In this newsfeed we will focus on some very important aspects related to setting up presence in Cyprus. We will consider whether to form a company in Cyprus or redomicile a foreign company to the country. We will also contemplate alternatives concerning premises, as well as for sourcing and appointing officers for the company.
As in a previous newsfeed focusing on a different area of setting up in Cyprus, that of hiring/relocating personnel, instead of examining this on a purely theoretical basis, we will go through a case study. We will look at how we handled this for one of our clients, a pharmaceutical group, with Swiss origins and presence in many countries around the world.
Create or Transfer
The first issue the particular group was considering was whether it should set up a company from scratch or whether it should relocate one of the Swiss companies of the group, which has been in existence and operation for years. Just to note that there are other ways of setting up presence (for example through acquisition of an existing business) but in our scenario these were the two possible alternatives. Considering that the company in Cyprus would not be involved in technical operations but rather in marketing and management activities, it was decided to set up a company from scratch, especially considering that most employees would be sourced from the local market instead of being relocated (continuation of employment was not an issue). For more information about redomiciliations you can check out our recently updated newsfeed.
Having decided that a new Cyprus company would be used, the choice was to go either with an incorporation from scratch or to use an established company never used before (known as a “shelf” company). The latter can be particularly handy in case of urgency, although over the last few years, and with the significant reduction of the time needed to incorporate a company, the former has become a much more popular alternative. It has the advantage of setting all corporate details (name, registered office, share capital) from the start based on preferences instead of making changes (which entail time and cost) later on.
For our client under examination a decision was taken to go for incorporation of a Cyprus company. A list of preferred names was provided in order to perform a name search and one of the available names was selected. The share capital was set, the Company Secretary and Registered Office would be handled from our office and what was left to proceed with the incorporation of the company was to determine the second element of this newsfeed: the officers or directors of the company.
Although there is no requirement in the Companies’ Law of Cyprus for a Cyprus company to have a resident director, this is very important for tax reasons. Indeed, currently for a company to be considered as a tax resident of Cyprus, its management and control must take place in the country. Although there is no legal definition of what the concept of management and control entails, it is commonly understood that the most decisive factor is to have the majority of the directors of a company being resident in Cyprus.
An important service we provide to clients is the sourcing of suitably qualified and experienced persons (from the local market) to be appointed as directors, based on the circumstances, activities and requirements of each case.
In our case study the client opted for the appointment of two individuals with a business administration and management background, together with a person from the management team of the head office, which he is visiting Cyprus on a regular basis. In terms of the decision making, this is done with the participation of both the local and the foreign members, on a joint signature rights basis.
Cyprus offers great choice for housing a business, from ultra-modern high tech office buildings to old city center houses, which can be converted in to cosy working nests. In addition, there is a growing number of providers offering serviced office space with a variety of support facilities. In general business properties, utilities, networking and communication connections and other support services (such as cleaning, courier, etc.) can be found in Cyprus at much lower rates compared to European and other countries, and certainly compared to renowned international business locations.
Our client opted for a conveniently located serviced office facility, offering the potential of extension of the utilised space as the intention is to grow the operations in Cyprus.
This concludes our coverage on the structure, officers and premises related to setting up in Cyprus.
It could not be stressed enough that it is crucial to have a plan of the expected outcome, both at the initial stage but also considering any future steps. At the same time, it is equally important to have guidance and direction from qualified local professionals, who will provide support and assistance both at the initial phase but also on an ongoing basis.
On an ongoing basis we provide corporate and administration services, which ensure the smooth running of the company and its compliance with all local laws and regulations, such as preparation and submission of the Annual Return, payment of the Annual Levy, etc.
As always, we are at your disposal for any further information or clarification and for considering any specific enquiries, concerns and ideas you may have.