Cyprus has always been one of the premier business destinations in Europe, and this is as true today as ever. A beautiful place to live and visit, Cyprus also boasts one of the best business environments in the world. This has made it not just an ideal home for businesses catering to the local community and tourists, but also a base for international operations.
Starting a business in Cyprus isn’t an impossible dream for foreign entrepreneurs, but it does require you to complete a number of steps. Fear not though: the expert team here at Euro Start Entreprises is here to help guide you through the formation process in Cyprus, and start your dream business in this sunny corner of Europe.
Why start a business in Cyprus?
Once known as a ‘tax haven’ for offshore businesses, Cyprus has cleaned up its act without diminishing its attractiveness to businesses. The corporate tax rate of 12.5% puts it level with Ireland, and among the best in Europe, particularly for a developed economy.
The business environment in Cyprus is mature, developed and efficient, with numerous resources to help startups and small businesses. Cyprus also benefits from double taxation treaties with 27 other countries, including most major nations across Europe.
Related article: Why Cyprus is so popular with tax savvy entrepreneurs
There are a range of grants and investment opportunities for startups in Cyprus, particularly in the tech and finance sectors. The Larnaca Free Zone and the Free Port Areas of Limassol and Larnaca also offer exemption from customs charges, making them ideal for exporters.
Cyprus is also an ideal destination for talent. Aside from offering a high quality of life, Cyprus provides a number of personal tax concessions for expat workers, as well as generous visa schemes. The country also benefits from its EU membership for trade and taxation, although it is not part of the Schengen Area, and so does not benefit from freedom of movement.
New Government Incentives for Third Country Nationals
One of the greatest appeals for businesses looking to expand or relocate to Cyprus is the country’s New Government Incentives for Third Country Nationals (TCNs). This framework of government support is designed to attract businesses looking for a business and IP-friendly environment within the EU, particularly those moving from the UK, or considering locations other than the UK with a high level of English proficiency.
The strategy includes the simple provision of work permits and visas for up to three years for non-EU nationals, and the expedited transfer of support staff under certain conditions. Application for long-term and permanent residence has also been simplified, while the spouses of highly skilled TCN employees can also freely access the Cypriot labour market, finding local employment without the usual visa requirements.
Tech workers and businesses are also major beneficiaries of the New Government Incentives. A digital nomad visa provides up to three years’ residency for TCN individuals, while tax breaks, R&D funding and strong IT infrastructure all support research and tech businesses. Workers can also benefit from a 50% tax exemption if they are newly non-domiciled, with an employment remuneration of ≥ €55.000 for 17 years.
Things to consider when starting a business in Cyprus
Starting a business in Cyprus is fairly straightforward if you have the support of an experienced formation agent. However, there are a few things you will need to consider before setting out on your Cypriot business journey. The first is office space, as a registered address is required to start a business in Cyprus. This can be a rented office or virtual office, however!
While most of the formation process can be completed online through Cypriot government portals, the final step of registration with the Ministry of Labour must be completed in person, with forms being handed to the Ministry offices. This will either necessitate your presence in Cyprus or that of a representative. Again, this makes using a formation agent the simplest choice.
Otherwise, you’ll want to think about the logistics of starting a business in Cyprus. While it’s a great place to start up in many industries, and offers substantial support for startups, it may not offer the same allure to all international employees, or the same access to resources and business relationships found in some leading European economies. This could make it less of a destination for high-tech manufacturing, for instance, but a great place for marketing, IT, or other office-based work.
How to start a business in Cyprus
Starting a business in Cyprus isn’t a byzantine process by international formation standards, but it does involve a multi-step process that requires the input of multiple parties, and a visit to government offices in Cyprus. While we recommend employing the help of a Cyprus company formation specialist, the following guide should give you an understanding of the steps involved, and what you’ll need to do to prepare for your new life in Cyprus.
1. Write your business plan
While it’s not a strict requirement for starting a company in Cyprus, we always advise entrepreneurs in any country to start by writing a comprehensive business plan. This document should contain all of the pertinent information about the business you intend to form, and your plans and predictions for how its opening months and years will proceed.
A business plan should be the foundational document for your business, acting as both a continual point of reference and a barometer for your success. A business plan will help you to nail down exactly what your business will do, what it will represent, and how it will operate, with plans and policies you can refer back to at important junctures.
- Business plans commonly include:
- A description of the company
- The products or services you will offer
- An assessment of the market
- The business structure
- Your target market and audiences
- Financial planning and targets
- Logistics and administrative factors.
