Frequently Asked Questions

Advantageous vehicle for International Tax Planning and use. The tax system of Cyprus is universally accepted as one of the most beneficial tax systems in the EU.

0% tax on Dividends received (Dividends received by CyCo, on certain conditions, are free of tax making CY the most competitive jurisdiction for holding companies).

0% withholding tax on Dividend payments (Dividends payable by a CY resident company to its foreign shareholders (whether a company or individual) are not subject to any withholding tax in CY).

Full tax exemption on the payment of dividends to its non-resident shareholders and has a real advantage over the other traditional holding jurisdictions.

No capital gains tax is paid on the transfer of immovable property owned by CyCo abroad (outside CY).

12,5% taxation for tax resident companies. (Starting from tax year of 2014).

0% taxation for NON tax resident companies.

0% taxation on gains arising from the disposal and/or re-evaluation of the securities.

Double Tax Treaties (CY has signed a considerable number of Double Taxation Treaties with various countries, to avoid the double taxation of income earned in any of the two contracting states).

Cyprus is a full member of the EU since 2004 and it benefits from all EU treaties, regulations and directives.

Cyprus has successfully harmonized its legislation fully with the EU standards and introduced a thorough anti money laundering legislative framework which is in full compliance with EU and USA standards.

A competitive IP Regime
Cyprus has set a specific task force called the Unit for Combating Money Laundering which is actively enforcing the application of the relevant legislation in practice, in association with all involved authorities i.e. the Cyprus Securities and Exchange Commission, the Central Bank of Cyprus and the Cyprus Bar Association.

Cyprus has in existence legislation in relation to the creation and operation of international trusts which allows client to retain their anonymity and hold their property under an international trust.

A company is a legal person created by a certain legal procedure, called Incorporation/Registration. In principle, a Cyprus private company can start its business activities as soon as it is registered with the Cyprus Registrar of companies (“RoC”)

Summary of the procedures of a company’s incorporation

Once the “Know Your Client” (“KYC” )procedure is adhered and the compliance department confirms that the procedure has been completed at their full satisfaction and they accept the client, the following steps are to be undertaken:

(1) Filing of an application to get approval of the required company's name by the RoC. It takes approximately 3-5 working days to obtain approval/rejection over a name.
(2) Filing of the required Memorandum and Articles of association (M&AA) of the company along with the required forms with the RoC
(3) If the client is a foreigner, there is an option to open an English translation folder with the RoC.
(4) Upon examination of the aforementioned documentation and assuming that everything is in order, the RoC proceeds with the company’s incorporation, assigning it with a registration number and, upon request, issuing a set of certificates i.e. certificate of (a) Incorporation; (b) Registered office; (c) Directors and Secretary; (d) Shareholders; and (e) Certified copy of the M&AA.

The timeframes within which a Cyprus company may be incorporated within the RoC varies and takes approximately 7 to 10 working days as of the date of the filing of the required documentation with the latter, depending on the period of time whereby the filings will be made (i.e. whether a public holiday intervenes within such dates and or August summer vacations etc.)

Our office pre-register Cyprus companies under our firm’s nominee directors/secretary/shareholders and keep a number in stock ready for you to buy off-the shelf- to establish your business immediately. Buying a shelf ready- made Cyprus company allows you to establish a business presence in Cyprus immediately, as soon as the KYC procedure is adhered by our firm’s compliance department and you are accepted as our client. Ideal, if you have an immediate contract to execute, it’s a legal requirement to have a company registration number. 

Our office also pre-approves names to be used for the incorporation of a Cyprus company so as to avoid any possible delays of obtaining a name approval from scratch from the RoC.

CPM offers banking services including introduction of clients to various banking institutions in our capacity as approved introducers for opening corporate and personal bank accounts.

For comprehensive lists of the necessary documents, which are needed for the opening of personal and corporate bank accounts, please see below:

For corporate bank accounts

In order to open a corporate bank account the following documentation and information is required:
• Completed CPM bank questionnaire signed by UBO , including CRS/ FATCA declarations
• Completed bank opening forms signed and delivered in original
• Copies of official corporate documents
• Personal data of UBO’s , company officers and authorised signatories (i.e name/surname/ address/telephone/emails/skype address/profession)
• Official company structure signed by the UBO (s)
• Company information : detailed line of business activity, approximate expected annual turnover
• Origin of funds/ countries involved / counterparties
• Description of expected inward / outward transfers. Destination of funds/ counterparties

For the Company’s director and/or secretary & the UBO(s) ( Physical person), the banks require in addition the following documentation and information:
• Clear copy of passport of all parties involved
• Utility bill not older than 3 months (Greek/ English/ Russian) language is acceptable
• Reference letter- from an existing bank
• CV of the UBO (s) (mentioning current occupation)
• TIN ‘s(tax identification number) of UBO’s along with declaration of their tax residency status
• Source and size of wealth of UBO’s

For personal bank accounts

In order to open a personal bank account the following documentation and information for the individuals are required:

• Clear copy of passport of all parties involved
• Utility bill not older than 3 months (Greek/ English/ Russian) language is acceptable
• Reference letter- from an existing bank
• CV of the UBO (s) (mentioning current occupation)
• TIN ‘s of UBOS’ along with declaration of their tax residency status
• Source and size of wealth of UBO’s


*Any request for further information or additional supporting documentation will depend on the case being considered.

