The most common business structures in Cyprus

You, Your Business, And The Law | Lead Grow Develop

Company registration in Cyprus is governed by Company Law. This set of regulations are modelled on the English Companies Act in 1948. In the past few years, the government made amendments to align Cypriotic Company Law with European standards.

Cyprus offers a wide variety of business structures that will offer investors a lot of development opportunities. Below are some of the most common business structures in Cyprus. 

Cyprus public and private companies limited by shares 

These are the most common types of companies in Cyprus. There are no requirements set when it comes to the minimum share capital required to start private and public limited companies.

It is necessary, however, that one to about 50 shareholders set up an LTD in Cyprus. They also have to subscribe to non-transferable shares, and they are liable to the company’s obligations only as far as their contribution is concerned.

If the private company is owned solely by foreigner investors, it is referred to as an International business or offshore company.  

Private companies

Private Limited companies are the most employed business structures in Cyprus, and there are plenty of reasons why. These companies can be used for various purposes. Some of those purposes are included below: 

  • They can be used as holding companies and allowing them to benefit from several tax advantages. 
  • You can also use them as trading companies and undertake a variety of commercial activities.
  • They can be used as financial companies, allowing the investors to set up private banking institutions under them. 
  • You can also register a Private limited company as a company that is ready to be sold, otherwise known as a shelf company.
  • Apart from the reasons mentioned above, private companies can be registered as exempt private companies and also as unlimited companies in Cyprus. 

Public companies

In Cyprus, a public company limited is a lot similar to a private company that is limited by shares. However, the difference lies in the fact that the shares are freely transferable. Also, unlike private companies, there can be as many shareholders as you wish.

If you want to establish a public company, the regulation requires that you have at least seven shareholders. Apart from that, you will need about 26,000 euros as initial capital to incorporate a public company limited by shares.

Cypriotic company limited by guarantee

A company that is limited by shares is quite similar in structure to the one that is limited by guarantee. These types of companies are usually established for charitable actions and non-profit purposes. 

Partnerships

In Cyprus, a general partnership can be formed by between two and up to twenty individuals. It is mandatory that all of the partners be registered with the Registrar of Partnership. When forming a partnership, no capital is required. Also, all of the Partners are entirely liable for the partnership to the extent of their privately owned assets.

There are two main types of partnerships; these are general partnerships and limited partnerships. The difference between the two is that the latter should have a general partner and at least one limited partner.

A general partner is entirely liable for the partnership’s obligations, and a limited partner is only liable to the extent of their contribution. Just like in general partnership, the limited partnership requires that at least two partners register with the Registrar of Partnerships as well. 

Sole proprietorship

This type of company is run by a single individual, and this member has full liability. It is easy to establish, simple and informal. Like all other types, it still has to register with the Registrar of Partnerships.

Business structures offered to foreign investors and companies in Cyprus

Foreign investors interested in starting companies in Cyprus can set up branches, subsidiaries, and representative or liaison offices in the country. The main differences between the companies they can operate and those run by locals lie in the types of activities they can undertake. There is also a limit to their degree of independence. 

A subsidiary company is often registered as a limited liability company. This allows it to be granted the status of a Cyprus resident business. It is an independent type of business structure that can undertake more activities than the foreign parent business.

Branch office

This type of business structure depends entirely on the parent company. Its activities should not be different from the parent business’. It is also considered a Cyprus resident company; however, it is relatively cheaper and easier to establish than the subsidiary. A branch office also benefits from several tax advantages as it is protected by the Cypriot double taxation agreements.

Representative office

This type is not allowed to undertake any commercial activity. It is limited to completing marketing activities and serving as a contact point between the potential clients, the foreign company and business partners in Cyprus.

Cypriotic Trusts

These types of business structures have become quite popular in the past few years in Cyprus. They offer a lot of tax advantages to their settlers. When forming a trust, a trust deed is drawn up. This allows the settlor to protect their assets by leaving them to their desired beneficiaries.

It is one of the safest methods of lowering the tax burden on the settlor, and it also represents a unique tax and estate planning solution for foreign nationals.

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