Setting Up a Company in Cyprus: 7 Steps Guide

Setting up a company in Cyprus has become increasingly appealing for entrepreneurs across the European Union. Known for its strategic location at the crossroads of Europe, Asia, and Africa, the island offers easy access to international markets, making it an ideal base for regional operations.

The country boasts a modern infrastructure, a stable economy, and a business-friendly environment that attracts start-ups, established enterprises, and investors alike.

One of the main draws is the favourable tax regime, with a low corporate tax rate and various incentives aimed at reducing operational costs. Entrepreneurs benefit from straightforward legal frameworks, simplified incorporation processes, and flexible business structures suitable for companies of all sizes.

Access to the European single market further enhances Cyprus’s appeal, allowing businesses to trade freely across EU member states.

Beyond financial advantages, the island provides an excellent quality of life. With a pleasant Mediterranean climate, a high standard of living, and a welcoming local community, the island offers both professional opportunities and personal comfort.

Entrepreneurs from the EU find the combination of economic benefits and lifestyle perks particularly compelling when choosing a location to establish operations.

Whether launching a start-up, expanding an existing enterprise, or seeking tax-efficient solutions, setting up a business presents a practical and rewarding choice for forward-thinking professionals.

Benefits of Setting Up a Company in Cyprus

Setting up a business in Cyprus offers a range of advantages that make the island an attractive destination for entrepreneurs and companies across Europe. One of the most significant benefits is its favourable tax environment.

The country boasts one of the lowest corporate tax rates in the European Union at 12.5%. Additionally, the Non-Domicile (Non-Dom) regime allows qualifying individuals to enjoy exemptions on dividends and interest income for up to 17 years, creating appealing opportunities for both business owners and investors.

Access to the European single market is another compelling reason to establish a company. Businesses registered on the island can operate freely across EU member states, facilitating cross-border trade and providing international growth opportunities.

Cyprus also benefits from an extensive network of double tax treaties, helping to minimise tax burdens on foreign income.

The process of incorporation is designed to be straightforward and efficient. Local authorities have streamlined registration procedures, allowing many businesses to be operational within a week.

Entrepreneurs can choose from various legal structures to suit their needs, with flexible options available for start-ups, holdings, and multinational subsidiaries.

Another key advantage of setting up a business in Cyprus is the Intellectual Property (IP) Box Regime, which offers significant tax incentives for companies generating income from intellectual property assets. Under this regime, qualifying IP income benefits from an effective tax rate as low as 2.5%, making Cyprus an attractive jurisdiction for tech companies, innovators, and businesses with valuable IP rights.

Beyond financial and administrative perks, the island provides an exceptional quality of life, which is an important factor for business owners and employees considering relocation.

With its Mediterranean climate, high safety standards, and robust healthcare system, the island ensures both comfort and well-being. A vibrant mix of local and international communities also fosters strong professional networks.

Key benefits of setting up a business in Cyprus:

• Low corporate tax rate (12.5%) with tax incentives for residents
• Access to the EU market and international trade opportunities
• Simple incorporation process with flexible legal frameworks
• Extensive double tax treaty network to avoid double taxation
• High living standards, safe environment, and modern infrastructure

Combining financial efficiency, regulatory simplicity, and lifestyle advantages, Cyprus stands out as a prime destination for entrepreneurs seeking sustainable growth and global reach.

Types of Companies in Cyprus

When setting up a company in Cyprus, entrepreneurs can choose from several company structures, each catering to different needs and goals. Selecting the right type is crucial for efficient operations, tax planning, and legal compliance.

1. Private Limited Company (LTD)

The Private Limited Company (LTD) is the most popular choice for entrepreneurs and small to medium-sized enterprises. It offers limited liability, meaning shareholders’ personal assets are protected against firm debts. An LTD requires at least one shareholder and director, and there is no minimum capital requirement. This structure is suitable for various activities, from trading to consultancy services.

2. Limited Liability Company (LLC)

Similar to an LTD, an LLC provides liability protection while offering flexible management and ownership options. This structure suits businesses seeking a balance between operational simplicity and legal safeguards. LLCs are often preferred by freelancers or small teams looking to formalise operations without complex governance. This option is typically reserved for regulated professions such as law, medicine, and other specialised fields, making it less suitable for traditional companies.

3. Holding Companies

Cyprus is renowned for its favourable environment for holding companies. These entities primarily manage shares of other companies and benefit from tax exemptions on dividends and capital gains. International investors use Cyprus-based holding structures to streamline global operations while leveraging the island’s extensive double tax treaty network.

