Cyprus may be tiny in land area, but it is a prosperous country with an exceptional economic landscape. The country offers amass of business opportunities for both local and foreign investors. Cyprus has a free-market, modern and service-based economy. This setup provides international and domestic businesses with a chance to invest and grow. More so, English is the official language in the country. As a former British colony, Cypriots are English speakers.
It’s no wonder that companies from around the UK and worldwide take an interest in settling and starting a business in Cyprus.
Self-employment is also the preferred type of business in the country. But is it easier to register as a self-employed in Cyprus? This article will help us understand more about starting a business as a self-employed individual in Cyprus.
What does Self-employed in Cyprus Mean?
Cyprus has a “Non-Dom” program for Cypriot residents is a popular choice for people who wish to start a business but do not want to set up a company. It was previously rigorous and was not favorable for small entrepreneurs and digital nomads. Thus, the government made it simpler, and you are no longer obliged to start a business in Cyprus.
Generally, a self-employed person is an individual who conducts businesses directly without using a business or company.
To be considered as a self-employed individual, you must have Income tax registration, VAT registration, and you are an employer.
What are the Types of Taxes for the Self-Employed in Cyprus?
People who register as self-employed in Cyprus must be aware of the three main types of taxation: VAT Tax, Personal income tax, and social insurance contributions.
Social Insurance Contributions
Cyprus collects about 15.6% of social insurance contributions from self-employed persons. This percentage is multiplied by the estimated earnings, not the actual earnings you may get.
A self-employed person’s estimated earnings are based on their years of experience and occupation. On the other hand, you may file a special application and request the tax department to base your contributions on the actual income.
The social insurance contribution is payable every quarter, and it is connected to the GESY or the National Health System of Cyprus.
Personal Income Tax
Self-employed persons in Cyprus earning more than €19.500 per year are also obliged to file an IR1. Those who earn less can submit a tax return if they wish. You may get your Taxpayer Identification Code when you register at the Ministry of Economy.
As a self-employed person in Cyprus, you have several exceptions for your income tax. Keep in mind that taxes in Cyprus are payable in two equal instalments. You will be asked to submit an audited financial statement if your income exceeds €70,000 per year.
Self-employed individuals with sales income in the last 12 months exceeding €15,600 must also register with the VAT department, though it is optional. VAT taxes are payable every quarter.
Typically VAT rate in Cyprus is 19%, but specific transactions may call for as low as 0% VAT.
How to Register As Self-Employed in Cyprus Online?
Unfortunately, registering as a self-employed individual in Cyprus cannot be done online. Applicants must give their signatures as e-signatures, and photocopies are not accepted.
If you wish to register as a self-employed in Cyprus, you may proceed to the Department of Labor. Located in the same building is the registration for Social Insurance Contributions with the Ministry of Labor and Social Insurance.
How to Register as Self-Employed in Cyprus?
The steps for registering as self-employed in Cyprus are the following:
- Select a name for the business and submit it for the approval of the Cyprus Companies of Registrar. You are allowed to use your name as the business name.
- File the registration application with the Trade Register in Cyprus
- Set up your business bank account
- Apply for the necessary licenses for your business
- Register for local tax and VAT
- Register for social security contributions
Why Register as a Self-Employed in Cyprus?
Self-employment in Cyprus is used by the country’s sole and small traders and partnerships. They can use their name as the trade name and do not need to open a company to transact with clients in or outside Cyprus. There are many benefits of knowing how to register as self-employed in Cyprus.
If you want to start a business in Cyprus, registering as self-employed will provide the following benefits:
- Self-employment is the simplest form of business accepted by the Commercial Code of Cyprus.
- The requirements for registration are straightforward, and the documents for filing are minimal compared to registering other forms of business.
- The procedure is very simple and can be completed in days.
- Being self-employed in Cyprus can be easily converted to other business forms, such as a limited liability company.
Cyprus is a beautiful country with a dynamic mix of culture, landscape and economy. Over the years, this small nation in the Mediterranean has attracted investors and small businesses from the UK and worldwide. The country has eased regulations in business registration to further grow its financial sector. Thus, you can expect simpler registration processes for companies and self-employed businesses.