Know your customer (KYC) is the process of a business identifying and verifying the identity of its clients.

According to the Directive DI 144/2007-08 of 2012 which is part of the Prevention and Suppression of Money Laundering Activities Law 2007, financial institutions, organisations and professional bodies, such as our firm, are obliged to comply with the law in order to assist in the combat against money laundering.

CPM is regulated by the Cyprus Securities and Exchange Commission which is responsible for monitoring the compliance of our firm based on the provisions of the Law as well as the Directive (mentioned above), that are regularly issued for the better implementation of the Law

Due to the above we are obliged to collect KYC documents for each of our clients.

For legal entities KYC information and documentation is obtained for all shareholders and Ultimate Beneficial Owners (UBOs) owning more than 10% of the share capital and for all Directors, Authorized Persons, Signatories and Attorneys.

A Beneficial Owner is considered to be:

  • a natural person who ultimately owns or controls a legal entity through direct or indirect ownership or control of a sufficient percentage of the shares or voting rights in that legal entity, including through bearer share holdings,(a sufficient percentage is considered to be more than 10%);
  • a natural person who otherwise exercises control over the management of a legal entity.

All KYC documentation must be provided to our firm in original or as certified true copies

The identification documents to be provided for individuals are the below:

  • Passport
  • Identity Card (for Cypriots citizens)
  • Utility Bill or Bank Statement (not older than 6 months) OR Internal Passport for Russian Citizens
  • Reference Letter (from a bank, lawyer or accountant)
  • Detailed CV

The identification documents to be provided for legal entities are the below:

  • Incorporation Certificate
  • Registered office certificate
  • Directors’ and Secretary certificate
  • Shareholders’ certificate (for private companies)
  • Memorandum & Articles of Incorporation or Partnership Agreement, Foundation Memorandum or equivalent governing document
  • Operating License (if applicable)
  • Ownership structure (leading to Ultimate Beneficial Owner & Percentage of ownerships)
  • Certificate of Good Standing or Incumbency (for companies registered abroad)
  • Authorization Letter or Board of Directors’ Resolution
  • Most recent audited Financial Statements

The identification documents to be provided for Trusts are: 

  • Trust Deed/Agreement
  • Registration of the trust
  • Letter of Wishes , if available
  • Trust structure

The identification documents to be provided for Funds  are: 

  • Fund Prospectus
  • Incorporation documents of fund:

a) Memorandum and Articles of Association, Partnership Agreement or equivalent governing document

b) Document/s confirming the Incorporation date

c) Document/s confirming the Board of Directors and Secretary names

d) Document/s confirming the Registered office

e) Document/s confirming the current Shareholders

f) Most recent audited financial statements

  • Fund regulations if fund is established in foreign jurisdiction
  • Approval of Appointment of Fund Manager
  • Registration of Broker
  • Registration of Fund Manager with SEC or any other regulatory authority
  • Approval of Appointment of Custodian
  • Approval of Appointment of Broker

In addition to the above documents for each Individual, Legal entity, Trust or Fund a form must also be completed providing us with further information.

An extra form will be required to be completed for any individual whom is considered to be a PEP.

Politically Exposed Persons (PEPs) are the natural persons who are residing in another member state of the European Union or a third country and who are or have been entrusted with prominent public functions and immediate family members, or persons known to be close associates of such persons.

The meaning ‘politically exposed persons’ includes the following natural persons who are or have been entrusted with prominent public functions’ in a foreign country:
• heads of State, heads of government, ministers and deputy or assistant ministers,
• members of parliaments,
• members of supreme courts, of constitutional courts or of other high-level judicial bodies whose
• decisions are not subject to further appeal, except in exceptional circumstances,
• members of courts of auditors or of the boards of central banks,
• ambassadors, chargιs d'affaires and high-ranking officers in the armed forces,
• members of the administrative, management or supervisory bodies of State-owned enterprises.
Immediate family members of a PEP include the following:
• the spouse or the person with which they cohabit for at least one year,
• the children and their spouses or the persons with which they cohabit for at least one year,
• the parents.