4. Branch Offices

Foreign enterprises aiming to expand into Cyprus often establish branch offices. These are extensions of parent companies and allow international firms to operate locally without forming a separate legal entity. Branches are ideal for testing the Cypriot market or managing regional operations.

5. Partnerships and Sole Proprietorships

For smaller ventures, partnerships and sole proprietorships offer straightforward solutions. Partnerships can be general or limited, providing flexibility depending on liability preferences. Sole proprietorships, often chosen by freelancers or single-owner businesses, involve minimal setup procedures but do not offer liability protection.

Choosing the right structure depends on your firm goals, tax considerations, and long-term plans. Cyprus’s variety of options ensures that both start-ups and established companies can find a suitable framework for their operations.

Guide to Company Formation: 7 Steps

Setting up a business involves a structured process designed to be efficient and accessible for both local entrepreneurs and foreign investors. Following each step carefully ensures compliance with local regulations while streamlining the overall formation journey.

1. Choosing and Approving a Company Name

Selecting a suitable name is the first formal step. The chosen name must be unique and not resemble existing registered companies. Certain terms—particularly those implying governmental affiliation or suggesting regulated activities—may require special approval.

Entrepreneurs must submit name proposals to the Cyprus Registrar of Companies, typically providing up to three options to improve approval chances. Processing usually takes a few working days, but names containing restricted words or foreign terms may extend the timeline.

2. Drafting the Memorandum and Articles of Association

Once the name is approved, the next step involves preparing the Memorandum and Articles of Association—essential legal documents outlining the company’s structure, objectives, and internal rules. The memorandum specifies the business purpose, registered office location, and share capital details.

The articles cover operational aspects, including director responsibilities and shareholder rights. Drafting these documents requires careful attention to local legal standards. Many entrepreneurs work with local experts to ensure full compliance and to tailor content to specific operational needs.

3. Registering with the Cyprus Registrar of Companies

After document preparation, entrepreneurs must submit the application for incorporation.

Key documents include:

• Approved company name confirmation
• Signed Memorandum and Articles of Association
• Details of directors, shareholders, and company secretary
• Proof of registered office address

The Registrar typically processes applications within 10 to 20 working days. Upon successful registration, the company receives a Certificate of Incorporation, confirming its legal status and enabling it to commence operations.

4. UBO Registration

All newly formed firms must declare their Ultimate Beneficial Owners (UBOs). This process ensures transparency and aligns with EU anti-money laundering regulations. UBOs are individuals holding at least 25% ownership or significant control over the entity.

Every firm must submit UBO information within 30 days of incorporation and update it within 30 days of any changes. An annual confirmation, typically between November and December, is also mandatory. Failure to comply can result in fines and operational delays.

5. Obtaining a Tax Identification Number (TIN)

Securing a Tax Identification Number (TIN) is essential for financial and tax-related activities. The owner must apply through the Tax Department shortly after incorporation.

The TIN enables businesses to:

• File corporate tax returns
• Process employee payroll taxes
• Engage in local and international trade requiring tax documentation

Without a valid TIN, companies may face operational restrictions and penalties for non-compliance.

6. VAT Registration

Firms engaging in taxable activities exceeding the VAT threshold of €15,600 must register for VAT. Registration ensures legal compliance when issuing invoices and reclaiming VAT on eligible expenses. Voluntary VAT registration can also offer advantages below the threshold. VAT registration is mandatory for companies doing business outside of Cyprus butoperating within the EU. Applications require submitting business activity details and the TIN.

Processing times vary but typically range from one to two weeks. Registered companies must file periodic VAT returns to avoid late penalties.

7. Opening a Bank Account

A corporate bank account is vital for managing daily operations, processing payments, and receiving client funds.

To open an account in Cyprus, businesses generally need to provide:

• Certificate of Incorporation
• Memorandum and Articles of Association
• UBO declaration documents
• Identity documents for directors and shareholders

Most banks require in-person verification, though some offer remote onboarding for foreign directors. When choosing a bank, entrepreneurs should consider transaction fees, international service offerings, and customer support. Collaborating with local professionals can streamline the application process and ensure compliance with Cyprus’s financial regulations.

Legal and Tax Considerations

Understanding the legal framework and tax obligations is essential when setting up a business in Cyprus. The island’s favourable regulations, combined with a competitive tax system, make it a preferred destination for entrepreneurs and investors seeking operational efficiency and financial benefits.

