPs) any change in the amount paid or in the number of shares owned by each limited partner must also be notified within seven days of the change.
Taxation of Partnerships
Partnerships in Cyprus are not considered to be separate legal entities for tax purposes and profits generated by a partnership are therefore taxed as income received by the partners. However, every partnership is obliged, within sixty (60) days from the date of its incorporation, to apply for taxpayer’s registration with the Cyprus Tax Department and to obtain a tax identification number.
Under the Cyprus Tax Reform 2026, all partners registered for tax purposes must submit returns disclosing their share of partnership income on their personal income tax return. In the case of alternative investment funds or mutual funds, only the administrator has the obligation to file a return.
Reporting Requirements
All partnerships are required to keep accurate books of accounts. General partners are responsible for ensuring that the partnership adheres to International Financial Reporting Standards (IFRS) and submits annual financial statements. Partnerships with a turnover exceeding €70,000 are further required to have audited accounts.
Partnerships with general partners that are companies must file an annual return, including the partnership’s financial statements, with the Registrar of Companies within six months of the end of the financial year.
Additionally, at the end of each tax year, the partnership must prepare accounts in accordance with accepted accounting principles which are audited by a certified person. Based on the audited financial statements, each partner submits its tax return to the Tax Department.
Sovereign Cyprus can assist in all aspects of establishing partnerships in Cyprus.
Please contact us if you have any questions or queries and your local representative will be in touch with you as soon as possible.
