Cyprus is a European nation that offers opportunities for growth for new companies intending to start operations in the area. However, like any other country, it also has many macroeconomic and geopolitical challenges that may overwhelm a new entrepreneur.
We will cover basic information on how to open an offshore company in Cyprus and why it is an excellent place to establish your business. You will also read more about the concrete guide on the process you should pursue.
Onshore VS Offshore
There are two types of companies that you can establish if you are a foreigner who plans to start doing business in Cyprus.
An offshore company is typically similar to onshore companies, except for the applied tax rate. Offshore companies benefit from relatively low taxes applied by the government where they are declared. There is also a higher degree of privacy for offshore companies that is not rendered to offshore businesses.
Why Open an Offshore Company in Cyprus?
Cyprus is a strategically good choice for opening offshore businesses because of its excellent location. It sits between three continents – Europe, Africa, and Asia. Therefore, it has a healthy tourism industry. Companies view this as an advantage for potential sales and higher foot traffic.
The country enjoys a stable economy, with solid shipping, tourism, and financial services. After Cyprus’ integration into the EU, it started to offer tax breaks for foreign investors who wish to open or register businesses.
Treaties are also enforced to safeguard foreign investors to prevent double taxation and have more fiscal transparency.
Among the members of the European Union, Cyprus has the most competitive corporate tax rate at 12.5%. Thus, it is a haven for the offshore industry. The country also offers a well-developed transport system, rich culture, low-cost living, and a tropical climate.
These economic and geographical characteristics make Cyprus a country of choice for international companies planning to open offshore locations.
How to Start an Offshore Company in Cyprus
Business owners should first visit Cyprus before setting up a company. It would help establish the gut feeling that this country is the perfect place to set up an offshore company.
Here are the steps in opening an offshore company in Cyprus:
Decide on the Legal Forms of Your Offshore Business
The first step in forming a business in Cyprus is to decide on the type of offshore company to start. It will be the starting point of the business formation and the first detail that you need for filing in the Registrar of Companies.
There are several types of offshore companies that can be opened in Cyprus:
- Private Foundation
- Offshore LLC
- Offshore Corporation
- International Business Companies of IBCs
The type of legal form you have will also impact the rates and breaks of viable taxes for you. These can still be subdivided further into sectors or industries that you specialize in. It can be an offshore insurance company or an offshore financial services company.
Determine the Requirements For Forming an Offshore Company
Establishing an offshore company has slightly different requirements than opening a local business. Business owners shall use the Company Law as the main branch of law to comply.
For you to be an eligible offshore company in Cyprus, you should meet the minimum number of shareholders. The company should also have at least one appointed director and one secretary. You must also maintain a share capital minimum of 1,000 EUR.
Likewise, your company shall not be allowed to issue bearer shares.
It is also vital that prospective offshore companies include registering their legal address in the country, employment rights, registration of licenses and permits, and registration of taxation.
These are mainly for businesses that offer services that may affect the local people. Application to open an offshore company in Cyprus also needs an attached Memorandum and Articles of Association. These are essential documents for the process as they contain the details of the offshore company, including the appointed directors, shareholders, and secretaries.
An application for opening an offshore company should also have the outstanding share value and a description of how the shares are divided among the company’s shareholders.
Another critical factor to include in the application is the trading name. Investors interested in opening an offshore company in Cyprus should provide at least three name ideas to ensure that the name is approved on the first application. The majority of these required documents for establishing an offshore company shall be submitted to the Registrar of Companies.
To submit, open the legitimate website of the Registrar of Companies. Fill in the application form and get the credentials to log into the account. Online applications may take up to four business days. Once complete, the business owner may log into the website to apply for a name and reservation.
And lastly, businesses need to have a company bank account to open an offshore company in Cyprus. This shall serve as the depositing account for the company’s share capital.
What Are the Fees You Need to Pay to Open An Offshore Company in Cyprus?
Several factors will be considered in the computation of fees when you intend to open an offshore company in Cyprus. It will include your company’s legal form and the services you offer.
The general fees are:
- Company accounting fee
- Company annual maintenance fee
- Company registration fee
It can be an overwhelming and time-consuming experience to open an offshore company in Cyprus if you are unfamiliar with the laws and the requirements. Though the country’s geographical qualities make it an attractive place for business owners, they have complex and strict procedures for entities that wish to open a business.
Foreign investors are advised to seek legal help or consider getting local business attorneys or agents to assist them in navigating through the red tape of establishing a business in Cyprus.
In some cases, the process can be completed remotely. Likewise, the tax regulations and policies in Cyprus are ever-changing. Legal strategists or business attorneys can help foreign companies avoid fines and penalties on non-compliance to these laws.