Corporate Tax and Obligations

Cyprus offers one of the lowest corporate tax rates in the European Union at 12.5% on taxable profits. Companies engaged in international activities may also benefit from exemptions on dividends, profits from overseas establishments, and certain capital gains.

To maintain compliance, businesses must submit annual tax returns and settle corporate tax liabilities promptly. Late submissions can result in fines, highlighting the importance of meeting local deadlines.

Non-Domicile Status: Tax Advantages for Owners

The Non-Domicile (Non-Dom) regime presents significant tax advantages for shareholders and directors relocating to Cyprus. Individuals qualifying for this status are exempt from taxes on dividends and interest income for up to 17 years, making it particularly appealing for those seeking long-term tax efficiency.

For business owners, this structure supports wealth management while reducing overall tax exposure. Securing Non-Dom status requires establishing tax residency, typically through the 183-day or 60-day rule, depending on individual circumstances.

Accounting Requirements and Legal Compliance

All Cypriot businesses must maintain accurate accounting records reflecting financial transactions and operational activities.

They are required to:

• Prepare annual financial statements in accordance with International Financial Reporting Standards (IFRS)
• Appoint a licensed auditor for yearly audits
• Submit financial reports to the Cyprus Registrar of Companies within prescribed deadlines

Failure to comply with accounting obligations can lead to penalties and impact firm credibility. Entrepreneurs are encouraged to engage local professionals to ensure adherence to reporting standards and regulatory expectations.

Tax Residency and Its Importance

Establishing tax residency is a critical consideration for both businesses and individuals. Entities are generally deemed tax resident if their management and control are exercised, while individuals qualify by meeting the stipulated presence requirements.

Achieving tax residency enables access to Cyprus’s network of double tax treaties, reducing exposure to dual taxation on foreign income. For business owners, this status facilitates efficient tax planning and enhances operational flexibility within the European market.

Navigating Cyprus’s legal and tax landscape requires careful planning, but with proper guidance, entrepreneurs can leverage the island’s regulatory advantages to establish a strong foundation for long-term success.

How RebaseCyprus Can Assist You

Setting up a business in Cyprus involves navigating legal requirements, tax regulations, and administrative processes. Without local knowledge, these steps can become time-consuming and complex. RebaseCyprus provides comprehensive support to ensure a smooth and efficient company formation experience.

Our team assists with every stage of the process, from selecting an appropriate company structure to handling documentation and liaising with local authorities. We guide clients through essential tasks, including name approval, UBO registration, tax identification, and VAT compliance.

With expertise in the Cypriot regulatory environment, we help businesses avoid common pitfalls and ensure full compliance with local laws.

Working with local experts offers several advantages when moving to Cyprus. Our in-depth understanding of regional procedures enables faster processing times and accurate submissions, reducing the risk of delays or penalties.

We tailor solutions to meet the specific needs of EU entrepreneurs, ensuring that each client receives personalised advice aligned with their goals.

Beyond incorporation, RebaseCyprus provides ongoing support for banking arrangements, accounting services, and residency applications, offering a complete relocation and business setup solution.

By partnering with us, entrepreneurs can focus on building their operations while we manage the complexities of establishing a presence.

FAQs: Setting Up a Company In Cyprus

How long does it take to set up a company?

The process typically takes 7 to 10 business days if all documents are prepared correctly. Delays can occur if approvals or submissions contain errors, making professional guidance valuable.

Can I open a company as a non-resident?

Yes, non-residents can establish a business without local residency. Many foreign entrepreneurs benefit from flexible incorporation rules and straightforward registration procedures.

What tax benefits does limited company offer?

A Cyprus limited company enjoys a 12.5% corporate tax rate, one of the lowest in the EU. Additional advantages include exemptions on dividends and capital gains under certain conditions.

Do I need to be present to register a company in Cyprus?

Physical presence is not always required. RebaseCyprus can handle the process on your behalf, although some banks may request in-person identification for account opening.

What are the average costs of incorporation?

Costs vary but generally range from €1,500 to €3,000, covering legal fees, government charges, and initial administrative expenses. Ongoing costs include accounting and compliance services.

When is VAT registration mandatory?

Businesses must register for VAT when annual taxable turnover exceeds €15,600. Voluntary registration can benefit companies trading within the EU, even below the threshold.

How does the Non-Dom status help with tax optimisation?

The Non-Domicile (Non-Dom) regime exempts qualifying individuals from taxes on dividends, interest, and certain capital gains for up to 17 years, offering significant savings for shareholders and directors.

These insights help entrepreneurs make informed decisions when setting up a business in Cyprus, ensuring compliance and maximising potential benefits.