How much does it cost to register and maintain a Cyprus company?
One of the principal question clients ask before deciding in which jurisdiction to set up their business is the cost of registration and running of a company.
This article focuses solemnly in the Jurisdiction of Cyprus.
The fees involved when setting up a Cyprus company:
- The registration or set up fee
- The annual fees for nominee services
- The accounting & auditing fee
- The annual expenses payable to the Registrar of Companies
1. The registration or set up fee
Our fees for incorporating a Cyprus company start at €1.500 plus 19% VAT if applicable. These fees include the incorporation costs and certified documents issued by the Registrar of Companies (ROC).
2. The annual fees for nominee services
Annual fees include the fees for the services of nominees, secretary and registered office. We advise all clients that are abroad to appoint our law firm as your secretary as we will be able to make any changes in the ROC on your behalf in a very timely and cost-effective manner. Fees available upon request.
3. The accounting & auditing fees
It is compulsory to have hire Accounting & auditing services for your company. The fees for such services vary substantially depending on the following factors:
- the number of transactions the company executes each month/year
- the size of the firm you decide to hire
A Cyprus company needs to register with the Inland Revenue Office and get a tax number. From then on it has to file audited accounts every year and pay tax, if appropriate.
Some companies are also registered with the VAT Department and get a VAT number. In such case, they have to file VAT return every three months.
Auditing & Income Tax (preparation of IR4) fees start at €1.500 plus VAT per year. Moreover, if the company wishes to outsource the accounting, payroll and VAT services fees start at €250 per month.
Please note that the above fees vary and increase depending on the requirements of each company.
4. The annual levy payable to the ROC
Each year a company has to file an annual return (annual report) with the ROC known as HE 32 which records the changes that took place in the company during the year. With this report the financial accounts of the company and all relevant minutes of the company need to be submitted at the ROC.
Our fees for the preparation and submission of annual report to the ROC is €180 plus VAT.
Special Government Levy
All companies registered in the Republic of Cyprus must pay at the ROC an annual levy of €350. For companies that fall within a group the total amount is capped at €20.000. Non-compliance may result in penalties and eventually striking off.
If you want to open a corporate bank account or require other administrative or legal services these shall be agreed separately.
All companies registered in the Republic of Cyprus must pay at the Registrar of Companies an annual levy of €350. For companies that fall within a group the total amount is capped at €20.000.
As of 1st February 2013, the levy is payable as follows:
- The annual levy on companies dormant or not is payable as of the year of incorporation. Exempt are only companies under liquidation or winding up.
- The annual levy must be paid no later than 30thJune of each relevant year;
- Failure to pay the annual levyby 30th June shall have the following penalties:
– For a delay of up to 2 months – a 10% penalty;
– For a delay between 2 and 5 months – a 30% penalty.
- Non-payment of the levy shall be given notice of strike off by the Registrar of companies and in the event of non-compliance the registrar will proceed with deregistering the company.
- Reinstatement fees from its strike off has a penalty of €500 (in addition to the outstanding amount of the levy) is imposed and €750 where a company is re-instated after the two-year period.
We would like to bring to your attention that the second instalment and final tax instalment for the year 2017 is due by 31st December 2017 which is based on the provisional income tax return submitted by the 31st July 2017.
Estimated taxable income can be revised any time prior to 31st of December of the current tax year. Any revised tax amounts are being equally apportioned over the two instalments, thus attracting interest at the rate of 3,5% per annum on the 1st instalm
Please note that:
- Non-payment on the due dates entails payment of interest at the rate of 3,5% per annum. In addition, there is a 5% fine for late payment of temporary tax.
- If the provisional declaration in less than 75% of the final tax assessment the taxpayer must pay, in addition to the normal tax, an amount equal to 10% of the difference between the final and the temporary tax.
- Tax paid which is in excess as per the chargeable income assessment of the Commissioner of Taxation will be refunded with interest of 3.5% per annum as from 1st January 2017.
- Where no taxable income arises, there is no requirement to submit the temporary tax return.
The temporary tax can also be paid electronically via JCC Smart
Please contact us in order to make all necessary arrangements for the filing of the returns on time and prompt payment of the relevant tax.Read More
CAPITAL REDUCTION BY WAY OF REDUCING SHARE CAPITAL OR SHARE PREMIUM OF A CYPRUS COMPANY LIMITED BY SHARES
It is a fundamental principle of law that a company limited by shares should only in limited circumstances reduce its share capital. This principle derives from the need to protect third parties such as creditors against the risk that the company’s assets could be transferred and/or removed depriving them of their security over the debts. In order to safeguard such risks a reduction is only feasible subject to the approval by the appropriate District Court in the Republic if certain requirements are met.
A Company registered in the Republic of Cyprus can is if so authorised by its Articles, reduce its share capital by way of special resolution to:
• Either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost or unrepresented by available assets; or
• Either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the wants of the company; or
• Cancel paid up share capital for the purpose of writing off losses of the company; or
• Cancel paid up share capital by the creation of a reserve, to be called “the capital reduction reserve fund”
Reasons & Benefits for a reduction of share capital
Once a company reduces its capital the reserves arising from a reduction are treated as realised profit and are distributable immediately. This is a relatively simple way for private companies to create a distributable reserve which can be used for the following reasons:
• To eliminate a deficit on the company’s profit and loss account and thereby enable the company to pay dividends
• To return excess capital to the shareholders
• A means of paying cash to shareholders where the company does not have sufficient distributable reserves to pay a dividend.
• The capital reduction proceeds can be used for conversion of non-distributable reserves to distributable reserves and reduce accumulated losses.
• It may lead to the return of any surplus capital to shareholders
• The procedure can also be used to simplify the capital structure of the company by eliminating certain classes of shares which have no valuable rights attached to them.
A Share Capital reduction is effective subject to confirmation by the Court. The Court may require the company to show that no third parties are affected negatively by this reduction, and if so their consent shall be required. The Court may further request a publication to be made to give any third party the opportunity to file an objection to such a reduction.The procedure is mapped out as follows:
1. Passing a Shareholders special resolution approving the reduction of the share capital of the company with a right to vote majority of at least 75%.
2. If the company has creditors, such consents will have to be obtained and submitted with the court application as appendix.
3. Obtaining the courts consent and judgement.
4. Submitting relevant documents to the Registrar of Companies to finalise the reduction and obtaining relevant certificate.
Effective date of reduction of Share Capital
The reduction of the share capital will have no effect unless and until step (3) above takes place and the necessary filing is made to the Cyprus Registrar of Companies (s.67 (2) of the Law).Read More