You may have heard about business owners starting businesses in Larnaca, Cyprus. There are no surprises if you also want to start your business in Larnaca, Cyprus since there are many benefits of running an operation on this sunny island. The incorporation procedures are also straightforward and relatively inexpensive.
In this article, we will go through the benefits of starting your business in Larnaca, Cyprus, and inform you of the steps to incorporate your business.
Benefits: Why You Should Start Your Business in Larnaca, Cyprus
There are numerous benefits of starting your business in Larnaca, Cyprus. In this section, we will briefly go through the most important ones:
- Lowest Corporate Income Taxations (12.5%) in the E.U.: One of the most important reasons many businesses get started in Larnaca, Cyprus, is the low corporate taxes. The corporate tax rate in Cyprus is 12.5%. This is one of the lowest corporate tax rates in the European Union, fully compliant with E.U. and OECD regulations.
- Attractive Tax Exemptions: Certain income is exempt from income tax in Cyprus. This includes, but is not limited to:
- Dividend income
- Disposal of shares, bonds, and other financial instruments profits
- Foreign exchange (F.X.) gains (Do not apply to trading in F.X.)
- Overseas Permanent Establishments (P.E.s) profits
- Absence of withholding tax and succession taxes
- Low Business Operational Costs (without Lowering the Quality): Compared to other Cypriot cities such as Nicosia and Limassol, Larnaca has a lower cost of running your business and living. Compared to other E.U. cities, you can start your business in Larnaca, Cyprus, and run a high-quality business with 30-40% less cost of running your business and living expenses.
- English is Widely Spoken in Larnaca: Southern Cyprus’ official language is Greek, while English is taught in schools. In Larnaca, Cyprus, almost everyone speaks English. Since there are no language barriers among your staff and processes, this may be helpful to your organization.
- Cyprus is an E.U. State: Cyprus is a member of the European Union, and its currency is the Euro. The single market and customs union are both open to the island. Larnaca, Cyprus, being a member of the European Union, enjoys the same rights as any other country on the continent.
- Strategic Location: Larnaca, Cyprus, lies in Europe, the Middle East-Asia, and Africa in the eastern Mediterranean. The topography of this island provides it an excellent strategic position to start your business in Larnaca, Cyprus, with three continents.
- Talented Workforce: The competent staff that Larnaca, Cyprus may provide for your company is the final benefit that we can discuss. Larnaca’s general populace is well-educated and has received training at local or foreign universities worldwide.
Also read: Cyprus Tax Facts 2021 by Deloitte
9 Steps to Start Your Business in Larnaca, Cyprus
The process of forming a corporation in Larnaca, Cyprus, is simple. It may take up to 2 weeks to start your business in Larnaca, Cyprus. Furthermore, you are not required to visit the island physically. The method for incorporation is outlined below:
1. Research and Planning
Before getting into the procedure of starting your business in Larnaca, Cyprus, you need proper planning of the nature of your business and the corporate structure of how you will be running your business.
As part of your research and planning stage, you need to develop your business name and design your shareholding table and the board of directors. This step is vital since you will be planning the pillars of your business.
2. Reserving a Business Name
Before getting into the procedure of registering your company, you need to reserve your business name with the Department of Registrar of Companies and Official Receiver (DR-COR). This may take 2-3 weeks, and once the name is reserved, you are entitled to use the name within the next six months.
3. Finding Your Office Space
As part of your company registration and bank account registration documents, you are required to show a physical address of your business in Cyprus. To do so, you will be needed to find an office space to start your business in Larnaca, Cyprus. At Sunshadow Investment, we can help you with finding this space. You can consult with us through a 20-minute online meeting with our operators.
