Operating a company in Cyprus comes with a set of obligations that must be diligently followed to ensure legal compliance and smooth business operations. From regular reporting to statutory filings, Cyprus companies are mandated to adhere to various regulatory requirements outlined by the Companies Law, Cap. 113. Understanding and fulfilling these obligations are paramount for maintaining transparency, accountability, and the overall success of a Cyprus company in today’s dynamic business landscape.

1. CORPORATE RECORDS

Companies are obligated under the provisions of the Companies Law (Cap.113) to maintain their statutory records at their registered office. These records encompass various registers such as those for Directors, Secretaries, Shareholders, and Charges.

Additionally, required documents consist of the certificate of incorporation, details of directors and secretaries, shareholder information, registered office particulars, memorandum and articles of association, audited financial statements, copies of annual returns, and minutes from general meetings.

Any alterations concerning the company’s officers, shareholders, share capital, or other statutory details must be promptly forwarded to the Registrar of Companies within the stipulated deadlines, as outlined by the Companies Law, Cap. 113. Should these deadlines be surpassed, penalties will be apply.

2. UBO REGISTRY

Every company and each officer thereof has an obligation to submit the details of its beneficial owners to the register.

The beneficial owner of a legal entity is the natural person, who has the final ownership status or final control of the legal entity. Ownership or control may be exercised either directly or indirectly or both, through:

• holding a sufficient percentage of shares or
• voting rights or
• having significant influence or control by other means.

Direct ownership means a 25% participation plus a share or ownership right of more than 25% in the issued capital of the company, which is held by the individual.

Indirect ownership means a 25% participation plus a share or ownership right of more than 25% in the issued capital of the company, which is held by the natural person through the legal entity.

If no natural person is identified as the beneficial owner based on ownership rights, or when there is doubt that the person identified is indeed the beneficial owner, then the highest administrative officer is declared.

3. MEETINGS

AGM: Every Cyprus-incorporated company is obligated to conduct an Annual General Meeting (AGM) annually. The initial AGM should take place within 18 months of its incorporation. Subsequently, an AGM must be convened each calendar year, with no more than 15 months between each AGM.

Minutes & resolutions: All records of minutes and resolutions formulated by the company’s officers or shareholders are required to be maintained at the registered office of the company.

4. ACCOUNTING REPORTING OBLIGATIONS

Bookkeeping: As per Cyprus Companies Law, Cap. 113, the directors of every company are responsible for maintaining proper books of account, required for the preparation of the financial statements and which are adequate for the presentation of a true and fair view of the company’s affairs and transactions.

5. FINANCIAL OBLIGATIONS

Annual return & Financial statements: Every company is under an obligation to file every year an annual return (HE32) with the Registrar of Companies. This annual return is accompanied by the audited financial statements of the company which were presented at the annual general meeting of the company. Failure on the part of the Company to file its annual returns together with the audited financial statements could result in financial penalties and the dissolution of the Company by the Registrar, by means of a strike off of the company’s name from the register maintained by the Registrar.

It should be noted that the annual return must be filed at the Registrar of Companies within twenty-eight (28) days from its drafting date. In the case of a new company, the drafting date of the annual return is the day following the expiry of the period of 18 months from the date of the incorporation of the company. In the case of an existing company, the drafting date of the annual return is the date on which 1year lapses from the drafting date of the last filed annual return.

Abolishment of annual levy: Following a new package of targeted measures announced by President Nicos Christodoulidis on 21/02/2024, the annual levy of €350 paid to the Registrar of Companies by Cyprus Companies is abolished.

6. TAX OBLIGATIONS & EMPLOYEE CONTRIBUTIONS

TIC registration: All Cyprus tax resident companies must register with the Cyprus Tax Authorities and obtain a Tax Identification Code (TIC) within a period of 60 days from the date of incorporation.

VAT registration: VAT registration is compulsory for legal persons registered in the Republic of Cyprus if the goods and services carried out over the 12 preceding months – or which will be carried out within the next 30 days – exceeds or will exceed €15,600. Nevertheless, a voluntary VAT registration can also be made.

Social insurance contributions: If a company hires individuals, it is required to make contributions as an employer on behalf of its employees. Similarly, all employees are responsible for making social insurance contributions. These contributions from employees are deducted by the employer from their monthly salary. Both employee and employer contributions should be remitted no later than the end of the calendar month following the month in which the salaries were earned. These contributions consist of at least social insurance and GESY contributions.

As of 1 January 2024, the employees’ own contribution to the state-administered social insurance fund is 8.8% of their gross remuneration, with a maximum annual cap on insurable emoluments as of 1 January 2024 of €62,868. The rate of 8.8% applies for both employee and the employer as from 1 January 2024 and for the next 5 years. Thereafter, the rate will increase every five years until it reaches 10,7% as from 1 January 2039.

GESY contributions vary depending on the employee’s annual salary wages.

Corporate tax: All Cyprus tax resident companies are taxed on their income accrued or derived from all sources in Cyprus and abroad, at standard rate 12.5%. A non-Cyprus tax resident company is taxed on income accrued or derived from business activity that is carried out through a PE in Cyprus and on certain other income arising from sources in Cyprus.

Disclaimer

Please contact us for further information and/or assistance in relation to the above, at info@dplawcyprus.com and/or +357 22 272 360. Our team has an extensive and successful experience in the above matters. This content is solely for general information purposes. None of the information herein should be relied on or substituted for specific professional advice regarding a particular matter or situation and no person should act or refrain from acting on the basis of the information contained in this brochure without first obtaining advice from an attorney.

 S. Dionysiou & Partners LLC is not engaged in rendering legal services or advice by providing the information contained in this brochure.