Obligations of a Cyprus Company

In accordance with the Companies Law in Cyprus (Cap.113), a Company is obliged to:

1. Prepare Financial Statements in accordance with the International Financial Reporting Standards (IFRS) and
2. The Financial Statements must be audited by an independent registered auditor in Cyprus in accordance with the International Standards of Auditing (ISA’s). 

 

In order for the above to be fulfilled the company directors must ensure that all records considered necessary for the preparation of the financial statements are maintained according to Companies Law. Such records must be kept at the Company’s Registered Office Address and be kept updated.

Further it is important for the records to be ready and available in case of an investigation from the authorities such as, the Inland Revenue Department, the VAT Service and the Social Insurance Services.

Lastly, a Company should  maintain accounting records/proof for six years from the end of the year to which they relate for income tax and VAT purposes.

In accordance with the Companies Law Cap.113 all companies registered in Cyprus should pay an annual Levy of €350 (three hundred and fifty Euro). Companies should make their payment to the Registrar of Companies by 30th of June of each year.

  In case of a late payment of the special levy the following levy increases are payable:

1. €385 if paid between 1July and 31 August.
2. €490 if paid between 1 September and 30 November 2018.  

 

In case which a company does not comply with the above, the Registrar of Companies may strike off the company from the Registry, under section 327 of the law. Following strike off, the company will be unable to file any documents or returns or obtain certificates form the Registrar’s Office. The company may be reinstated within a period of two years from the strike off date, provided a penalty of €500 is paid to the Registrar. For a strike off period of over two years the penalty fee is increase to €750.

Under the provisions of the Companies Law, Cap.113, every company shall hold a general meeting as its Annual General Meeting “AGM” within eighteen months from the date of its incorporation and thereafter it must hold its AGM in each calendar year, provided that no more than fifteen months have elapsed from the date of the previous AGM.

Every company must file an Annual Return with the Registrar of Companies containing the particulars prescribed by the Law.

The Annual Return, as a matter of practice, are prepared by the Company’s Secretary and filed with the Registrar of Companies together with the accounts of the Company which must be prepared and audited by the Company’s auditors. These accounts must be properly signed and delivered to the Secretary.

Failure to submit the Annual Return within the time frames, will result in the deregistration of the company from the Register and the Registrar may impose further penalties and/or take legal actions against the directors (depending on the case) in accordance with the Companies Act Cap. 133.

On the basis of sections 104 and 105 of the Municipalities Law 111/1985 the Municipalities imposed an annual professional tax on legal entities having a registered office and/or having their work performed and/or managed by law firms and/or accounting/audit firms and/or offices providing secretarial services, within their municipal boundaries as follows:

• For legal entities working independently, an annual fee of €150,00.
• For legal entities in a group of companies, an annual fee of €85,00 per legal entity.
• For inactive legal entities (dormant companies), an annual fee of €50,00.

The deadline for the payment of the professional tax is 31st of March of each year.

As from the 16th of March 2021 and within 6 months, all Cyprus companies are obligated to keep to their registered office address and submit to the Registrar of Companies sufficient, clear and updated information on their Ultimate Beneficial Owners. For newly incorporated companies, the Information must be submitted within 30 days from their incorporation.

Amendments/changes must be submitted within 14 days from the day they were brough to the attention of the company/Officers.

Lastly, the company and its Officers have an annual obligation to confirm the Information.

Compliance with the Cyprus Tax Obligations is crucial as the opposite may result in substantial financial penalties/ fines and/ or offences/legal action.

All Cyprus tax resident companies must register with the Cyprus tax authorities and obtain a Tax Identification Code (TIC) within a period of 60 days from the date of incorporation.

A Company registered in Cyprus is required to complete and submit an annual income Tax Return to the Inland Revenue Department by the 31st of March of the year following the end of a tax year. Tax returns are submitted electronically through Taxisnet. Even if a company does not perform any activities during a specific year, the company is still obligated to prepare financial statements and submit a tax return. In the event that a company does not submit their tax returns for a number of years, legal charges may be imposed.

The Temporary Tax Assessment form must be submitted on/or before 31st July of each year by all companies. The temporary tax is payable in two equal instalments. The first instalment of the temporary tax is due on the 31st of July and the second on the 31st of December. A final payment must be made before 1st of August of the following year of assessment, so as to bring the total instalment payments to the level of the actual liability due. 

Value Added Tax (VAT): A company or an individual must register for VAT if they meet any of the below conditions:

• At the end of any month, value of taxable supplies in the last 12 months, has exceeded the threshold amount of €15,600 or at any given time, the taxable supplies are expected to exceed the threshold amount in the next 30 days;
• If a taxable person provides services of any value to another VAT registered person within the EU Member States;
• At the end of any month, acquisitions of goods from other EU Member States in the last 12 months, exceeds the threshold amount of €10,250 or at any given time, the value of acquisitions in the following 30 days will exceed the registration threshold;
• If in a 12 month period, assuming period starts on 1 January, the value of distance sales to a non-VAT registered individual in another EU Member State exceeds the registration threshold of €35,000. As of 01/07/2021, the existing thresholds for distance sales of goods within the EU will be abolished and replaced by a new EU-wide threshold of €10,000.
• Offers zero rated supplies of goods or services;

Any registered person must submit their VAT return and pay VAT due to the Commissioner before or on the 10th day from the end of the month that is following the end of each VAT period. VAT returns must be submitted each quarter electronically through Taxisnet.

A taxable individual engaging in intracommunity supply of goods or services to taxable individuals in other EU Member States must register with VIES. VIES reports are submitted on a monthly basis electronically.

If a Cyprus company wants to hire people to work for them then it must register with the Social Insurance Services department and obtain an Employers Id Number.

The employer is liable to pay contributions to the Social Insurance, Annual Holidays with Pay, Redundancy, Human Resource Development and Social Cohesion Funds for each employee whose remuneration is not less than €2 per week or €7 if on a monthly basis.

If your company is an employer, additional to the obligations you have to the Social Insurance Services you are required by law to have a private Employers Liability Insurance.