Establishing a Company in Cyprus: A Guide for Israelis
Cyprus has become an attractive destination for Israeli entrepreneurs looking to establish a business abroad. Its proximity to Israel, favourable business climate, and strategic location make it an ideal choice. This article outlines the different types of companies in Cyprus, the registration procedure, and the benefits of setting up a company in Cyprus.
Types of Companies in Cyprus
1. Private Limited Liability Company by Shares
This is the most common type of company in Cyprus. It requires a minimum of one shareholder and a maximum of fifty, and public share offerings are not permitted. The liability of investors is limited to their shareholding. This structure is particularly relevant for non-European citizens, allowing the establishment of an offshore company without a physical presence in Cyprus.
2. Public Company Limited Liability by Shares
Similar to private limited companies, but with a minimum of seven shareholders and the ability to offer shares to the public. It requires a minimum issued capital of €25,629.
3. Limited Liability Company with a Guarantee (No Share Capital)
In this structure, partners act as guarantors rather than shareholders, with their liability limited to the amount they committed to in the event of liquidation. This type of company does not have share capital.
4. Limited Liability Company with a Guarantee (Share Capital)
This company has share capital, and the liability of partners is limited to their shareholding and their commitments towards the company's debts during liquidation. It can be either public or private, with public companies allowed to offer shares to the general public.
5. Variable Capital Investment Company (VCIC)
This type of company has shares with variable values and requires a license from the Cypriot Securities Authority (CySec) to operate as collective investment funds (CIFs). The number of partners can range from one to fifty, depending on whether the company is public or private.
Company Registration Procedure
The registration process in Cyprus is straightforward, must be made by a lawyer, and incorporates the following:
Identity card or passport copy of the employer.
A Greek-translated memorandum of articles of association signed by shareholders.
An employer declaration registration form for employee recruitment.
Information about directors and shareholders.
Benefits of Registering a Company in Cyprus
1. Tax Advantages
Cyprus offers a favourable tax environment with numerous benefits:
Intellectual property-holding IT organisations can benefit from an effective tax rate as low as 2.5%.
A competitive corporate tax rate of 12.5%.
No dividend tax, benefiting shareholders.
Personal income tax rates range from 0% to 35%.
Zero percent tax on capital gains and share sales.
2. EU Passport Opportunity
Relocating to Cyprus offers the potential to obtain Cypriot citizenship, allowing one to gain an EU passport after four years of residency.
3. Business-Friendly Environment
Cyprus provides a stable business environment with limited government interference, allowing businesses to operate with minimal disruption.
4. Active IT Communities
Cyprus hosts vibrant IT communities, such as CypRus IT, IT Hub, TechIsland, and Founders CY, offering excellent networking opportunities and fostering innovation and collaboration.
5. Safety and Security
Cyprus has a low crime rate and ranks high in global safety indexes, making it a secure location for both individuals and businesses.
6. Quality of Life
With 350 sunny days a year and beautiful Mediterranean beaches, Cyprus offers an unparalleled work-life balance.
Strategic Considerations for Israelis
While Cyprus offers numerous benefits, it is crucial to consider the absence of a double taxation treaty between Israel and Cyprus. Without such a treaty, businesses might face dual taxation—23% in Israel and 12.5% in Cyprus. Engaging tax experts can help devise strategies to mitigate tax liabilities and maximize the advantages of Cyprus’ corporate environment.
Steps to Establish Your Business
Company Registration: Begin with registering your company through the Business Facilitation Unit (BFU) in Cyprus.
Bank Account Opening: Set up a bank account in Cyprus to manage your financial transactions.
Residence Permit Registration: Obtain residence permits for owners, management, and staff to legally reside and conduct business in Cyprus.
Team Relocation and Adaptation: Focus on relocating your team and helping them adapt to the new environment.
Setting up a company in Cyprus is cost-effective and can be completed swiftly. To ensure a smooth process, it is advisable to seek the expertise of professionals familiar with the Cypriot market.
We offer comprehensive assistance in setting up companies in Cyprus and various other fields.
Contact Klitos Platis by email at klitos@kleanthousplatis.com to arrange an introductory meeting and start your business journey in Cyprus.
The content of this article is valid as of the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Klitos Platis by email at klitos@kleanthousplatis.com.