Close associates of a PEP include the following:
• any natural person who is known to have joint beneficial ownership of legal entities or legal
arrangements, or any other close business relations, with a PEP,
• any natural person who has sole beneficial ownership of a legal entity or legal arrangement which is known to have been set up for the benefit de facto of a PEP.

Under the Directive DI 144/2007-08 of 2012 which is part of the Prevention and Suppression of Money Laundering Activities Law 2007, we are required to establish the original source of funds or wealth in connection with PEPs and/or with Key individuals.

Under Cyprus tax law, a company is a resident tax payer of Cyprus if its management and control is exercised in Cyprus. In the interpretation of management and control, Cyprus adopts the OECD (Organization for Economic Cooperation and Development) model tax convention even
though Cyprus is not its member. The alignment of the Cyprus law with the OECD recommendations strengthens the Cyprus tax residency framework making it more likely to be respected in other jurisdictions depending on those jurisdictions’ substance requirements.
According to OECD definition, the place of effective management is the place where key management decisions and commercial decisions that are necessary for the contact of the entity’s business are in substance made. Ordinarily the place of effective management is the place where the most
senior persons or group of persons (i.e. board of directors) takes its decisions, the place where the actions to be taken by the entity as a whole are determined, however no definitive rule can be given. All relevant facts and circumstances must be examined to determine the place of effective management.
Each company’s formal arrangement, its administrative and operational structure should be considered separately taking into account the individual features of each case and should be assessed on the basis of the tax rules applicable in all jurisdictions concerned. However the following principles should
should form a starting basis:

• Board composition: having the majority of the directors (or any other management body) of the board to be Cyprus tax residents is quintessential to Cyprus tax residency and substance.
• Board procedures: Board meetings should be held in Cyprus to discuss substantive issues relating to the management and Control of the company and its investments.
• Record keeping-archiving: books and records, books of accounts, minute books, company seal and corporate register should be kept in the Cyprus office
• Accounting function-book keeping: all financial and other functions of the company should be prepared and kept in Cyprus
• Personnel and office space: personnel should be physically present in the office engaging in the company’s activities in accordance with the business plan and such employees should possess skills relevant to the company’s activities
• Wide and general power of attorneys granted to non- tax residents of Cyprus should be avoided
• Memorandum and articles of association: the company’s M&A should include the necessary provisions to eliminate the risk of being viewed as having a taxable presence in another jurisdiction

In view of the aforesaid, our firm may provide you with:

Personalized Virtual Office
• Registered Office Address
• Telecom and IT support Services
• Ancillary website and logo design services
• Personal Assistant Services
• Reception Services
• Translation Services
• Accounting Services

Shared Business Office

• Rental of fully furnished shared office including shared board room facilities
• Telecom and IT support Services
• Ancillary website and logo design services
• Internet Access Services with fast line internet and WIFI
• P.A. Services
• Dedicated Reception Services
• Translation Services
• Accounting Services
• VAT and Payroll Services
• Parking
• Dedicated fixed IP address for e-mail/website

Dedicated, Fully Fledged Business Office
• Rental of fully furnished office including shared boardroom facilities
• Telecom and IT support Services
• Ancillary website and logo design services
• Internet Access Services with fast line internet and WIFI
• P.A. Services
• Dedicated Reception Services
• Translation Services
• Accounting Services
• VAT and Payroll Services
• Parking
• Dedicated fixed IP address for e-mail/website

Minimum number of directors required
According to Section 170 of Company Law of Cyprus Cap 113, every private company in Cyprus must have minimum one (1) director and every public company must have minimum two (2) directors.
Also, Section 171 of Company Law of Cyprus Cap 113 defines that there must be a company secretary who cannot be the same person as a sole director except in the case of a private company where the sole shareholder can be the sole director and also the secretary.

Duties of directors
Since directors have powers to take important decisions several duties are imposed on them so that to ensure that the companies’ interests are well-protected.
Those duties are divided into the following categories’:
   I. Fiduciary Duty
   II. Duty to exercise skill and care
   III. Statutory duties

The duties owed by the Directors are owed to the company and not to individual shareholders or third parties special interests.

I. Fiduciary Duty
A director owes a duty to the company to act in good faith and in best interests of the company. This duty is called “fiduciary duty” and it is the highest standard of care.

The fiduciary duties of directors have been developed by court decisions over time and these decisions form part of the common law. A fiduciary duty can also be found in statute. For example, the duty of directors, who are interested in contracts to declare the nature of their interest, has been codified and is included in the Cyprus Companies Law. Directors shall exercise their powers only for the purpose allowed by law. In addition to this, directors must also act in accordance with the company's constitutional documents such as memorandum and articles of association. Any decision taken by the directors (e.g. transfer of shares etc.) without following the formal procedures provided by the articles of association of the company constitute a breach of this duty.