There is no strict guide on what a business plan should contain, or what it should look like. Instead, try to fill your business plan with things you will find useful in the future, as well as information that will help to inform others about your business, and convince them of its potential, financial stability, and the quality of its management.
2. Choose your company name
As with starting a business in any country, your first port of call will be to choose a name. The names of all Cypriot businesses are available to browse in the country’s online Business Register, allowing you to see what’s already taken, and start working through ideas.
Once you’ve settled on an available business name, you’ll need to gain approval for it, and reserve it with the Cypriot Registrar of Companies and Official Receiver.
3. Prepare your paperwork
The next step will be to prepare your Memorandum of Association and Articles of Association. These documents demonstrate an agreement between all shareholders and/or guarantors to form the company; and lay out the basic rules on how the company will be run.
The Companies Law 2016 provides a standard Memorandum for general purpose companies, though this will have to be adapted slightly for your business. Cypriot business law is largely analogous with the UK Companies Act, meaning that the format of these documents is likely to be familiar to UK entrepreneurs.
Under Cypriot law, the Memorandum and Articles of Association must be prepared by qualified lawyers, who must also then sign the relevant declaration. The Articles will be more specific to your business, and may require more time and attention. A Cypriot formation specialist will help to connect you to lawyers who can help prepare the correct documents.
4. Register your company
The next step is to begin the registration process. Like the business name, the registration process includes the Cypriot Registrar of Companies and Official Receiver. The following documents can either be submitted to the office in person, or using the online portal:
- Declaration form (HE1)
- Registered office address form (HE2)
- Directors and secretary form (HE3)
- List of directors [public company only] (HE5)
- Original or scanned copy of Memorandum & Articles of Association
- One-Stop Shop application cover (for One Stop Shop submissions)
These documents must all be certified by a lawyer or advocate registered in Cyprus. Upon completing this step, you will be eligible to receive your:
- Certificate of Shareholders
- Certificate of Directors and Secretaries
- Certificate of Registered Office
- Certified true copy of the Memorandum and Articles of Association
- Certified copy of the Certificate of Incorporation.
5. Register for taxes
Cyprus may be known for its low-tax environment, but there’s no skipping this step! You will next need to register your business with the Cypriot Tax Department for relevant business taxes, including corporation tax and value added tax (VAT).
This chiefly involves registering for a tax identification number (TIN), which can also be activated to pay VAT if required by your business. This can again be done in person or online through the use of a secure e-signature. The required forms are:
- Form T.D.2001 (for a TIN)
- Form T.D.1101 (to activate the TIN for VAT)
6. Register with the Labour Ministry
The last formal step towards starting a business in Cyprus is to register your new business with the Ministry of Labour, Welfare and Social Insurance. This encompasses a range of social contributions that your business will make, including registering new employees, approval for computerised salary payments, exemptions to paid leave laws, and more.
While some of these forms and registrations may not be applicable to you now, many will be important for your business in the long run, making it important that you assess them and familiarise yourself with them. Documents to be filed where applicable should include:
- Form Y.K.A. 1-001 (registration as an employer)
- Form Y.K.A. 5-018 (confirmation of the start of employment for each employee)
- Form Y.K.A. 1-003 (declaration of recruited employees)
- Form Y.K.A. 1-021 (online contributions payments)
- Form Υ.Κ.Α. 1-006 (use of a computerised system for salary payments)
- Form Y.K.A. 1-005 (certificate of exemption from contributions to Central Holiday Fund and full paid annual leave)
- Form Y.K.A. 1-008 (application for Social Insurance for unenrolled employees)
The original copies of these forms must be submitted in person to the Ministry of Labor, Welfare and Social Insurance offices, making this a step best completed by company formation experts. However, the payment of the fees can be completed online.
7. Incorporate!
With all the formal steps completed, you can think about the process for launching your new business into the world. This may include marketing, a website, ecommerce platform, procurement of labour and supplies, and all of the other aspects of the business that haven’t already been accomplished as requirements for the formation process.
Cyprus is a perfect business destination, offering an ideal balance between a beautiful location to work and live, and a highly developed business environment. Whatever your industry and wherever you choose to settle, you’ll be safe in the knowledge that Cyprus is among the most stable, business-friendly and picturesque places to do business in Europe.
For further information on company formation in Cyprus, including tax assistance and opening up a business bank account, please give us a call on 0033 (0)1 53 57 49 10 or email us from our contact page, where we’ll be happy to discuss all your company incorporation requirements.
