Overview of the Cyprus Limited Structure
Cyprus Limited is one of the preferred company forms for international companies and investors wishing to set up a business in Cyprus. It offers numerous advantages such as low formation costs, low tax rates, and a flexible company structure. Additionally, it provides significant asset protection, making it an attractive option for safeguarding wealth from legal challenges. In this article, we will take a closer look at how Cyprus Limited is structured. So you know what to expect!
Limited Liability Company in Cyprus: Structure of the Management of a Cyprus Limited Company
The Cyprus Limited Liability Company (Limited) in Cyprus is a flexible type of company that considers both individuals and legal entities in its management. It offers an adaptable structure to meet the varying requirements of different business activities. The directors and shareholders are key elements.
In a Cyprus Ltd, the main management responsibility lies in the hands of the directors. They are responsible for the company’s daily management and make strategic decisions on behalf of the company. Their duties may include developing business strategies, overseeing finances, hiring executives and overseeing general operations. Directors also have several statutory duties that they must fulfil. These include:
- Complying with the companies‘ law of Cyprus, specifically Companies Law, Cap. 113
- Ensuring that the company fulfills its tax obligations
- The preparation and filing of annual accounts
Whilst the directors are responsible for the daily company management, the shareholders also play an important role in the structure of a Cyprus Limited. The shareholders are the company owners and have the right to vote at the AGM. In the case of an exempt private company, which has specific characteristics such as a limit on the number of debenture holders, exclusive shareholding, and specific regulatory relaxations concerning financial reporting and director loans, shareholders enjoy certain regulatory benefits. They influence important company decisions. For example, shareholders can vote on the appointment and removal of directors, amendments to the memorandum and articles of association, the issue of new shares and the approval of the annual accounts. However, they do not normally take an active role in its day-to-day running.
The management structure in a Cyprus Limited provides a balance between the directors and the shareholders. The directors have the authority and responsibility to manage the company and make strategic decisions. Meanwhile, the shareholders have the right to scrutinize these decisions and withhold their approval if necessary. This balance ensures that the interests of all parties are taken into account. It contributes to the stability and success of the company.
Step-By-Step Guide to Incorporation
Setting up a company in Cyprus is an exciting step. Below we provide you with a guide to make this process easier. However, setting up a company is particularly easy with the services of BS Holding, based in Paphos.
- Step 1: Create a business plan – Before setting up your company, you should draw up a detailed business plan. This plan should include your business objectives, target audience, marketing plan, and financial projections.
- Step 2: Select and check the company name – Choose a name for your company and check if it is available in Cyprus. You can do this at the Department of the Registrar of Companies and Official Receiver.
- Step 3: Prepare the Memorandum and Articles of Association – The Memorandum and Articles of Association are important documents that set the ground rules for running your company. They should be prepared by a lawyer or other qualified professional.
- Step 4: Appoint directors and shareholders – Appoint the directors and shareholders of your company. In Cyprus, a limited company must have at least one director and one shareholder. The same person can be both a director and a shareholder.
- Step 5: Determine the registered office for the Limited Liability Company – You must specify an address in Cyprus as your company’s registered office address. This is the place where all official documents and notices will be sent.
- Step 6: Submit documents – Submit the required documents to the Department of the Registrar of Companies and Official Receiver for company incorporation in Cyprus. This includes:
- The Memorandum
- The Articles of Association
- The names of the directors and shareholders
- The address of the registered office
- Step 7: Pay the fees – Pay the fees required to incorporate the company. The exact amount may vary. It is best to contact us to find out in advance.
- Step 8: Open a bank account – Once you have registered your company, you should open a bank account in Cyprus for a private limited liability company. This can be done from abroad.
Please note that this is a general guide and certain steps will vary depending on your circumstances. Also, consider the Parent-Subsidiary Directive when operating in different countries of the European Union. It is recommended to seek professional legal and financial advice before setting up, for example, a Cyprus Limited as an offshore company. BS Holding will be happy to advise you on topics such as company formation in Cyprus. This way you play it safe and nothing stands in the way of your future!
