Doing Business in Cyprus

For those who may not be familiar with Cyprus; Cyprus is an island country in the eastern Mediterranean. In recent years, Cyprus has become a popular destination for foreign investors and entrepreneurs looking to start or expand their business operations. If you are considering doing business in Cyprus, sit tight and follow carefully as we will explore the ins and outs of doing business in Cyprus.

Why Should I Do Business in Cyprus?

Before we dive into deeper information in regards to Cyprus company formation, Let us answer this major question always asked by businessmen. Cyprus offers a range of advantages for those looking to do business in the country. Here are some reasons why you should consider Cyprus as a business destination:

Business-Friendly Environment 

Cyprus has a well-established legal and regulatory framework that is designed to support businesses and provide investors with a high degree of transparency, stability, and predictability. The government of Cyprus is committed to promoting business growth and development, and it actively supports initiatives that promote innovation, entrepreneurship, and research and development. Moreover, the legal structure in Cyprus is based on the principles of UK Common Law. It is also consistent with EU laws and regulations, providing foreign companies with a familiar and dependable framework to operate in.

Low Tax Rates 

Cyprus offers one of the lowest corporate tax rates in Europe, making it an attractive destination for businesses looking to optimize their tax burden. Additionally, the country has a wide network of double taxation treaties, which can further reduce the tax burden for businesses operating in multiple countries.

Highly Skilled and Educated Workforce 

Cyprus also boasts a highly skilled and educated workforce, with a strong focus on science, technology, engineering, and mathematics (STEM) fields. The country has a large number of universities and research institutions, which produce a steady stream of skilled graduates each year. This highly skilled workforce is one of the key reasons why many businesses choose to establish their operations in Cyprus.

Communication Language

Another reason foreign investors do business in Cyprus is that English is widely spoken in the country. This makes it easier for international businesses to operate in the country, as they do not have to worry about language barriers or the cost of hiring translators.

Easy Incorporation Process and Business Regulation

The incorporation process in Cyprus is simple and can be completed within a few working days, making it hassle-free for businesses. Moreover, The country also has a flexible labor market, with a relatively low level of labor regulation and a high degree of flexibility in terms of hiring and firing. 

Cyprus also has a well-developed financial services sector, with several international banks and financial institutions operating in the country. You will find more details on this later on in this blog. This ease of doing business in Cyprus has made it a popular destination for investors and startups, who are now expanding their operations in the country. 

Business Entities in Cyprus

There are several business entities in Cyprus that both local and foreign investors can choose from, each with its advantages and disadvantages. FirmEU can help you determine what is best for you based on your company.

• Private Limited Liability Company (Ltd): A Private Limited Liability Company is the most common business entity in Cyprus. It requires at least one director and one shareholder, and the liability of the shareholders is limited to the amount of their share capital. This type of company entity is best fit for small and medium-sized businesses

• Public Limited Liability Company (PLC): A Public Limited Liability Company is almost like a Private Limited Liability Company. The difference is that it can offer its shares to the public. Also, It requires a minimum of seven shareholders, and the liability of the shareholders is limited to the amount of their share capital

• General Partnership: A General Partnership is a business entity in which two or more partners share the profits and losses of the business. Each partner is personally liable for the debts and obligations of the partnership.

• Limited Partnership: A Limited Partnership is similar to a General Partnership, but it has two types of partners: general partners and limited partners. The liability of the general partners is unlimited, while the liability of the limited partners is limited to the amount of their investment.

• Branch: A branch is an extension of a foreign company in Cyprus. It is not a separate legal entity and is wholly owned by the foreign company who is intending to set this up. The branch is required to register with the Registrar of Companies in Cyprus.

• Sole Proprietorship: A Sole Proprietorship is a business entity in which one person owns and operates the business. The owner is directly liable for the company's debts and responsibilities.

Each type of business entity has its own legal requirements, advantages, and disadvantages. It is essential to seek professional advice before choosing the right business entity for your business.

Steps for Setting Up a Business in Cyprus

If you're considering starting a business in Cyprus, you'll need to follow a few steps to ensure you're setting up the business properly. Below the steps are discussed: 

Step 1: Employing the services of a corporate service provider

The first step in setting up a business in Cyprus should be to employ the services of a corporate service provider. A corporate service provider is a professional service firm that specializes in providing company formation and administration services to businesses. They will help you navigate the legal and regulatory requirements of setting up a business in Cyprus, saving you time and ensuring that you're complying with all relevant laws and regulations.