Furthermore, directors must not misuse company's property, information, opportunities and other confidential details for their own or anyone else’s benefit, unless allowed to by the company's articles of association or in cases where such use has been disclosed to the company in general meeting and the company has consented to it. If a director in breach of his fiduciary duties made a personal profit out of a business transaction, then he will be liable to pay that profit to the company. As illustrated in Bairstow v Queens Moat Houses plc [2001] 2 BCLC 531, CA, directors are obliged when they act in breach of duty to make good any misapplication by them of the company’s assets.

II. Duty to exercise Skill and Care
The authority of the duty of care and skill has been redefined in Re D’ Jan of London Limited [1993] B.C.C. 646. In this case, the court held that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. In a few words, the conduct of a reasonably person means a person having both the general knowledge, skill and experience that may reasonably be expected of persons carrying out the same functions as carried out by that director in relation to the company, and general knowledge, skill and experience that director has. 

III. Statutory duties
Directors have various statutory duties imposed by the Companies Law and other legislation, such as the Income Tax, VAT, Customs & Excise legislation, Health and Safety and Environmental legislation. Breach of statutory duty gives rise to criminal, civil or administrative liability or all together.

At this point, special references must be made to statutory liabilities imposed under the companies law to directors in relation to the company, its shareholders or to the public such as Prospectus offers (s.31 to 39 Cap. 113), pre-emption rights/transfer of shares (s.71 to 82 Cap. 113), financial statements available for inspection (s.141), profit and loss account and balance sheet (s.142 Cap. 113), directors report and annual return (s.151 Cap. 113), disclosure of payment for loss of office made in connection with transfer of shares of a company (s.185 Cap. 113), register of directors interests (s.187 Cap. 113), disclosure of directors’ interests in contract (s.191 Cap. 113), duties antecedent to or course of winding up (s.207, s.213 Cap. 113), register of directors and secretary (s.192 Cap. 113), fraudulent trading (s.311). Breach of the above duties under companies law is a criminal offence with penalties ranging from the payment of a fine to 2 years imprisonment. Directors may be liable for prosecution by the Inland Revenue or Customs and excise in respect of tax related offences.

Furthermore, the latest amendment of section 141 of the Cyprus Companies Law Cap. 113 (herein after referred to as “Cap. 113”) provides that the directors shall ensure that the company’s accounting books and records which are considered necessary for the preparation of financial statements are in accordance with the law and disclose accurately the company’s financial position in regard with any (a) received and paid amount (b)sales and purchases (c)assets and liabilities.

Liabilities of directors

In principal, there is no difference, as far as a liability is concerned, between executive, non- executive and or nominee directors as the law refers only to directors, in general.

I. Breach of common law (fiduciary) duties and the duty of skill and care
Breach of the aforesaid duties will render the director personally liable to the company in damages or injunctive relief.

II. Breach of statutory duties
Breach of a statutory duty may result in criminal, civil or administrative liability or all above.

In various statutes, and for the purpose of avoid directors hiding with impunity behind the companies, it has been a practice to include into such statutes i.e. the Health and safety of Work law, Law 89 (1)/96, the consumer credit law, 39 (1)/2001 etc., the following section by which directors and other officers of a limited liability company are subject to criminal liability:
”....where an offence …. committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of any director, manager, secretary or other similar officer of the body corporate or any person who was purporting to act in such capacity, he as well as the body corporate shall be guilty of that offence and shall be liable to be proceeded against and punished accordingly…”

Offences under the VAT legislation do not require proof of “mens rea” (which means “guilty mind”) in respect of one or more elements of “actus reus” (which means “guilty acts”). In this respect, the offence is one of strict liability.
A director can also be prosecuted under section 20 C of the Cyprus criminal code as person who aids or abets the company in committing an offence.

III. Tax related issues
Directors may be liable for prosecution by the Inland Revenue or customs & excise in respect of tax related offences. In addition to powers to impose a vast array of civil penalties and interest charges, both the Inland Revenue and excise, have the power to prosecute and to bring criminal proceedings against individuals involved in tax evasion, either personally or through their companies. 

Generally, breach of the aforesaid duties will render the director personally liable to the company in damages or injunctive relief.

A company can be financed either through debt or equity. Debt financing mainly consists of receiving loans or issuing debt securities. Debt has traditionally been a tax efficient way of financing. However, recent tax developments are such that businesses financing their operations through back to back debt, may face certain risks and challenges.

