If you are considering the possibility of founding a company in Cyprus, or maybe expanding your business in this beautiful island, then the first thing you must know about is the 5 requirements that all companies in Cyprus are obliged to abide by every year.
This article is designed to sketch these 5 requirements or obligations for you and help you make sure that you have carefully taken them into account before expanding your business or founding your company in Cyprus.
1. Filing of an Annual Return
First of all, any company that conducts business in Cyprus is obliged to hold an annual General Meeting and file a yearly return with the Registrar of Companies. This document actually describes any changes that might have happened during the previous year with the shareholders, with the director or with the company’s secretary.
After the conclusion of the annual meeting, the company has a period of 42 days to prepare and file the annual return. Bear though in mind that all new – founded companies do not have to file any such document during the first year of its operation, on condition that the company’s first return should be filed at least 18 months from its foundation.
2. Filing of VAT Reports
Almost all companies operating in Cyprus are obliged to register with the State VAT Department and get a tax number. Those already registered must then file quarterly vat reports – even if no transactions at all have been made during these months.
It is important to remember that the company’s quarterly filings do not match the divisions of the calendar year – they are determined by the tax office itself.
3. The Conduct of Audited Accounts
All companies operating in Cyprus are obliged to complete financial statements in compliance with certain International Financial Reporting Standards, while some types of companies are also obliged to appoint a locally authorized auditor to thoroughly check the company’s financial statements. Learn more information about authorized auditors in Cyprus.
Statements are due to the Registrar of Companies, together with the company’s yearly report, by the end of the year, following the fiscal year being audited.
On the other hand, small businesses are not obliged to do that, provided that during the last financial year they met at least two of the following requirements:
Their Gross assets remained below €3,400,000.
Their Net turnover remained below €7,000,000.
They employ no more than 50 employees.
4. Filing of Tax Returns
Any company with regular income from both within Cyprus and abroad are obliged to keep books and records and prepare yearly records. Other companies, defined by certain criteria are exempted, and are allowed to file a return based on audited financial statements.
All yearly tax returns must be filed by the end of December of the subsequent tax year, and temporary tax returns are due by August 1 of the tax year, and must be paid in 3 equal installments, during the following tax year on August 1, September 30 and December 31. Any sort of remaining balances are payable by August 1 of the next tax year. Companies that are exempted, along with those filing through an accountant, might be required to file their tax return via the internet. In this case, the company can file it at least 3 months later.
5. Pay the Special Government Levy.
Any company operating in Cyprus is required to pay a special government levy, amounting to 350.00 Euros by the end of June every year. For group companies the corresponding amount is €20,000, evenly divided among the companies.
If a company fails to pay within the deadline, but pays within the next 60 days, there is a penalty of 10%; if it pays within 5 months, the penalty amounts to 30%. If it exceeds even this time frame, the Registrar of Companies will eventually remove the company from the register.
In case the company wishes to be reinstated, it must pay €500 within 2 years since the removal of the company’s name from the register. Following this 2 years, the fee for reinstating the company raises to €750.
In case a company undergoes a liquidation procedure that has started before the end of June, it is not required to pay this levy.
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We will take you through a step by step process from A to Z in creating the perfect business in Cyprus.
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If you want to work with professionals who provide exceptional quality standards of services in Cyprus, the simplest way is to fill in the contact form below.
We will take you through a step by step process from A to Z in creating the perfect business structure in Cyprus.
Can’t wait any longer? Become even more successful by working with accountants you can count on and be among the thousands business that already did.