Contact in Cyprus
Cyprus: +357 22 00 87 99
UK: 0800 098 8033
US: +1 415 651 8449

Hidden Cyprus Company Formation Fees

Cyprus company formation fees will vary according to the complexity of the structure of the firm you wish to create, and of course, the firm that you choose to hire to set-up the company.

While this information is widely available on the internet, there are several other expenses that the owner of a Cyprus company will be required to pay, but which are very rarely mentioned when discussing the formation of a company.

 

Costs of gaining the “Cyprus tax resident” status

Unless the activities of your Cyprus company have a “de facto” business substance in Cyprus, e.g. ownership of real estate in Cyprus, a Cyprus company needs to demonstrate that the management and control of the Company is in Cyprus.

Failure to demonstrate this, may give the right to the tax authorities of other countries to claim that the Ultimate Beneficial Owner is attempting the evasion of taxes and hence demand that any profits of the Cyprus company be taxed by them.

Cyprus has agreed the types of income that may be taxed in each Country by signing quite favorable double tax treaties with numerous countries around the globe. However, it is a responsibility of the Cyprus Company to demonstrate that it is a tax resident in Cyprus and hence benefit from the provisions of the double tax treaties.

This may be achieved by renting some office space in Cyprus and making sure that the majority of the members of the Board of Directors of the company in Cyprus are tax resident in Cyprus.

The cost of renting some office space and the fees of a director in Cyprus start from €500 each, per month. Accordingly, the Cyprus Company will incur a fixed cost of at least €12.000 on top of other administrative expenses per year in order to qualify for Cyprus taxation.

 

Taxation Levels

Cyprus’ corporate income tax rate is now 12.5%. Previous to Cyprus joining the European Union the tax rate was 4.25%. The tax rate has increased by almost three times since Cyprus became a member of the European Union.

While a tax rate of 12.5% is among the lowest in the European Union, it should also be compared to the zero rate that exists in some other jurisdictions.

That all said, several exceptions to this tax rate exist, namely:

  • Foreign-sourced dividends
  • Disposals of shares and other qualifying titles (such as corporate bonds) provided the disposed company does not hold any immovable property in Cyprus.
  • No withholding taxes on payments made abroad at all times.
  • Profits of foreign branches (but an option to tax is available for the taxpayer).
  • The Cyprus IP tax regime can be utilized to achieve an effective tax rate of as low as 2.5%
  • Shipping activities are taxed under the tonnage tax regime
  • Foreign exchange gains, unless they are earned by Forex traders/ dealers

 

Cyprus company formation fees – Conclusion

Due to the administrative expenses that are described above, and the fact that the tax rate is not close to zero any more, Cyprus may not be an ideal place for companies that make profits in and around the level of the average salary of a European Citizen.

In my opinion, a Cyprus company may be used for the establishment of an efficient tax structure where the profits of the company will be above a certain amount only.

It is highly recommended that anyone thinking of forming a company in Cyprus seek advice from a local accountant to ensure the tax benefits are worth the costs, before they proceed with the formation of a Cyprus Company.

You may be interested in the following service...

Client testimonials

"Constantinos was professional and helpful. He made the process of buying property in Cyprus much easier for us.

We would definitely recommend Constantinos and his assistance to others."

Natasha Petrovic (Jul 26, 2022)

Company Formation

This service is available across Cyprus

Location

1Who is this service for?

Many clients choose our company formation service in Cyprus for the agreeable tax regime, and may not be permanently located on the Island.

It can be particularly advantageous to have English-speaking business and tax experts available to assist you with your business plans here - from the start-up phase through to ongoing tax-compliance and HR matters such as processing new employees and Social Security obligations.

2Regulated Experts

For your peace of mind, please rest assured that all of our accountants are registered and regulated by the local Accountancy Regulatory Body and speak fluent English. Therefore, you can be sure that you will obtain timely answers to any queries you may have, in a language that you understand!

3What does this service consist of?

Tax & Social Security Registration

Our tax experts will assist you to set-up your business in Cyprus including company name registration, Mercantile Registry operations and bank account set-up.

Tax Optimisation Planning

As one of the major reasons for choosing Cyprus as a location for incorporating your company in the European Union is the favourable taxation environment, ensuring that you maximise your tax obligations is a critical aspect of any business formation service in Cyprus. Accordingly our experienced, registered and regulated accountants will provide advice on:

  • Maximising the tax advantages of non-resident corporate owners.
  • The creation of optimal tax structures using Cyprus and international companies, double tax treaties and international trusts for the best possible structure for your business.