Financing a company through equity can be done by increasing the authorised share capital of the company and allotting the shares at par or at premium value in cash or through contribution in kind, or by contributing to the capital reserve of the company without the issuance of shares. Increasing the share capital of the company can be considered to be the most appropriate financing method, provided that there are reasons for not issuing new capital, as there are no taxation or legal issues.

Additionally, by financing through increase of the share capital, the company may also benefit from the Notional Interest Deduction (NID) provisions. In accordance with legislation effective from 1st January 2015, Cyprus tax resident companies and Cyprus permanent establishments of non-tax resident companies could be entitled to an annual tax deduction on new corporate equity. The effective tax rate can be reduced from 12,5% to as low as 2,5%. However, the notional interest to be deducted cannot exceed 80% of the taxable income of the company for the year before the deduction of this notional interest. It should also be noted that in the year of tax loss such a benefit will be lost. The NID is calculated on the amount of new share capital/share premium. The rate of NID is equal to the yield on the 10 year government bonds of the country where the new funds are invested, plus 3%, with the minimum rate being the yield on the 10 year government bonds of Cyprus, plus 3%.

The procedure for increasing the share capital is straightforward and efficient in respect to both time and cost. If there are authorised but unissued shares in the capital of the company, the Board of Directors may pass a resolution approving the issuance and allotment of shares at a designated price which can either be the par value of the shares or at a premium. The members of the company, other than the allottee, must waive any pre-emption rights they may have under the Articles of Association of the company. Then, the secretary of the company makes the necessary amendments to the corporate register of the company and files the applicable form to Registrar of Companies. Finally, a new share certificate is issued for the newly issued shares in the name of the allottee. 

Where the company does not have any available authorised shares to issue, the shareholders of the company may approve, by Ordinary Resolution, the increase of the authorised share capital. A true copy of such resolution must be submitted to the Registrar of companies together with the relevant form and the applicable capital duty. The rate of capital duty is at 0,6% of the nominal value of the issued shares  or €20, whichever amount is greater. It should be noted due to the fact that the capital duty applies on the nominal value only, it can be minimised by issuing the shares at a premium. 

The authorised share capital of a company is the maximum value of securities that a company can legally issue. The value of the company’s authorised capital including the number of shares and the value per share is specified in the capital clause of the Company’s memorandum.

Part of the authorised share capital of a company may be issued to a subscriber (who is the shareholder of the time of the registration). Such issued part of the authorised capital is called issued share capital. However a company may not issue shares more than it’s authorised capital unless and until the shareholders of the Company approve an increase of the share capital, following the procedures stipulated in the Law and the Memorandum and Articles of Association of the Company.

A Company’s authorised capital can be changed after the approval of its shareholders in an extraordinary general meeting.

So please see below the steps to be followed after identifying the necessity of increasing a Company’s share capital  in order to issue and allot further shares.

1st step

  • Board resolution: for the purpose of (a) getting the approval of the directors for increasing the Company’s share capital and allotting the same to the potential shareholders (b) fix the date, time and place for holding the extraordinary general meeting in order to get the approval of its shareholders for alteration to authorised capital  by way of an ordinary resolution.
  • Approve and release a notice for the EGM  and authorise a director or the Company’s secretary to release the same

2nd  step

Shareholders resolution: following the holding of the extraordinary general meeting on the date, time and place as mentioned in the notice and pass an ordinary resolution (i) to increase of the Company’s authorised capital

(ii) Issue and Allotment of the share capital of the Company. In this case, the wording of the resolution will refer as well to the conditions of such issue and allotment(s) (i.e. consideration, at par value or at a premium, reference to the names and proportion of shares to be allotted to the shareholder(s), etc) Please also note that in the case that there are in existence other registered shareholders and the Company’s articles provide for the right of first refusal/pre-emption rights, and the purporting allotment will be to a new shareholder or to an existing shareholder but to a different proportion of the share capital owned by such shareholder, then a waiver letter should be executed by the remaining shareholders.

3rd   step

For any new issue and allotment a letter of subscription/ subscription agreement is required to be executed by the new shareholder(s).

4th step  

Amending the Register of Members of the Company to reflect the aforementioned increase and issue and allotment to the new shareholder(s). Issue of the new share certificates in respect of the new shares issued and allotted to the new shareholder (s).