4. Document Preparation
To submit your business for approval, you are required to prepare the following documents:
- Memorandum and Articles of Association
- Names and addresses of the shareholders
- The number of shares issued
- Amount of the share capital
- Shareholders’ voting rights
- Company regulations for daily operations
- List of the members within the board of directors
- Details about shareholders’ and directors’ rights, duties, and responsibilities
- Date and minutes of the first shareholders’ meeting
- Shareholders’ personal and legal documents
- Shareholders’ bank details
5. Document Submission to Start Your Business in Larnaca, Cyprus
Upon submission of your document, you are required to:
- Submitting the completed and signed the submission forms
- Submitting the certified due diligence documents
- Submitting an affidavit signed by a Cypriot lawyer
6. Company Registration Approval
Once the Department approves your company and document of Registrar of Companies and Official Receiver (DR-COR), your company is registered, and you will receive the following documents:
- Approved Memorandum and Articles of Association
- Certificate of directors and secretary
- Certificate of Shareholders
- Certificate of Registered office
- Certificate of Incorporation
7. Opening Up a Business Bank Account
With the documents and the certificates of incorporation, you can now open up a bank account for your business with a bank of your choosing. The standard documents required to open a business bank account in Cyprus are:
- All documents and certificates received from the Department of Registrar of Companies and Official Receiver (DR-COR)
- Proof of the registered office
- An application form issued by the bank
- Information & other documents regarding the source of funds
All documents must be in English or, if in another language, to be officially translated.
8. V.A.T. and Tax Registration
Suppose your projected annual sales are equal to or greater than 15,600 Euro. In that case, it is critical to get your company’s tax identification number (TIN), which is required, as well as V.A.T. registration. Companies with trade operations within the E.U. can get EORI numbers based on their V.A.T. numbers, making trading processes easier.
9. Employer Registration
Suppose you are planning to hire employees for your business in Larnaca, Cyprus. In that case, you will need to register your company with the Ministry of Labor, Welfare, and Social Insurance as an employer and receive a unique id number as an employer.
Staff can be found through a variety of employment agencies. In addition, the Cyprus Human Resource Management Association and the Cyprus Chamber of Commerce and Industry (KEBE) may give information on staff hiring.
10. Obtaining a Business License
Obtaining a business license in Cyprus is a crucial step in starting your business. After registering your company, you will need to obtain a business license from the Ministry of Commerce, Industry and Tourism. The license is valid for one year and must be renewed annually.
The process of obtaining a business license involves submitting an application to the Ministry of Commerce, Industry and Tourism. The application must include the following documents:
- A copy of the company’s registration certificate
- A copy of the company’s memorandum and articles of association
- A copy of the company’s lease agreement or title deed
- A copy of the company’s tax clearance certificate
- A copy of the company’s social insurance registration certificate
Once the application is submitted, it will be reviewed by the Ministry of Commerce, Industry and Tourism. If everything is in order, you will receive your business license within a few weeks.
Digital Nomad Visa for Non-EU Nationals
Cyprus has announced its new Digital Nomad Visa Program, which will begin in January 2022, as part of the latest news in 2021. Applicants who are working, self-employed, or freelancers can get one-year licenses with the possibility of renewing for another two years.
Holders of the Digital Nomad Visa must have a monthly income of at least €3,500, medical insurance, and a clean criminal record.
The work agreement or other necessary documents, as well as a bank account, should be used to show the income of digital nomads in Cyprus. In the event that you have family members.
If there is a spouse/civil partner, the income is raised by 20%, and by 15% for each kid.
Start Your Business in Larnaca: Types of Companies
There are different companies, such as partnerships, foreign subsidiaries, limited liability companies (LTD), and others. Each company has a distinct formation process under Cypriot law, and entrepreneurs must understand these requirements to avoid complexities.
Limited Liability Company
A Limited Liability Company, more commonly known as an LTD, can be formed as a public or private company. The requirements vary depending on the company size and types of shares. A private limited company does not face any impositions regarding minimal capital requirements. However, public limited companies need a minimum share capital of €25,629 to register in Cyprus.
Setting up a Private LTD in Cyprus
Incorporating a private LTD business is one of the most common forms of business registration in Cyprus, and it involves one or more business partners, no more than 50. The company needs a location in Larnaca and must hire a secretary to fulfill the preliminary requirements.
