Businesses in Cyprus are legally obligated to provide accounting records related to their business activity dating back seven years from the current date. You must appoint an approved auditor to check your bookkeeping and prepare annual financial statements (January-December). For convenience, many companies outsource their bookkeeping altogether. The Institute of Certified Public Accountants of Cyprus (ICPAC) has a registry of approved companies that can provide accounting and administration services. Accounting services a) Accounting firms; b)Accountants. Audit services a) Audit firms; b) Statutory auditors. Administrative services a) ASPC firms; b) Licensed professionals.
Most companies in Cyprus are incorporated as limited liability companies that can also form holding structures carrying out business activity domestically and internationally. The following structures can be registered: a) A company; b) A partnership; c) A business name; d) A European company (SE); e) An overseas company. Regardless of the type, companies must have a Cypriot resident as a director. If the company owner is a foreign citizen who resides abroad more than 183 days per year, the company must appoint an additional person as director. This could be a regular director or a legal representative like a lawyer. Basic company obligations 1. VAT
Under the Employers’ Mandatory Insurance Law (N.174/1989), private employers must insure their employees for accidents and profession-related illnesses, regardless of whether the employee resides and works in Cyprus or abroad. Insurance coverage for your business can go further by helping you through unforeseen difficulties that could endanger the viability of your company. You can choose from a variety of corporate insurance packages according to your business needs: a) Accident and travel; b) Insurance abroad; c) Energy; d) Marine and cargo; e) Risk management / loss control; f) Business vehicle insurance; g) Liability (General, Employer’s, Product, Director’s & Officer’s); h) Property insurance; i) Business interruption; j) Machinery breakdown; k) Financial losses; l) Crisis management (e.g. terrorism). The Superintendent of Insurance has a list of licensed insurance and reinsurance companies.
Companies can buy or lease a commercial vehicle locally for business use. EU-registered vehicles may also be brought into the country and used for business purposes. If you use an EU-registered vehicle for over six months, you need to re-register it in Cyprus. The registration process is as follows: a) Submit the vehicle for an MOT inspection (the cost is currently €35.25); b) Secure a CO2 certificate by presenting original registration documents at your closest Road Transport Department District Office; c) Present the vehicle to a Road Transport Department District Office for inspection and registration. The documents required to register your vehicle include: 1. Application form TOM 6; 2. Customs and Excise form C72A, where applicable; 3. Documentation proving ownership (invoice or packing list with two €1,71 stamps); 4. MOT certificate; 5. CO2 certificate (TOM 119); 6. Registration certificate from the country from which it has been transferred (in Greek or English with two €1,71 stamps); 7. SVA approval (TOM 139B) in case of a left-hand-drive vehicle; 8. Insurance certificate (e.g. cover note for a 4-month period) from a Cyprus-based insurance company. For more information and related documents click here. The registration fee is €150 and the road tax depends on the vehicle’s CO2 emissions. Business owners can contact the Department of Customs and Excise and ask for the renewal of the temporary admission scheme (Form C104 O) under which the company car was placed when it entered Cyprus. The detailed request must be made in writing to the Director of the Department of Customs and Excise. In exceptional cases, the Director may accept the request and allow the renewal for a justifiable period of time. Moreover, for persons fulfilling an assignment of a specified duration, the exemption of the excise duty is granted for the period of the assignment. For more information on bringing vehicles from within the EU, click here.
As an EU member state, Cyprus complies with European regulations and directives in its environmental policy. Cyprus has signed nine international environmental agreements and has ratified the Kyoto Protocol and the Cartagena Protocol on Biosafety. Under this latter protocol, Cyprus governs the movement of living modified organisms (LMO) resulting from modern biotechnology to countries outside the EU. Businesses in Cyprus can refer to the Department of Environment of the Ministry of Agriculture, Rural Development and Environment for the following: a) Protection of nature and biodiversity; b) Pollution control; c) Waste management; d) Climate change and energy; e) Sustainable development; f) Noise pollution. Health and safety While businesses must comply with relevant health and safety (H&S) legislation, companies can choose to go further in the spirit of social responsibility and extend protections for their employees. The key piece of legislation is the Health & Safety at Work Act 1996, which obligates employers to safeguard the health and safety of their workforce. The Ionizing Radiation Protection Act 2002 similarly covers employees’ health and safety, focusing on protection from work-related ionizing radiation. H&S legislation includes provisions for pregnant women (risks to the fetus) and young people.