5th step

  • To increase the authorised share capital of a Company and notify the issue and allotment  the following documents are  required to be filed to the  Registrar of Companies office (“ROC”)

(a) copy of the ordinary resolution executed by the Secretary in Greek and

              (b) HE14 form with the  (for the increase)

              (c)  HE12 (for the issue and allotment)

A Cyprus company is required to comply with the following statutory obligations:

a) Annual Company Levy

According to Companies Law Cap.113, all companies registered in Cyprus are required to pay an annual levy of €350 to the Registrar of Companies. This levy is payable by the 30th of June every year. Failure to comply will result in penalties and eventual strike-off of the company.

b) Annual General Meeting

A Cyprus company must hold an Annual General Meeting (AGM) once a year. The first AGM can be held within 18 months of the date of incorporation. Thereafter, the AGM must be held on an annual basis with the time between them not exceeding 15 months. The agenda usually includes a review of the audited financial statements, approval of dividend payments, appointment of the board directors and auditors.

c) Statutory Records

A company registered in Cyprus is required to keep and maintain its Statutory Records at its Registered Office either as hard copies or electronically. The statutory records are very important not only because they are required by Companies Law Cap.113 but also to comply with EU anti-money laundering legislation. These records include a Register of Directors, a Register of Secretaries, a Register of Shareholders, and a Register of Charges

d) Accounting Records

It is a legal requirement for a Cyprus company to maintain books and records and prepare financial statements in accordance with the International Financial Reporting Standards (IFRS). Such books and records should be updated within four (4) months from the date of a transaction. Furthermore, the accounting records must be kept at the registered office of the company for six (6) years from the end of the year to which they relate, and be available for inspection from the Tax Department.

e) Audited Financial Statements

A Cyprus company is legally required to have its Financial Statements audited by a duly licensed and practicing external Auditor in Cyprus. Dormant companies, meaning companies without any assets/income, are exempted.

f) Annual Returns

A Cyprus company is required by law to prepare and file with the Registrar of Companies an Annual Return once every calendar year. The Annual Return contains the company's statutory information as at the date of its compilation and should be filed with the audited financial statements of the previous year which have been approved at the AGM of the company.

g) Tax Returns

In accordance with Cyprus tax laws, every company should submit a Tax Return (IR4) on an annual basis. The Tax Return is prepared based on the Audited Financial Statements of the company and includes its balance sheet and profit and loss account in Euro and its tax computation. Administrative penalties are imposed for late submission of declarations or late submission of supporting documentation requested by the Commissioner of Taxation. Legal actions may also be initiated against the company and its directors for continued non-submission which may lead to the disclosure of the beneficial owner(s) to the Commissioner of Taxation

A Cyprus company is obliged to be registered with the VAT Authority in the following cases:

a) The value of the taxable supplies (supplies taxed at zero and/or reduced and/or standard rates) has exceeded €15,600 during the 12 preceding months.

b) There are reasonable grounds for believing that the value of the taxable supplies will exceed the amount of €15.600 within the next 30 days.

c) The value of acquisitions of goods from other EU Member States, has exceeded the registration threshold of €10.251,61 during any calendar year.

d) There are reasonable grounds for believing that the value of the acquisitions of goods from other EU Member States will exceed the amount of €10.251,61 within the next 30 days.

e) Τhe company is engaged in the supply of intra-community services for which the recipient must account for VAT under the reverse charge provisions.

f) The value of services received from abroad, for which an obligation to account for Cyprus VAT under the reverse charge provision exists, exceeded the amount of €15,600 during the 12 preceding months.

g) The value of distance sales (sales from a person established in another Member State) has exceeded the amount of €35.000 during any calendar year.

It should be noted that exempted products and services, and disposals of items of capital nature are not taken into account for determining annual turnover for registration purposes.

Failure to comply renders the company liable to a levy of €85 for every month of the delay or refusal or omission to register.

A Cyprus company not liable to be registered is entitled to apply for a voluntary registration or register as an intending trader.

Constructive use of the Cyprus Treaties’ Network has rendered considerable advantages to businesses and individuals who have chosen to establish legal entities in Cyprus. Tax treaties, in Cyprus and most countries, legally supersede local tax legislation and for this reason they are a useful tax-planning tool to protect businesses and individuals against double taxation of income earned in other countries.

The provisions and goals of treaties vary significantly, with very few being alike.

Most treaties:

  • Define which taxes are covered and who is a resident and eligible for  benefits
  • Reduce the amounts of tax withheld from interests, dividends and royalties paid by a resident of one country to residents of the other country
  • Limit tax of  one country on business income of a resident of the other country to that income from a permanent establishment in the first country
  • Define circumstances in which income of individual residents in one country will be taxed in the other country, including salary, self- employment, pension and other income
  • Provide for exemption of certain types of organizations or individuals
  • Provide procedural frameworks for enforcement and dispute resolution


The main purpose of these treaties is the avoidance of double taxation of income earned in any of these countries.
Under these agreements, a credit is usually allowed against the tax levied by the country in which the tax payer resides for taxes levied in the other treaty country, and as a result the tax payer pays no more than the higher of the two rates (a number of the treaties also contain very beneficial “tax-sparing credits”).

