Accounting Services in Cyprus

Accounting Services in CyprusWhen it comes to successful business in Cyprus, the first thing to pay attention to is financial reporting and knowledge of tax nuances of the country.

In this regard, FINWYN CONSULTANCY LTD offers a wide range of accounting services adapted to the needs of international customers – non-residents of Cyprus. We will help you to control the efficiency of your business in Cyprus so that you can focus directly on the activities of the company itself, from the correct completion of primary documentation to the preparation of declarations and filing of tax reports.

Accounting in Cyprus

We offer the following services to international business owners in Cyprus:

  • maintenance of accounting books and primary documentation
  • preparation and filing of declarations on value added tax, profit tax
  • the choice of the optimal taxation system
  • preparation of financial statements
  • preparation of accounts receivable and accounts payable reports
  • monthly reconciliation of bank accounts
  • monthly reconciliation of creditors
  • reparation of financial statements, i.e. consolidated, in accordance with International financial Reporting Standards
  • preparation of unaudited accounts for banks
  • consultation on accounting systems

Contact us today for more information about our accounting services. We are happy to help and always adapt our approach to the requirements of your business.

Additional information about accounting service in Cyprus

Ownership of the Cyprus Company is subject to timely submission of the annual report. The owners of the companies attach financial statements to the annual reports. The first time it is necessary to provide the documents within 1.5 years from the date of registration of the company and in the subsequent reporting period corresponds to the calendar year.

General rules of reporting:

  • an annual financial report shall be submitted within a 4-week period after the shareholders’ meeting with the signatures of the director and secretary;
  • an annual fee of €350, which must be paid by the end of June of each year, whether there is some business activity. If the annual fee is not paid in a timely manner by June inclusive, a penalty of 10 per cent is applied for a 2-month delay, and 30 per cent or more for a 5-month delay;
  • a company that does not submit reports and does not confirm its Sub-Stens in Cyprus may be liquidated;
  • accounts of the Cyprus Company are submitted jointly with the subsidiaries (if any).

Cyprus is an excellent jurisdiction to optimize the taxation of your business.  The taxation of companies in Cyprus includes:

  • an annual fee of €350, which must be paid by the end of June of each year, whether or not there is some business activity;
  • capital gains tax after the sale of real estate or shares in the country – 20%;
  • VAT (usually 19%). For some activities the rate is lower: 9% – transportation of passengers and luggage, catering, nursing care, renting of real estate to tourists, 5% – food industry, repair of housing, sale of tickets for excursions, etc., 0% – banking, insurance, finance, and some others.
  • Income tax of 12.5% regardless of the source (from abroad or within Cyprus);

Tax exemptions are provided for companies with activities related to education, intellectual property, rental housing, insurance and some other areas.

You will not have to pay taxes when re-registering real estate, as well as when receiving payments from subsidiaries and subsidiaries abroad.

The basic tax rate on the profits of Cypriot companies (Corporation Tax) – 12.5%. This tax applies to all companies and all income received. The only exceptions are income from:

  • profit received from the work of a permanent subsidiary in another country;
  • income from securities (shares and others);
  • distributed dividends outside Cyprus.

Profit tax rate (Corporation Tax) – 12.5%

Income tax is withheld from resident companies with profits from any commercial activity, both from sources within and outside Cyprus. Non-resident companies are taxed on profits in respect of income of which Cyprus is the source.

Income tax is not levied on income from securities transactions, dividends, and interest on non-core activities (but the latter will be subject to a defence tax).

Interest earned by the Cyprus company in the line-up activity, or closely related to it, is not subject to a defence tax, but is taxed on profits at a standard rate.

The dividends received by the Cypriot company from a non-resident company, are exempt from both income tax and defence fee.

Annual fee – Annual Levy. It is obligatory for all companies (even not operating), starting from the first year of registration, and is 350 euros. Payment must be made before 30 June of each year. In case of late payment of the Annual Levy – a penalty is payable. Delay of payment for up to 2 months – penalty of 10 %, for a period from 2 to 5 months – penalty of 30 %. Delay for a period of more than 5 months may entail liquidation of the company.

Capital Gains Tax (VAT) – 20%

Income from capital gains from the sale of shares in a foreign company and income from foreign securities are exempt from this tax.

Value added tax (VAT)

The standard rate is 19%, the reduced rate is 9% and 5%. If the company exports goods, the rate is 0%. Depends on the type of activity of the company.

Repatriation tax (Withholding Tax)

Source tax (i.e. in Cyprus) for the payment of interest, dividends, royalties by a Cypriot resident in favour of a non-resident.

  • The payment of income as dividends in favour of a non-resident – 0%.
  • Payment of income as interest to a non-resident – 0%.
  • Royalty income payable to a non-resident is 0% if the rights are used outside Cyprus and 10% if the intellectual rights were used in Cyprus.

Special IP BOX tax regime

Under certain conditions, taxes in Cyprus can be optimized and reduced by 2.5% if the Cyprus company profits from intellectual property.

This interest rate is achieved by the fact that 80% of the income derived from the ownership of intellectual property can be exempted from income tax, while 20% of intellectual property income is taxable at a standard rate of 12.5%.

The benefits can be taken on the condition that the Cypriot company has participated in the creation of intellectual property and its main activity is related to such intellectual property in the territory of Cyprus.

The tax residence of the Cyprus company is a document (certificate) certifying the status of the tax resident of Cyprus and indicating that the company is a taxpayer in Cyprus. Most often, this document is necessary for the purposes of applying double taxation treaties to the international activities of the Cyprus Company. Such a certificate may also be requested from companies when entering into contracts or when passing due diligence from their counterparts.

This certificate is issued for a specific country with the date of issue.

As a rule, Cypriot companies are by default considered residents. However, the basic rule for determining a tax residence is the place of management and control of the company. The basic requirements for obtaining a certificate will therefore be as follows:

  • the management of the company should be in Cyprus;
  • a power of attorney represents the interests of the company, then the power of attorney should be limited to specific powers (not general, but special);
  • submitting a financial statement for companies older than 1 year.

Value Added Tax (VAT) in Cyprus

VAT registration in Cyprus may be voluntary or compulsory.

Mandatory VAT registration occurs when the Company reaches one of the following factors:

  • The total taxable volume of shipments exceeds 15,600 EUR; [ The total taxable volume of purchases exceeds 10,252 EUR; < Since the beginning of the calendar year, the volume of remote sales to persons residing in the EU and not registered on VAT exceeded EUR 35,000.

If the above thresholds are not reached, the company may apply for voluntary registration, justifying the need to obtain the VAT number, future transactions.

After the registration of the company in Cyprus is completed, the VAT accounts are given quarterly. The report must be submitted within 40 days of the end of the quarter for which the report is submitted, even if the company did not have transactions for the period.

Accounts of the company in Cyprus

Companies registered in Cyprus are obliged on an annual basis to:

  • prepare an audited financial report;
  • on the basis of it to file a tax return to the tax authorities of Cyprus;
  • to submit a statistical report (Company Returns) to the Register of Companies.

The fiscal year is equal to the calendar (from 01.01 to 31.12).

The Cyprus Companies Act provides that Directors of Companies shall ensure that adequate books of accounting are kept to enable the preparation of financial statements that give the correct explanation of transactions, to determine with reasonable accuracy the financial condition of the company at any time and including supporting documents such as contracts and accounts.

The auditor has the right to request additional information that will allow him to prepare the accounts most accurately.

In case of registration of the company for VAT – it is required to submit quarterly VAT reports and monthly VIES reports.