How and What business to start in Cyprus for foreigners

Cyprus is one of Europe's most significant commercial centres due to its geographic position, but it also has other characteristics that attract international investors looking to start a business in Cyprus. In the 2019 World Bank Doing Business Report, it is ranked 57th in terms of ease of doing business.

Benefit of starting a business in Cyprus

These are the 03 most noticable benefits when starting a business in Cyprus:

• Cyprus is an EU member, which can help businesses eliminate any exchange rate risks and improve monetary transparency.
• Treaties were signed with more than 50 countries to avoid the double taxation on the foreign companies in Cyprus. The country provides an attractive tax regime, with several tax incentives.
• Corporate tax is among the lowest in Europe with only 12.5%, encouraging more and more people to start a business in Cyprus.

Port Kyrenia Girne

Overall, businesses in Cyprus need to pay only 12.5% of their profits to the government. It has one of Europe's lowest corporation tax rates. Furthermore, corporations are excluded from paying taxes on the sale of securities, dividends, and, in some situations, capital gains. Cyprus has a territorial tax system, which means it only taxes revenue generated locally. As a result, through agreements on double taxation, starting a business in Cyprus can lead to significant tax reduction.

Cyprus has less bureaucratic persecution on business than continental Europe. A business started in Cyprus, on the other hand, has a lot of power and a good reputation beyond the border. This implies that investors may simply start a business headquarter in Cyprus and do business across Europe without having to meet any additional licensing requirements. Cyprus responds to the demands of both domestic and international enterprises. The government has implemented a number of tax perks and deductions that are quite appealing.

Top business ideas in Cyprus based on industries/sectors

• Banking and financial consultancy are two most profitable and fastest growing sectors for business ideas in Cyprus. This has been a favored destination for international investors for the last two decades. The flow of investments via Cyprus to Asia (particularly China and India), South America, and the Middle East has recently accelerated. Furthermore, corporations from outside the EU see Cyprus as a good place to start investing in Europe.
• There are more than 130 shipping firms in Cyprus, operating Europe's third-largest and the world's eleventh-largest merchant fleet. Although it is not as comparable to banking in the top business ideas in Cyprus category, shipping still contributes up to 7% of GDP annually.
• Cyprus' insurance industry is thriving. Such services are in high demand from both private and public organisations.

Limassol city’s famous oval building

What to consider when starting a business in Cyprus

While considering doing business in Cyprus, a foreign entrepreneur should take into account several aspects, such as:

• Different formalities for each company structure.
• Legal or registered physical addresses in Cyprus (virtual offices are acceptable).
• Names reservation and registration.
• Taxation and employment purposes registration immediately after incorporation.
• Special licenses and permissions from the government are required.

The expenses for starting a business in Cyprus are also commonly asked topics. Fortunately, they are relatively affordable, and certain procedures are completely free. The fixed costs when starting a business in Cyprus are:

• Company registration fee
• Annual maintenance fees
• Accounting fees

Nominee services (for shareholder and director) and company secretary services are the most often used in Cyprus by foreign entrepreneurs, as it is compulsory by law to have local directorships.

There are 5 company structures for foreign investors doing business in Cyprus to choose from:

• Private limited liability company by shares: the most common one. There is no requirement for a minimum share capital, and the members' liability is restricted. The number of non-transferable shareholders is from 1 to 50.
• Public limited liability company: the minimum capital for a public limited liability company by shares is 25,629 EUR. Shares are transferable, and at least 7 shareholders are required.
• Limited liability company by guarantee without share capital: generally, a limited liability company by guarantee without share capital is usually established for charitable or non-commercial purposes. Each participant is able to determine their own responsibility limit, which must be agreed upon before participation.
• Limited liability corporation: by its memorandum of association, a limited liability corporation by guarantee with a share capital can restrict the responsibility of its members and can be either private or public.
• Variable capital investment company: This one has a variable value rather than a nominal value. The initial capital need ranges from 50,000 to 300,000 EUR. The number of members of a private business is from 1 to 50. If a firm is public, it must have at least one member.

How to start a business in Cyprus in 8 steps:

1. The approval of the company name is the first step. An application for clearance might take anywhere from two to three days to a week to examine. Reservation of a company's trading name (which must be distinctive and represent the business's activity) should be done at the same time.
2. Prepare filing documents, including the company's Memorandum and Articles of Association. The paperwork must be accompanied by a sworn declaration from a lawyer, as well as information about the firm, its director, secretary, and shareholders.
3. Open a corporate bank account with a local bank for the deposit of the share capital.
4. Appoint the firm's officials, including the director and the company secretary (secretaries are required when doing business in Cyprus).
5. Submit the necessary papers to the Cyprus Companies House for the business registration process.
6. Register the business for taxation, VAT, social security, and pensions.
7. Obtain the appropriate business licenses to enable the start of a business in Cyprus.
8. After these steps are completed and the business's Certificate of Registration is received, the company can hire employees and begin operations.

Within 60 days of setting a business in Cyprus, the newly formed company must register with the tax department and get a Taxpayer Identification Number. In some circumstances, obtaining a VAT number is also essential. Because a Cyprus business must employ people, it must register with the Ministry of Labour, Welfare, and Social Insurance. The company can also register a trademark to protect its business and intellectual interests.