A corporate service provider like FirmEU will also help you with the following:

• Choose the right legal structure for your business (e.g., sole proprietorship, partnership, or limited liability company)

• Register your business with the Cyprus Registrar of Companies

• Obtain any necessary licenses and permits to operate your business

• Open a bank account for your business

• Draft your company's memorandum and articles of association

• Provide ongoing company secretarial services

Step 2: Choose the Right Legal Structure for Your Business

Once you've employed the services of a corporate service provider, the next step is to choose the right legal structure for your business. The most common legal structures for businesses in Cyprus are

• Sole Proprietorship: a business that is owned and managed by a single person.

• Partnership: a business that is owned and ran by two or more people.

• Limited liability company (LLC): A business structure that offers limited liability protection to its owners and is the most common legal structure for businesses in Cyprus

Your corporate service provider specializes in Cyprus incorporation. They can help you choose what legal structure is best for you based on your need. 

Step 3: Register your Business with the Cyprus Registrar of Companies

After you've chosen the right legal structure for your business, you'll need to register your business with the Cyprus Registrar of Companies. This involves submitting the necessary documentation, such as your company's memorandum and articles of association, to the Registrar of Companies.

Step 4: Get Every Necessary License and Permit Needed 

Depending on the nature of your business, you may need to obtain certain licenses and permits to operate in Cyprus. Take for instance;  if you're opening a restaurant business, you'll need to obtain a food service license. Your corporate service provider can help you determine what licenses and permits you need and assist you in obtaining them. However, if you will like to do this yourself, you will have to do more research on this. 

Step 5: Open a Business Bank Account

You'll need to open a bank account for your business in Cyprus to manage your finances. Your corporate service provider can assist you in opening a bank account and advise you on the best banking options for your business.

Step 6: Draft Your Company's Memorandum and Articles of Association

Your company's memorandum and articles of association outline the rules and regulations governing your business. Your corporate service provider can assist you in drafting these documents, ensuring that they comply with all relevant laws and regulations in Cyprus.

Step 7: Provide Ongoing Company Secretarial Services

Once your business is up and running, you'll need to provide ongoing company secretarial services to ensure that your business remains compliant with all relevant laws and regulations in the kand. Also, Your corporate service provider can assist you in providing these services, such as filing annual reports and maintaining accurate records.

Opening a Business Bank Account in Cyprus

You've seen why people start up businesses in Cyprus and the steps to take in setting up a business in Cyprus. Now,  If you're thinking of starting a business in Cyprus, one of the things you'll need is to open a business bank account. We mentioned this earlier, but let us go a bit deeper in this section 

A business bank account will allow you to manage your finances, pay suppliers, and receive payments from customers. Cyprus offers both online and on-sight business bank account opening options, so you can choose the option that best suits your needs.

Online Business Bank Account Opening in Cyprus

Online business bank account opening is a convenient option for those who do not have the time or means to visit a bank in person. Most major banks in Cyprus offer online account openings for businesses, which means that you can complete the process from the comfort of your home or office.

To open an online business bank account in Cyprus, you will need to provide certain documents and information. This typically includes:

• A valid passport or ID card

• Proof of address (such as a utility bill or bank statement

• Company registration documents (such as a certificate of incorporation) km

• Details of the company's directors and shareholders

• A business plan (depending on the bank)

Once you have gathered all the needed documents, you can visit the bank's website and begin the account opening process. The bank will typically ask you to fill out an online application form and upload your documents. After the bank reviews your application and approves it, you will be able to access your new business bank account online.

On-Sight Business Bank Account Opening in Cyprus

If you prefer to open a business bank account in person, you can do so by visiting a bank branch in Cyprus. This option may be preferable if you have specific questions or concerns that you want to discuss with a bank representative. Also, you may need this if you want to establish a personal relationship with the bank.

To open an on-sight business bank account in Cyprus, you will need to bring the same documents and information that you would need for an online account, which is mentioned above. You may also need to schedule an appointment with the bank to ensure that a representative will be available to assist you.

During your appointment, the bank representative will review your documents and ask you the necessary questions. If everything is in order, you will be able to open your new business bank account on the spot.

Conclusion

Cyprus offers a favorable environment for doing business with its strategic location, well-developed infrastructure, skilled workforce, and attractive tax system. The country's stable political and economic climate, coupled with its membership in the European Union, make it an ideal destination for companies looking to expand their operations in Europe and beyond. 

However, it's crucial to familiarize yourself with the legal and regulatory framework of the country before starting any business venture in Cyprus. With careful planning and execution, Cyprus presents excellent opportunities for entrepreneurs and investors alike. To learn more on how to go about setting up a business in Cyprus successfully, check our 'Doing Business in Cyprus Page' or contact us:

Email: info@firmeu.com

Call: +31 (0)6 82918628