The application form to register new employees can be submitted by hand/post to your closest District Social Insurance Office. Application form YKA 1-008 should be accompanied by copies of the following certificates:
The Civil Registry and Migration Department (CRMD) issues and renews residence permits to all non-Cypriots who are either self-employed or employed by legal persons in Cyprus. EU citizens may enter the Republic without an employment contract and search for work for a period of four months before applying for a Registration Certificate for EU citizens (form MEU1A) at the CRMD (for Nicosia district residents) or at the immigration offices of the local district police (for residents of all other districts). The process for securing a Registration Certificate, which if approved is issued immediately, is the following:
Residence and employment permits for non-EU citizens (third country nationals) are mainly granted on a temporary basis and for a specific work position. For companies of foreign interest and Cyprus shipping companies, to employ third country nationals in Cyprus, the following must apply:
The employer should provide new employees with their terms of employment in writing prior to or on their start date. Staff contracts or equivalent written statements confirming working conditions (e.g. letters of commitment) must contain at minimum the following information:
Worker salaries are protected under both national and EU legislation. Employers must pay employee salaries regularly and without deductions; they must also keep relevant records. The minimum wage is set at €870 gross on recruitment and at €924 after six months of continuous service for clerks, sales assistants, school assistants, nursing assistants and carers. For building cleaners, the gross salary on recruitment is set at €4.55/hour and at €4.84/hour gross after six months of continuous employment. For security guards, the minimum hourly wage is set at €4.90/hour gross and upon six months of continuous employment, it increases to €5.20/hour. Employees must contribute 21.5% on their insurable earnings; contributions are divided between the employer, the employee and the state in the proportion of 8.3%, 8.3% and 4.9%, respectively. The self-employed must contribute 20.5% on their insurable income; 15.6% of which is paid by the self-employed and 4.9% by the state. Voluntary contributors owe 18.4% on their declared earnings, 14% of which is paid by the voluntary contributor and 4.4% by the state. Voluntary contributors working abroad for Cypriot employers pay contributions of 16.6% on either their basic insurable earnings or on their normal earnings, as agreed in their contract of employment, up to the maximum insurable earnings. An additional contribution of 4.9% is paid by the state. Cyprus social insurance provides several benefits, such as maternity allowance, sickness allowance, unemployment allowance, pension, widow’s pension, orphan’s allowance, and allowances for industrial accidents and occupational diseases. In addition, employers must contribute 1.2% to the Redundancy Fund, 0.5% to the Human Resources Development Fund and 2% to the Social Cohesion Fund for their employees.
In Cyprus, health and safety for workers is controlled by the Department of Labour Inspection. The department deals with safety and health requirements at workplaces (buildings and other premises, construction sites, dock work sites, extractive industries, agricultural, enterprises etc.) and relating to work equipment (machinery, tools, appliances, pressure vessels, scaffolding, personal protective equipment, etc.). This department also regulates health risks from the use of asbestos, chemical agents, biological agents, carcinogenic and mutagenic agents, as well as from physical agents, such as noise and heat, or from ergonomic factors, such as manual lifting and handling of loads, monotonous work, pace of work, etc. Finally, this sector regulates issues related to the safety and health of children and young persons as well as maternity protection. In Cyprus, numerous international organisations such as ISO and HACCP, advise, organize and inspect companies that require health and safety certificates.
Labour laws and information on employment relations can be found at the Department of Labour Relations, which is under the Ministry of Labour, Welfare and Social Insurance. Note that various anti-discrimination measures apply in Cyprus which are in place to protect workers from unfair dismissal. The party that initiates termination must give timely notice to the other party. The first six months count as a probation period in which neither party is required to give notice to the other to terminate the contract of employment. This probation period can be extended to two years if both parties agree to do so upon recruitment. In the event of redundancy, workers who have been employed for 104 consecutive weeks can claim benefits from the Redundancy Fund. An employee who has been dismissed unfairly has the right to compensation payable by the employer, provided that the employee has worked longer than 26 consecutive weeks (or longer than the agreed probation period). The District Labour Relations Offices can be found in Nicosia, Limassol, Larnaca / Ammochostos and Pafos.
Continuous professional development can be mandatory and/or voluntary depending on the sector and position of the employee. The Human Resources Development Authority (HRDA) regulates and subsidizes the continuous professional development of employees across Cypriot companies. With a few exceptions, companies can request grants of up to €200,000 covering a three-year period for the professional development of their employees. Companies can also request subsidies from the HRDA to train their staff through open seminars run by licensed training institutions or through tailored in-house programmes. Certain professions, such as auditors and accountants (Chartered or Certified) and those holding positions regulated by the Cyprus Securities and Exchange Commission (CySEC) have a legal obligation to complete training to legally continue practicing. The HRDA also supports and partially subsidizes the training of young professionals, as well as unemployed individuals so as to facilitate their access to the labour market.
The creation of solid and long-term partnerships across European and international borders is of vital importance. Business opportunities for Cyprus-based companies can be found through the European Office in Cyprus. The Enterprise Europe Network supports companies to cooperate, innovate and grow together on the international level. The network is active in more than 60 countries worldwide and brings together 3,000 experts from 600 member organisations. European Union structural funds also offer a variety of financing (grant) schemes for the formation of international collaborations between European companies so as to encourage innovation and business development.
Incorporating a European Company (Societas Europea or SE) facilitates business activity across European countries. There are several advantages to SEs:
The Trade Service of the Ministry of Energy, Commerce and Industry is set up to facilitate Cypriot companies dealing with exports and imports by offering benefits such as: a) Financial support for trade fairs / missions abroad for the promotion of Cypriot products; b) Seminars in key foreign markets for the promotion of professional services offered by Cyprus companies; c) Support schemes for Cypriot manufacturers of agricultural and industrial products as well as service providers to participate in trade fairs abroad, to conduct market research to identify export potential in third countries, and to promote the use of e-commerce; d) A dedicated trade licensing department to accelerate import/export procedures.