Opening an IT company in Cyprus is a process that requires careful attention to legal, tax, and operational aspects. Cyprus is attractive for businesses due to its low taxes, ease of registration, and strategic location, providing convenient access to EU markets. In this article, we will take a detailed look at the key steps, requirements, and benefits to consider when registering an IT company in Cyprus.
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Choosing the Legal Form for an IT Company
Before starting the registration of an IT company in Cyprus, it is important to choose the right legal form. The most commonly used form for IT companies is a limited liability company (Ltd). This type of company offers several advantages: it protects the founders’ assets and separates their personal liability from the company’s liabilities. This means that shareholders only risk their contributions to the company’s authorized capital, minimizing financial risks.
Ltd registration is possible for both residents and non-residents of Cyprus, making this business form convenient for foreign investors. To register a company, a minimum of one shareholder, one director, and a secretary is required. The same person can perform all these roles, which is particularly convenient for small companies. The legal address of the company can be either in residential or non-residential property, giving entrepreneurs flexibility in choosing suitable office space. It is important to note that a legal address is necessary to comply with local requirements for the company’s physical presence in Cyprus.
Nominee Services and Legal Address
In Cyprus, the practice of providing nominee services is also widespread, which includes appointing a nominee director, secretary, and providing a legal address. These services are typically offered by law firms and specialized companies. Nominee services allow for the confidentiality of the director and secretary, which may be important for those who do not want to publicize their connection to the company. Nominee directors and secretaries perform their roles only formally, without participating in the company’s operational activities, while ensuring compliance with all legal requirements.
However, if the founder wishes to save on nominee services and personally manage the business, they can act as the director and secretary themselves. This reduces costs while maintaining control over the company. Nevertheless, a legal address remains a mandatory requirement. It can be located in either commercial or residential property, making the registration process more flexible and accessible.
Document Preparation and Registration Process
The company registration process in Cyprus begins with reserving a unique name in the Companies Register. This step is necessary to ensure that your chosen name is not already taken. Once the company name is approved, the next step is to submit the incorporation documents, including the company’s memorandum, information about directors, shareholders, and the company’s legal address. All these documents are submitted to the Cyprus Companies Register, where the official registration takes place.
The following documents are required for submission:
- Proof of identity for all company participants (passports or other identification documents).
- Proof of residence (such as a utility bill).
- Documents confirming the source of income for the beneficiaries (tax returns, rental agreements, etc.).
- Resumes of the company’s beneficiaries.
These requirements are aimed at complying with anti-money laundering measures and financial crime prevention, making Cyprus a reliable and transparent jurisdiction for international investors. It is important to note that, under Cypriot law, only a licensed lawyer can register a company. It is not possible to register a company independently. The cost of opening a company starts from 1,200 euros + VAT. Contact us, and we will provide you with a lawyer for company registration, as well as a licensed auditor and accountant for bookkeeping and reporting.
Tax Benefits for IT Companies
One of the key advantages of opening a company in Cyprus is its favorable tax system. Cyprus offers one of the lowest corporate tax rates in the European Union—12.5%. This attracts not only local companies but also international holdings looking to minimize their tax burden. Particularly appealing are the tax conditions for companies involved in intellectual property, such as software development or IT products. Under certain conditions, such companies can take advantage of tax incentives, reducing the corporate tax rate to 2.5%, which significantly increases business profitability. We covered this in detail in our separate article on the special IP-Box regime in Cyprus.
Moreover, for non-domiciled residents of Cyprus, there is no tax on dividends, although there is a contribution to the GESY fund of 2.65%. This is especially beneficial for international shareholders, as it allows for profit distribution under favorable conditions. Additionally, there is no capital gains tax in Cyprus for most assets, making this jurisdiction ideal for managing international investments.
Office and Company Management
Cypriot authorities require companies to have a real office on the country’s territory. This is necessary to meet “substance” requirements, which means the physical presence of the company and the conduction of management activities in Cyprus. Having an office is not just a formality. The company must have a registered address where operations are actually conducted, as well as means of communication via phone and email.
Furthermore, the office can be rented in a business center or residential property, which is especially popular among new companies as it reduces the cost of organizing a dedicated space. Renting an office provides the company with all the necessary documents for registration, such as a lease agreement, which will be required for submission to the Companies Register.
Opening a Bank Account and EMI
After registering the company, it is necessary to open a corporate bank account. This can be done with Cypriot banks, banks in other countries, or through EMI (Electronic Money Institutions). Many companies opt for EMI services as they offer faster and more flexible account opening conditions compared to traditional banks. Electronic payment systems allow management of accounts in multiple currencies, which is especially convenient for IT companies operating internationally. It is also important that EMI ensures fast transaction processing, which is critical for companies involved in e-commerce, digital services, or selling IT products.
To open a bank account, documents confirming the identity and residence of the beneficiaries, as well as company information, will be required. Opening an account with a traditional bank may take several weeks, while the EMI process can be completed within a few days.
Compliance with Legal Requirements
For successful company registration and continued business operations in Cyprus, strict compliance with local legal requirements is essential. In addition to submitting all necessary documents, the company must maintain accounting records and submit tax reports. Cyprus also has a value-added tax (VAT) system, with a rate of 19%. Companies are required to submit VAT returns on time and pay taxes through the Taxisnet system.
It is important to remember that Cypriot law requires companies to prepare annual financial statements and submit them for auditing.
Opening an IT company in Cyprus is a process that requires a comprehensive approach to legal and tax aspects, as well as careful compliance with legislative requirements. However, due to the flexibility in choosing a legal form, tax incentives, and the absence of currency controls, Cyprus remains one of the most attractive places for registering an IT business. Nominee services, flexibility in choosing a legal address, and the possibility of tax optimization make Cyprus an ideal jurisdiction for international entrepreneurs.