Structure of the Finances and Taxes of a Cyprus Private Limited Liability Company
Financial management and tax planning are also key aspects of any company management. There are specific requirements and advantages for a Cyprus Limited that can have a favourable impact on your company. Cyprus is not a typical tax haven in Europe, but you can benefit from a tax exemption or reduction in certain cases. These are the most important aspects:
One of the most attractive features for companies registered in Cyprus is the low corporate tax rate. With a rate of only 12.5%, Cyprus offers one of the lowest corporate tax rates in the European Union. This allows you to reduce your operating costs and increase profitability.
All companies registered in Cyprus, including limited companies, are required by law to prepare and submit annual financial statements. These financial statements must be audited by a certified public accountant. The submission of accurate and timely financial statements is not only a legal requirement but also contributes to the transparency and credibility of the company. We can help you with this.
Cyprus has concluded double tax treaties with a large number of countries. This means that companies registered in Cyprus that do business with these countries only have to pay taxes in one country. These treaties often allow for reduced or zero rates of withholding tax on various payments, such as dividends, interest, and royalties. These agreements are particularly favourable for international companies and digital nomads.
With the right tax planning, Cyprus Limited Companies can minimize their tax burden and maximize their profits. This can be achieved through a combination of strategies. These include utilizing tax reliefs and exemptions, effectively managing business expenses, and utilizing loss carryforwards. Additionally, the unique corporate taxation structure in Cyprus offers significant tax benefits, especially for Non-Resident Private Limited Liability Companies. Get in touch if you would like to develop a truly effective strategy with experts.
As an owner, you not only have to run your business, but also fulfil several legal requirements. One of these obligations is the filing of annual returns. These ensure that your company is in good financial shape. You also need to keep accurate company accounts and update your company register when there are changes to the company structure or management. This may sound like a lot of work. But your business needs to operate legally. If you fulfil all the requirements, you can concentrate on your core business and run your company successfully like an offshore company. We will be happy to help you!
When a Cyprus Limited Company is dissolved, a liquidator must oversee the process of dissolution. The liquidator has the task of settling all obligations and debts of the company and distributing the remaining assets among the shareholders. This is a necessary step to ensure that the company fulfils its legal obligations and that the interests of the shareholders are protected. However, it is also a complex and challenging task that requires expertise and experience. Overall, the process of winding up a limited company in Cyprus is an important step to ensure that the company is properly wound up and that all obligations are fulfilled. We can also help you with the dissolution!
In the course of globalisation, companies are increasingly looking for locations that offer favourable tax conditions and a central location. Cyprus is one such location, which is considered a gateway due to its geographical position between Europe, Africa and Asia. In a Europe-wide comparison, it has many advantages. The tax framework also makes Cyprus an attractive location for companies. Cyprus Limited benefits from the numerous double tax treaties that Cyprus has concluded. It is therefore not surprising that more and more international companies from the European Union are choosing Cyprus as the location for their subsidiaries or holding companies. Is Malta an alternative for you? Then take a look at our Malta vs Cyprus comparison.
Why company formation in conjunction with non-dom status is ideal
Forming a Cyprus company in conjunction with non-dom status offers an ideal combination of advantages. Non-dom status enables foreign entrepreneurs to effectively reduce their tax obligations. In conjunction with the 60-day rule, there is even a shortened residence period of 60 days instead of 183 days to be considered a tax resident. This means that a person can relocate to Cyprus and benefit from the tax advantages after just two months.
The link between incorporation and non-dom status allows entrepreneurs to minimize their tax burden while enjoying the benefits of a European corporate structure. However, find out in advance about the exact legal and tax requirements and seek professional advice if necessary. This will ensure that you take all aspects of company formation and non-dom status into account.