Basic information over Funds

An investment fund is a vehicle that allows a number of separate and unrelated investors, a group of individuals or companies, to make investments together  by pooling their money together and taking advantage of the shared costs, spreading  the risk etc.

UCITS  (Undertakings for Collective Investment in Transferable Securities) fund is set up according to the strict rules prescribed by the European Union and may only invest in certain investment classes (transferable securities such as stocks and bonds). UCITS funds can be purchased by investors in any European country where they are authorised for sale, and in a number of countries in other regions or on other continents where they are permitted.

The UCITS regime aims to provide individuals with a secure environment for fund investing. It sets out universal rules on how these funds should be structured, managed and governed, and how their assets should be safeguarded. It imposes rules concerning diversification, liquidity and use of leverage for hiden levels of investors protection.

AIF (Alternative Investment Fund) is considered as a “non-UCITS” fund and it is established under domestic Cyprus fund legislations. Unlike UCITS, they are not harmonised EU funds, but, regardless this, they are widely recognised internationally and can be sold on a private placement basis to investors subject to compliance with local securities law.

The AIFs are categorised into the following 2 types:

      I. With unlimited number of persons, which may be marketed to retail and/or professional and/or well-informed investors (the “AIF”)

      II. With limited number of persons (up to 75 persons marketed only to Professional and/or well informed investors) (the “AIFLNP”)

Confidentiality in all business transactions is an element which the Cypriot Authorities have perfected, in respect to the activities of nearly all commercial sectors. The Processing of Personal Data (Protection of Individuals) Law of 2001 (the Law) came into force on 23 November 2001. The Law was introduced in the context of harmonisation with the European Data Protection legislation and amended in 2003 in order to align domestic legislation with Directive 95/46/ EC of the European Parliament and the Council Decision of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data.

The registration of Cyprus Companies can be done through the appointment of nominees to hold shares on behalf of the beneficial owners - whose identity remains secret.  Privacy of the trusts’ constitution and membership, as well their transactions and activities is secured through the absence of registration or reporting requirements - even the identity of the settlor may be protected, if required. In Cyprus, the cornerstone of banking policy is safeguarding the confidentiality of a bank’s customers and their transactions.

Disclosure of the beneficial owners and parties of the trusts‘ arrangments is done to the Authorities only in consent with the legislation. Disclosure to banks and other third parties might be done only upon written consent of the beneficial owner him/herself or authorised person.

There is no minimum share capital requirement for a Cyprus private company.   However, the share capital which a Cyprus company proposes to issue must be divided into shares of a fixed amount. Such shares must be issued with a par value, and in registered form.  Shares without par value and shares in bearer form are not permitted under Cyprus law. The capital may be paid in cash or in kind (the use of a good or service as payment instead of cash).

The full value of the Issued Share Capital must be shown to have been paid to the company (e.g. in its bank account) and from then on this capital must be used for company purposes only. The Share Capital need not be paid and actually cannot be paid at the Registrar of Companies.

Basic information over Trusts

A trust is established by a settlor when the legal ownership of trust property is transferred to the trustee and the trustee holds, manages and distributes such property to or for the benefit of the beneficiaries in strict accordance with the terms of the trust and fiduciary duties imposed upon him, so that such beneficiaries have equitable ownership therein.

The starting point of creating the trust is the settlor’s ownership of the property he intends to place in trust. The trustee receives legal ownership (or title) to the trust property when the settlor creates and constitutes the trust.

The trustee holds the legal ownership of the trust property in a separate fund and must keep it apart from its own personal property. Trust assets are insulated from the trustee’s personal creditors. The trust assets, whether real estate, a portfolio of stocks and shares or any kind of property, form a separate fund.

Trust formation in Cyprus is governed by the Cyprus International Trusts Law 1992 which complements the Trustees Law Chapter 193 of 1955 which was based on the English Trustees Act of 1925.

(a) The Settlor is the person of full age of eighteen (18) and of sound mind who sets the Cyprus International Trust and can be either a natural or legal person who may not be resident in Cyprus during the calendar year immediately preceding the creation of the trust;

(b) The Trustee or at least one of the Trustees must be resident in Cyprus for the whole duration of the Cyprus International Trust. This means that if the Settlor wants to appoint a Trustee who has his residence outside of Cyprus then he must appoint a second trustee.

(c) The Beneficiary or Beneficiaries must not be resident in Cyprus during the calendar year immediately preceding the creation of the trust and that applies equally whether the beneficiary is a natural or legal person.

(d) The trust property can include all kinds of assets situated anywhere in the world and it can comprise of real estate property located in Cyprus;

(a) Comply with the residency requirements of the International Trusts law;

(b) The trust instrument satisfied the 3 certainties requirement, i.e.
     1. Certainty of Intention - the Settlor’s intention to create the trust;
     2. Certainty of Subject Matter - the assets which will form the trust property must be readily identifiable and tangible;
     3. Certainty of Objects - the identity of the beneficiaries must be clearly stated and sufficiently defined in cases where this involves as large group of people.

