Incorporating a business in Cyprus offers various advantages to their owners and shareholders. But aside from the low taxation, excellent infrastructure, capable workforce, agile legal and tax system, Cyprus also offers a variety of business entities a businessman can choose from, according to his needs.
There are 5 different types of business entities that can be incorporated in Cyprus, all with different characteristics, offering certain advantages and disadvantages to their owners:
Company
A company is a legal person established under the provisions of the Companies Law for conducting any legal activity. It is an independent legal entity therefore it is a distinct and separate person from the persons who create or manage it. A major advantage is that the members of the company are not personally liable for its debts, liabilities or for any other obligations of the company and no action can be taken against them by the company’s creditors.
A company can be a Private limited liability company by shares, a Pubic limited liability company by shares, a Limited liability company by guarantee without share capital, a Limited liability company by guarantee with a share capital, or, a Variable capital investment company.
Partnership
A partnership is an association of persons united voluntarily to carry together a business and to generate a profit. Partnerships are registered with the Registrar of Companies according to the General and Limited Partnership and Business Names Law. Unlike companies, a partnership is not an independent legal entity and the general partners are responsible for the debts and liabilities of the partnership, whereas the limited partners are only liable for up to the amount they have contributed as capital of the partnership.
A partnership may be either a general partnership or a limited partnership with the main difference being that in general partnerships all partners are general partners and in limited partnership, you have to assign at least 1 general partner and at least 1 limited partner.
Business name
A name that a natural or legal person can use to do business with, having a place of business within the Republic of Cyprus. A major disadvantage of registering and doing business using only a business name is that the owner of a business name has Unlimited liability.
European Company
A European Company is a legal entity established in Cyprus and is a different entity from its founder or owner. The members are not liable for the debts or other obligations and cannot be held liable by the company’s creditors.
A European company is a simpler way to do business in more than one member-states without having to incorporate a network of subsidiary companies in each country. It provides ease of movement on the common market and is suitable for employing personnel from more than one country to manage the business.
Overseas Company
An Overseas Company is incorporated outside the Republic of Cyprus and then establishes a place of business within the Republic, therefore, allowing it to do business and operate as a branch. This doesn’t require the establishment of a new legal entity in Cyprus but it is necessary to appoint an authorized person to represent the company and the place of business in transactions with third parties and to handle the legal documents required.
Types of Cyprus entities that can be incorporated in Cyprus with their main obligations, taxation, and liability requirements.