Nominee Directors, Bank Accounts & Ancillary Services

As part of our company incorporation service in Cyprus we will arrange for you a service offering nominee services for shareholders, directors, secretarial services and also a registered office address:

  • Since personal details of directors and shareholders are publicly available at the public Registrar of companies. In order to maintain your anonymity, we can introduce to you a service provider company that would offer nominee shareholder and director services. Via this service the shares would be held confidentially on your behalf as a beneficial owner through a Trust deed. The trust deeds are not available for review by any external firm person or authority, unless directed via Court order.
  • Introduce you to a service provider company that offers services regarding opening bank accounts and preservation of those accounts.

4Additional Services

Company Incorporation Service Features

The Limited Company Incorporation and Tax Service package provides all of the assistance you will need to get set-up and operating in the quickest time possible in Italy, and includes the following individual services:

  • Drawing-up a notarial contract according to your guidelines, properly prepared and tailored to your objectives.
  • Ensuring that your Articles of Association contain all necessary elements.
  • Make sure that the application is made in accordance with the requirements of the Commercial Companies Code. With the power of attorney you will have granted to us, on your behalf we will register your company at all Government institutions and offices required by law.
  • Applying for company tax and identification numbers.
  • Obtaining all necessary documents, permits and approvals.
  • Dealing with bank formalities connected with setting up of the company bank account.
  • Once completed the registration process, we will draw up all other corporate documents required by the Commercial Companies Code.

Bookkeeping

Once your business has been set-up in Cyprus, with all formalities attended to, it will be necessary to ensure that your company is compliant with Cyprus' tax laws. We offer a comprehensive service, which includes the following components:

  • Maintenance of proper books and records based on International Accounting Standards
  • Preparation and Submission of VAT returns (quarterly)
  • Resolution of tax enquiries related to the industry sector of the company
  • Maintenance of all legally required records (income, expenses, invoicing, assets)
  • Completion and presentation of all required tax returns
  • Company annual return (abbreviated accounts: balance sheet, profit and loss statement, annual report)
  • Ongoing updates on any legislative changes affecting the area of the Company Activities

Fully Managed HR & Payroll Service

This service includes the following components:

  • Initial Set-up according to client's requirements
  • Production of Employee Pay slips (printed at client site)
  • Management & Payment of Employer & Employee Social Security Contributions
  • Registration and Removal of Employees from Social Security system

This service costs €25 per month for the first employee and €20 per additional employee.

All prices are ex-VAT (@ 19%).

5Audit Service

As well as legal registration and ongoing tax compliance, companies in Cyprus must submit an audit carried-out by an approved accountant. Below are details of our Auditing Service:

  • Our qualified auditors prepare the audit of Financial Statements that includes the examination and verification of a company’s financial and accounting records and supporting documents.
  • All companies that are registered in Cyprus must prepare and submit to Cyprus authorities Audited Financial Statements every year. As required by Cyprus Companies Law the Audited Financial Statements must be submitted every year to Inland Revenue Department and to Registrar of Companies.
  • We prepare the Financial Statements in accordance with International Finance Reporting Standards as well as the Audit Reports in accordance with the International standards of Auditing.
  • Audit provides to every business the opportunity to improve company’s effectiveness and reliability. Furthermore as external Auditors we form an independent opinion on the Financial Statements.

6Fees

The cost of set-up and registration of your fully tax-optimised Cyprus company would be €1500 - Notary, Commercial Registry and any associate administrative costs not included.

The Limited Company Incorporation and Tax Service starts at 100€ per calendar month*

*For those with an unusually high level of operations or additional complexity it may become necessary to adjust the fee level, but only with the client's prior agreement.

For assistance with a company formation in Cyprus, please use the contact button below.

Support services

7Free Support Services Included

When combined with the free and innovative Advocate Abroad support services you can be sure that you are obtaining completely transparent legal services from registered and regulated English-speaking lawyers abroad.These support services include:

  • Verification of the regulatory status of your professional.
  • Fees as recommended by the Local Professional Body
  • Fees specified in advance and legally guaranteed.
  • Service levels agreed in advance and guaranteed.
  • All professionals must hold professional indemnity insurance.
  • Professionals' proficiency in English monitored.
  • Continuous quality controls and reviews.

Why choose Advocate Abroad?

AdvocateAbroad.com Message
Established more than
10 years ago
Present in 20
European Countries
Over 30,000 client enquiries
successfully managed