Accounting Services

Cyprus Accounting Framework

As an EU member state, Cyprus is subject to the accounting, auditing and financial reporting requirements established in EU Regulations and Directives as transposed into national laws and regulations. The Cyprus Companies Law, Cap. 113 sets out the requirements for the preparation of corporate financial statements in Cyprus and transposes the EU Accounting Directive (2013/34/EU).

The Institute of Certified Public Accountants of Cyprus (ICPAC) is the body of professional accountants in Cyprus. Although ICPAC does not set accounting standards, it promotes high-quality implementation of accounting standards through its code of ethics and educational activities.

International Financial Reporting Standards

All Cyprus entities, including small and medium-sized enterprises (SMEs), are required to apply the International Financial Reporting Standards (IFRS), as adopted by the EU, in their consolidated and separate financial statements.

Foreign companies are also required to use IFRS as adopted by the EU in their consolidated financial statements unless their home jurisdiction’s standards are deemed by the EU to be equivalent to IFRS Standards.

Bookkeeping

The directors of the company are responsible for keeping proper books and accurate accounting records on the basis of which the company’s financial statements are prepared.

These books of account and records must give a true and fair view of the company’s financial affairs and allow the determination of the financial position of the company, with reasonable accuracy, at any specific point in time. They must also include supporting documents (including contracts and invoices), which should reflect:

All the amounts of money collected and spent by the company, as well as issues for which a relevant collection and expenditure is made.
All the sales, purchases and transactions of the company.
All the assets and liabilities of the company.

Financial Statements and Audit

All Cyprus companies, irrespective of their size, must have their financial statements audited annually by a certified auditor practicing in Cyprus. A company must appoint a certified Cyprus auditor to hold office at each annual general meeting. This applies even if a company is dormant.

A company’s directors are responsible for ensuring that a complete set of financial statements for the company is prepared in accordance with the IFRS and the provisions of the Companies Law. These should include the profit and loss account, the balance sheet signed by at least two directors, and notes which, depending on the circumstances, must be accompanied by:

The company’s management report or, if applicable, a consolidated management report.
The company’s auditors report.
A non-financial report and depending on the circumstances a consolidated non-financial report;
A report or, if applicable, a consolidated report for tax and government payments.

The audited financial statements of the company must first be approved by the board of directors and then presented for approval by the shareholders at an annual general meeting held no later than 18 months after the incorporation of the company, and subsequently at least once per calendar year.

Every company that has subsidiaries, subject to certain exemptions for small and medium-sized groups and holding companies, must prepare consolidated financial statements, in accordance with the IFRS, and present the consolidated ones.

The annual financial statements must be kept at the company’s registered office in Cyprus for a period of six years from the end date of the last statements.

Annual Returns

The Annual Return should be prepared up to the company’s reference date and delivered for filing to the Registrar of Companies, together with the financial statements and auditor’s report, within 28 days of its drafting date.

For a new company, the drafting date of the Annual Return is the day after the expiry of the period of eighteen months from the date of the incorporation of the company. For an existing company, the drafting date of the Annual Return is the anniversary of the drafting date of the previous Annual Return.

The Annual Return includes essential information about the company as at the date of its drafting, in respect of:

The company’s registered office address;
The address of the place where the company’s registers are kept;
The names of the directors and company secretary and, where applicable, the share capital.
The register of members.

The information included in the Annual Return should be in accordance with the companies’ register of the Registrar of Companies. Any changes in a company’s particulars should be notified to the Registrar by filing the relevant form, prior to the filing of the Annual Return.

Annual Returns must be accompanied by the financial statements relating to the previous financial year, duly certified by a director and the company’s secretary, together with payment of the appropriate fee. For a private company with share capital, the Annual Return can only be submitted through through the Registrar of Companies’ e-filing system.

Corporation Tax Return

Companies incorporated in Cyprus are obliged, within 60 days from the date of the incorporation, to register with the Cyprus Tax Department and obtain a Tax Identification Number (TIN). The submission of a request for registration in the Tax Register is carried out only via the Tax Department’s online Tax For All (TFA) portal.

All Cyprus companies are also required to submit their financial statements, together with auditor’s report, to the Cyprus Tax Department as part of filing the annual Corporation Tax Return (Form TD4). Corporation Tax Returns can be filed online via the TAXISnet online portal.

The tax year in Cyprus is the calendar year. Corporation Tax Returns must be filed with the Cyprus Tax Department by 31 January of the second year after the year to which the Return relates (e.g. Corporation Tax Return for 2025 must be filed by 31 January 2027).

The payment of the final tax under the self-assessment method for legal persons who have an obligation to prepare accounts is 31 January of the year after the following year of the year of assessment.

All employers are now required to prepare and submit the Monthly Withholding Tax and Contributions Declaration (Monthly Form TD7) through the Tax Department’s online Tax For All (TFA) portal and settle the relevant PAYE and related liabilities through the submission of monthly TD7s.

The submission deadline for the annual Employer’s Return of Withheld Taxes & Contributions (Annual Form TD7) is 31 March of the year following the year of assessment.

Delays in the submission of declarations or the payment of taxes are liable to accrue interest, fines and other charges.

Value Added Tax (VAT)

The standard VAT rate in Cyprus is 19%. Exemptions apply to specific services, including healthcare, education, financial and insurance services, betting, gambling and lotteries, certain real estate transactions, and cultural and non-profit activities

Cyprus companies must register for VAT if they are:

A legal person registered in Cyprus and the taxable transactions value of your goods and services carried out over the 12 preceding months – or which will be carried out within the next 30 days – exceeds or will exceed €15,600.
A legal person making acquisitions in Cyprus from other EU member states and, at the end of any one month over the preceding calendar year, when the total value of acquisitions exceeds the threshold of €10,251.61, or whenever there are reasonable grounds to believe that the value of acquisitions over the next 30 days will exceed this threshold.

Registration on the VAT Register requires prior registration in the Tax Register at the Cyprus Tax Department to obtain a Tax Identification Number (TIN).

Entities registered for VAT purposes must submit a VAT declaration via TAXISnet and pay the tax due by the 10th day of the second month following the end date of their tax declaration.

Sovereign Accounting Services

Sovereign’s accounting outsourcing services in Cyprus provide assistance with tax returns, audit and general compliance, which includes preparing financial statements under IFRS, performing statutory audits, and handling submissions to the Registrar of Companies and tax authorities. These services are mandatory for all registered entities in Cyprus.

Sovereign can either offer in-house bookkeeping and accounting services or can recommend a range of accountancy firms that we work with closely. By outsourcing these functions, you can reduce internal operational costs, gain access to sophisticated accounting software and devote more time and resources to value-added and revenue-generating tasks. A high level of accuracy will eliminate delays and administrative errors, as well potential fines and penalties.

Additional services can include obtaining tax certificates, such as tax clearance and Double Taxation Agreement (DTA) certificates, requesting official tax rulings, consulting on controlled foreign company (CFC) and transfer pricing requirements, and general tax planning.

Sovereign can also assist individual clients to prepare and submit their tax returns to the Cyprus Tax Department. This includes personal tax planning and advice on issues affecting expatriates.