An overview of Cyprus Legal and Company Formation system
Cyprus has traditionally been a significant destination for the setting up of international business companies (IBCs) Factors which are taken into account in choosing Cyprus include the following:
- Safe jurisdiction of keeping assets through Cyprus IBCs triggers the provisions of international and bilateral treaties protecting investment.
- Double Taxation Treaties providing comfort to foreign governments, such as Russia, on issues of exchange of information while at the same time maximising tax efficiency and provide plenty of opportunities for international tax planning.
- Tax incentives created to attract new foreign investment through IBCs. The corporate tax rate is the lowest in the EU.
- No exchange control regulations or currency restrictions.
- Strategic location of Cyprus and excellent infrastructure.
- Highly skilled human resources and positive attitude of Cypriots.
- Cyprus is a jurisdiction which offers stability and security
- Regulatory regime for fiduciaries and service providers, licensed under the Cyprus Securities and Exchange Commission, in relation to the due diligence procedures, documentation, compliance and anti-money laundering procedures.
The legal system of the Republic of Cyprus is a blend of common law and civil law systems, with prominent features of common law in areas such as corporate law and commercial law, stemming from the historical fact that Cyprus was controlled and administered by the British between the years of 1878 and 1960, before it gained its independence as a state.
The Republic of Cyprus entered the European Union (EU) in May 2004; these factors contributed to the formation of the current legislative framework. Since 2004, EU law is given supremacy over conflicting legislation of the member states of the EU.
The law of the Republic of Cyprus is also premised on a large body of statutory legislation, a number of laws enacted by the British administration during the colonial period which, though amended in some cases extensively to meet the requirements and needs of the modern business world, have not been superseded, common law and the principles of the doctrine of equity.
The Companies Law, Cap. 113, as amended is the legislation which governs and regulates all Cyprus companies. The Law is mostly a reproduction of the 1948 Companies Act of the UK, though extensively amended to comply with the requirements of the EU and the changing market. The Law applies to public (listed and non-listed) and private companies. It also contains a set of model articles of association, the so called “Table A” Regulations, which can be fully or partially adopted by public or private companies. It should be borne in mind that other laws are also relevant in the incorporation and workings of a Cyprus company.
Find out details about Cyprus Tax by downloading our annual publication Tax Facts 2015.
Important note: This article has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice from a qualified accountant.