The Cyprus Companies Law is predominantly based on the English Companies Act and is compliant with all EU Directives. Companies registered in Cyprus enjoy full access to European markets and EU trade agreements. Cyprus has an attractive tax system with one of the lowest corporate income tax rates in the EU and an extensive network of over 60 double tax treaties worldwide.
Key advantages of Cyprus include: highly competitive tax system with one of the lowest corporate income tax rates in the EU and multiple incentives at both the corporate and individual level (click here to read more about Cyprus tax); an extensive double tax treaty network; good ease of doing business; effective regulation; advanced infrastructure and communications; human talent; and low set up and operational costs.
Sovereign acts as a partner to businesses and individuals considering investment into or from Cyprus through all stages of the investment cycle. We provide company formation and management services, together with the comprehensive advice to maximise opportunities and achieve long-term sustainability.
Sovereign Trust (Cyprus) is authorised by Cyprus Securities and Exchange Commission (CySEC) as an Administrative Service Provider (ASP). Our services range from domiciliary services – providing company secretary and professional directors for your company – to helping you manage your payroll, banking or intellectual property requirements.
Cyprus has developed into a key regional domicile for investment funds and fund managers. Sovereign can also assist with setting up Alternative Investment Funds (AIFs) and Undertakings for the Collective Investments in Transferable Securities (UCITS), as well as establishing asset management companies with a pan-European reach.
Under the principle of single authorisation – known as ‘passporting’ – a licensed Cyprus Investment Firm (CIF) is permitted to provide the services or perform the activities for which it has been authorised in any EU or European Economic Area (EEA) member state without further authorisation.
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Setting up a company in Cyprus
A Cyprus company may take the form of either a private company or a public company. Every company is required to have a company secretary and a registered office address in Cyprus, which may also be used as the business address of the company. Every Cypriot company is required to maintain proper books of account, prepare audited financial statements and submit an annual corporate income tax return. Specialist uses of Cyprus companies include:
Cyprus serves as an effective gateway to the EU, receiving dividends free of withholding tax and paying dividends to shareholders without deduction of withholding tax. Cyprus also has some particularly advantageous tax treaties.
Finance and treasury companies
A Cyprus company can receive interest on loans to EU group companies with no withholding tax and can pay interest without deduction of withholding tax. Cyprus companies trading in securities (e.g. shares, bonds, repos) have no tax liability because income and gains on disposal of such securities are exempt from tax.
Ship owning and management companies
Cyprus operates an ‘Open Registry’ regime with a Tonnage Tax System (TTS), which covers ship owning, ship management (crew and technical management) and chartering. There is no tax on shipping profits, dividends paid from shipping profits, estate duty or capital gains tax and no stamp duties on documents or mortgage deeds. There is also no income tax for seafarers on Cyprus-flagged ships.
Oil and gas exploration and extraction companies
Combined with Cyprus’ permanent establishment exemption, exploration and extraction activity can be undertaken free of Cypriot tax.
The private company is the most common business vehicle in Cyprus. A private company must have at least one shareholder and cannot have more than 50 members. It also only requires a minimum of one director to be appointed, and does not limit the maximum number of directors. The transfer of shares must be restricted.
A public company must have at least seven shareholders. The shares are freely transferable and available to public subscription. A public limited company requires at least two directors and must also register its memorandum and articles of association with the Cyprus Registrar of Companies.
Establishing a presence in Cyprus can be effected through a subsidiary or a branch of an overseas company. Both procedures are cost and time-effective.
The differences between a branch and a subsidiary are that a branch office must have the same name as that of its parent company, and acts as an extension to the head office. A branch does not acquire a separate legal personality and therefore the liability for all activities undertaken fall on the parent company.
Partnerships are regulated by the Partnerships and Business Names Law (Cap. 116). A general partnership is one in which all partners are general partners and have unrestricted liability for all the obligations of the partnership. A limited partnership is one in which at least one partner is treated as a general partner and has unrestricted liability for all the partnership obligations, with the other partners having limited liability up to the amount contributed (or remaining unpaid) by them to the partnership. Since the introduction of Amending Law 144(I)/2015, a limited liability partnership (LLP) can also be established.
Investment funds are a rapidly growing sector within the Cyprus financial services industry. There are two types of funds that can be set up in Cyprus: UCITS and non-UCITS. The non-UCITS funds are known as International Collective Investment Schemes (ICIS). In addition there is the possibility to distribute foreign UCITS and foreign non-UCITS in Cyprus.
Cyprus has fully adopted all EU Directives and Regulations that effect investment services and financial markets. Under the conditions of the prevailing MiFID II related legislation, an investment firm licensed by the Cyprus Securities and Exchange Commission can effectively offer its services throughout the EU under the “passporting” conditions of its authorization.
Located at the crossroads of three continents and on key strategic shipping routes, Cyprus is a country with a strong maritime tradition that has developed into a dynamic international shipping hub.
Today, Cyprus is a modern, efficient and integrated shipping cluster ranked amongst the leading in the world. It is committed to providing quality services, a competitive business and taxation environment whilst ensuring efficient shipping and the highest possible standards in safety, security and environmental protection.