Under a private LTD, the shareholders’ monetary or non-monetary shares hold a nominal value and cannot be transferred to a third party. The members of a private LTD are liable for upholding all obligations and debts taken by the company, depending on the value of their shares. There are no minimum share capital requirements, and establishing this form of business is relatively easy.
Setting up a Public PLC in Cyprus
Entrepreneurs who want to register their business as a public company limited by shares in Cyprus must understand that the requirements are similar to a private LTD. However, there are two significant differences: the maximum number of business partners is not restricted, and shares are transferable per the shareholder’s decision.
More importantly, the public company must have a minimum share capital of €25,629 with at least seven shareholders who meet the eligibility criteria
Setting a sole proprietorship is the easiest business formation process in Cyprus, for the government facilitates business owners looking to operate their business themselves and hiring Cypriot talent. Sole traders don’t struggle with share capital requirements, and the legal framework is relatively straightforward.
The Cypriot government allows entrepreneurs to register two broad partnership-based businesses: General and Limited partnerships.
A partnership-based company is not legally considered a separate business entity from its owners and requires at least two partners to ensure registration. The maximum number of partners is limited to 20
Foreign Subsidiaries or Branches
Setting up a foreign subsidiary, branch, or representative office in Cyprus is a straightforward process because the local government welcomes the arrival of foreign firms, business owners, and investors. Cyprus allows foreign companies to establish and operate branches and subsidiaries controlled by parent companies located globally.
The founders must meet the requirements levied on their company’s structure and engage the support of a local formation service provider. Setting up a foreign subsidiary or branch requires filling and submitting the mandated legal form and engaging with the Cypriot authorities. Foreign companies are warmly welcomed in Cyprus, and subsidiaries are one of the most popular pathways to enter the country’s business ecosystem.
Hiring Workforce for Your Business in Larnaca
The benefits of establishing a business in Cyprus raise the number of people who move there in search of employment. The excellent living conditions in Larnaca and the benefits of the city make this location significantly more advantageous. The vast majority of people who come here are skilled and educated individuals. With English being a frequently spoken language in the city, finding a job becomes considerably simpler. Individuals who can work in a variety of fields are simple to discover for those looking to launch a business here. Another circumstance that reinforces the need for immigrants to come prepared is the requirement that those who move to Larnaca for a living obtain employment. With the conditions it gives and the solid employee pool it offers, starting a business in Larnaca makes a lot of sense in every way. Cyprus can far more easily and profitably provide you with the European experience in wonderful cities.
Finding an office or co-working space for your business in Larnaca
Larnaca has recently introduced two new co-working spaces in the heart of the city center. When starting your business in Larnaca, having a space where you feel inspired, comfortable, at peace, and welcomed is essential.
While Native is the larger space of the two, with high ceilings and natural light giving you an office-like feel, Ohouse is smaller and more intimate. Previously a boutique hotel, this space gives you a comfortable, homely feeling.
Both spaces are situated in the old town, by Lazarus Church – with dozens of desks, creative and quiet areas, and super-fast Wifi. Native and Ohouse offer the facilities to take calls, host meetings, and work comfortably. Give you the freedom to come and go as you please. There’s flexibility to pay weekly and monthly or make one your HQ.
In conclusion, starting a business in the energetic city of Larnaca is a captivating opportunity with promise. Larnaca is the ideal place for entrepreneurial efforts thanks to its many benefits, including its advantageous location, thriving economy, and hospitable business environment. Aspiring business owners can successfully traverse the complexities of setting up a business in this prosperous Cypriot city by following the step-by-step procedure described at the beginning of this article.
Larnaca is a light of hope, providing an exceptional platform for innovation, growth, and success thanks to its rich cultural legacy, strategic location, and favorable economic climate. Those who take the initiative today will benefit from their efforts as the city develops, adding to their prosperity and the vibrant landscape of Larnaca’s rapidly growing business community.
If you have any questions regarding starting your business/investment in Larnaca, do not hesitate to contact us at firstname.lastname@example.org, call us at +357 24 816246, or Book a 20-Minutes Online Meeting.