(c) Provide information related to the Trustees to the relevant competent authority

(d) Payment of stamp duty.

(a) It can be used as an asset protection vehicle as it is immune from forced heirship and claw back rules in other jurisdictions where the assets are located;

(b) It does not become void even where the Settlor becomes insolvent or bankrupt;

(c) It has no limit on the period over which it is valid and enforceable, given that it was set up after 2012;

(d) When a creditor contemplates that the Settlor used the Cyprus International Trust to defraud him the burden of proof is upon the creditor to prove such a sham within 2 years of creation of the Cyprus International Trust. After the 2 year period the creditor will be barred from bringing an action against the trustees.

1. Income
(a) If the Beneficiary is not resident in Cyprus and receives income from outside of Cyprus this income will not be subject to tax;
(b) If the Beneficiary is resident in Cyprus and receives income from Cyprus this income is subject to tax;
(c) If the Beneficiary is resident in Cyprus and receives income from outside of Cyprus and also from Cyprus then this income will be subject to tax;
(d) A Cyprus International Trust does not pay any tax on income received from outside of Cyprus whereas a Cyprus Company pays income tax on it’s worldwide income;
(e) A Cyprus International Trust does not pay any tax on the interest received provided that the beneficiaries are not resident in Cyprus;
(f) Cyprus International Trusts are not affected by the non existence of a double taxation treaty.

2. Dividends
Dividends which are received by the Cyprus International Trust from a Cyprus company are not subject to tax.

3. Payments to beneficiaries
There is no withholding tax on payments to beneficiaries provided that they are not resident in Cyprus.

4. Capital Gains
Any gains from asset disposal, other than immovable property situated in Cyprus, made by the Cyprus International Trust are not subject to capital gains tax in Cyprus.

5. Estate Duty
No estate duty is payable by a Cyprus International Trust that was formed for the purposes of estate duty planning.

Trust Registries will be maintained by 3 Cyprus regulatory authorities:
    1. the Cyprus Securities and Exchange Commission;
    2. the Cyprus Bar Association;
    3. the Cyprus Association of Certified Accountants.

For the purposes of ensuring that such information contained in the Trust Registries remains confidential, only the 3 abovementioned authorities will have access to such information and will not be made publicly available in under any circumstance.

1. The name of the Cyprus International Trust;
2. The name and the full address of the Trustee or Trustees of the Cyprus International Trust at all relevant times;
3. The date when the Cyprus International Trust was established;
4. The date of any change in the governing law to the Cyprus International Trust occurred;
5. The date of termination of the Cyprus International Trust.

The information will remain in the Trust Register for a term not exceeding 5 years after the termination of the Cyprus International Trust.

Certification and legalization of documents

In Cyprus we do not have Notary Publics and therefore certification of a person’s signature is made by Certifying Officers which are appointed and regulated by the Ministry of Interior and more specifically by the District Administration office.

A certifying officer certifies that the person named on the document, has signed in his presence. If apostille authentication is required then the signature of the certifying officer must also be certified by the District Officer. 

Any country which has signed the Hague Convention of 5th October 1961 (including Cyprus) accepts and recognizes apostilled documents. The Ministry of Justice and Public Order is the relevant competent authority in charge of the implementation of the aforementioned Convention. The apostille certification attests the authenticity of a document, so that it can be used in any of the countries which are a part of the Hague Convention.

Alternatively for countries which have not signed the Hague Convention, legalization of a document can be effected by the local embassy or Consulate of that country in Cyprus.

All official local public documents issued by an authority in Cyprus may be authenticated by apostille. The apostille can be inserted on the original document or on a true copy, provided that it has been authenticated by the authority which has issued the original.

Examples are:

1. Documents proving civil status:

  • Passport
  • Identity Card
  • Birth certificate
  • Marriage certificate
  • Divorce certificate
  • Death certificate
  • Certificate of adoption
  • Evidence of a change of surname, name
  • Clear criminal record and others.

2. Documents related to education:

  • Diploma
  • Certificate

3. Corporate documents issued by the Department of the Registrar of Companies in Cyprus.

4. Other documents

  • Power of Attorney
  • Statements
  • Consent
  • Contracts 

Provided that the original documents are in order, they can be certified within one working day.

Only documents in Greek or in English can be apostilled in Cyprus without any further procedures.

If the original document is in another language this can be translated by the P.I.O (Public Information Office). If the document is not original then an affidavit, testifying the accuracy of its translation is required.