Establish a branch in Cyprus
Expand-your-business-in-cyprus-establish-a-branch-in-cyprus: The 2012-2013 financial crisis in Cyprus has offered to its competitors and detractors the opportunity to express their malicious predictions as to its demise as the international business center in the crossroad of Africa, Europe and Asia. Despite the foreseeable economic downfall of the island, Cyprus turned things around and became an even more competitive jurisdiction.
There is every reason to believe that Cyprus emerged from the crisis stronger than ever and maintained its reputation as the investment hub of Europe. Its corporate environment, with corporate structures still a compelling proposition for global companies, is indeed ideal. New investment and tax incentives have been introduced by the Government which is determined to maintain a steady pace in boosting efficiency and investor confidence. The island’s effective and transparent tax regime, which is full in compliance with all EU regulations, highlights the island as a very appealing country for business. Not to mention the expanding network of Double Tax Treaties with numerous international countries. The tourist sector is thriving and in 2018 is expected to break every record than ever before!
Recent economic developments have certainly put Cyprus on the world map, causing eagerness to entrepreneurs around the globe to expand their business on the island. The fastest, easiest and most flexible way is the registration of a branch of your foreign corporation in the Republic.
What is considered a branch?
The legislation that enables a company to open a branch office in Cyprus, is based on the Companies Law CAP 113. More specifically, the Sections 347 to 353 of the CAP apply to:
- all overseas companies, meaning companies incorporated outside Cyprus, which after the commencement of the above mentioned provisions, establish a place of business within Cyprus; and
- Companies that have been incorporated outside Cyprus which established a place of business within Cyprus before the commencement of the above mentioned provisions, and continue to have an established place of business within Cyprus at the commencement of these provisions.
Notably, the Branch adopts the same name of its founding company and does not constitute a separate legal entity. Instead, it operates as a conduit and extension for the parent company; which operates through it some of its international activities. In regards to the legal responsibility of each entity, it’s noteworthy that the parent company will be ultimately responsible for its Branch’s debts, obligations and profits, irrespective of the existence of independent managing boards.
Additionally, as long as the branch is controlled and managed in Cyprus, it will be treated as permanent establishment and will benefit from the same tax treatment as a local company. All the aforementioned tax, financial and legal advantages will apply.
Generally, the whole procedure is quite easy, straightforward and identical with that of the incorporation of a new Cypriot Company.
A company incorporated outside Cyprus may establish a branch or representative office in Cyprus provided that within one month from the date of such establishment it registers itself as an overseas company with the Cyprus Company Registrar. Before the application of the below procedure, a local representative, authorised through a Power of Attorney (POA), must be appointed to carry on the establishment process and alternatively be in charge for maintaining relations with the tax authorities.
Initially, the Parent Company shall submit an application form with the Registrar of Companies in the Ministry of Trade, Industry and Tourism. The latter shall be done within the window of 30 days.
- Fill-up, sign and submit a handful of Forms and Reports duly issued by the Companies Registrar;
- Obtain a document certifying the amount of the capital subscribed (where applicable);
- The Branch’s name (same as the Parent Company) shall be registered as a trademark;
- Notarization and apostillation of the Charter or Statutes or Articles of Association of the Parent Company or any other document defining its constitution;
- Submit a list of information concerning the Director(s) and Shareholder(s);
- Declaring who will be the contact point (resident in Cyprus) between the branch office and the Trade Register. This will be the only authorized person to accept on behalf of the branch service of notices required to be served for legal and tax purposes;
- Submission of Incorporation Certificate, issued by the Parent Company’s relevant authority;
- Submission of the most recent Financial Statements and Balance Sheet of the Parent Company;
- Setting up a Bank Account in its own name;
- The Registrar issues in the applicant’s name the following official certificates in approximately 3 days. This time frame is subject to the Registrar’s delays due to its heavy workload:
- Certificate of Incorporation;
- Certificate of Registration;
- Certificate of Directors; and
- Certificate of Shareholders
11. Using the issued Certificate of Registration, the representative shall submit an application before the Ministry of Commerce for VAT and Tax Registration.
12. If the Branch intends to employ physical persons, the representative shall proceed also with health care, pension,insurance and other mandatory registrations.
All submitted documents shall be in an official language of the Republic of Cyprus (Greek or English).
The finalization of the above mentioned procedure takes approximately 20 days, depending on the notary and banks schedules.
- Charges: If the overseas company creates any charges over any of its assets that are located in Cyprus then these charges must be registered with the Cyprus Company Registrar in the same manner and procedure as if the company has been incorporated in Cyprus.
- Eligibility of Documents: Every overseas company is obliged under the law to have in legible characters in all of its invoices, notices, official publications and office letters the name of the company, the country of its incorporation and state if the liability of its members is limited.
- Acquisition of Immovable Property: Section 348 of the Law provides that where an overseas company has delivered to the Registrar of Companies the documents and particulars mentioned above, it shall have the same power to hold immovable property in the Republic as if it were a company incorporated in Cyprus under this Law.
- Exemption from Financial Reporting Obligations: Every company of a member state of the European Union is exempt from delivering each financial year to the Registrar of Companies copies of the Financial Statements and Director(s) or Auditor(s) Reports. A statement made by the designated Authority of the Member State providing that the said company is exempted pursuant to the provisions of the relevant EU Directives, is required to be filed.
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