Obligations of a Cyprus Company
- Prepare Financial Statements in accordance with the International Financial Reporting Standards (IFRS) and
- 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 case of a late payment of the special levy the following levy increases are payable:
- €385 if paid between 1July and 31 August.
- €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.
- 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.
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.
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;
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.
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.