Running and growing your business

Business management

Accounting and administration

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.

Types of companies and basic obligations

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

VAT declaration every three months;
Online procedure;
VAT payments are due within 40 days of declaration;
Possible to have VAT returns.

2. Company levy

A fixed €350 levy is due regardless of company size;
Payment due annually by the 30th of June;
Companies can pay online.

3. Annual board meeting

Companies must hold an annual meeting to review important topics and approve financial statements.

4. Audited financial statements

Audited financial statements must be submitted to the Department of the Registrar of Companies and Official Receiver within 2 weeks of the annual board meeting via form HE32.

Company taxation

5. Corporate income tax

12.5% on the company’s net profit;
Tax form IR4 for year n must be submitted to the tax authority by end of year n+1 based on the audited financial statements signed by company director and auditor.

6. Defense tax

Only applies to residents (citizens and those that reside 183+ days per year in Cyprus);
It is calculated as 20% x 87.5% of a company’s net profit.

Insurance

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.

Business vehicles

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.

Environmental management

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.

Hiring employees

The hiring process

Every employer is obliged to register in the Register of Employers of the Social Insurance Services (SIS); before recruiting personnel. To register as an employer the YKA 01-001 application form must be filled in and submitted to the local Social Insurance District Office. A bilingual sample of the form – for guidance purposes – can be downloaded here.

After registration, the employer is notified of its registration number, which is used both for the purpose of paying contributions and in every communication of the employer with the SIS.

Each employer notifies the Social Insurance Services of each employee recruitment no later than one (1) day before recruitment.

It is noted that the notification of new hires will be made only electronically through the Information System “ERGANI“, which can be found on the website https://ergani.mlsi.gov.cy.

On this website, relevant information has been posted on the operation and terms of use of the System. In addition, the Ministry of Labour, Welfare and Social Insurance has designated Communication Officers in each District Social Insurance Office for further information and assistance, if needed. The list of Communication Officers has also been posted on the above website.

It should be noted that as of September 13, 2021, the issue and use of the “Declaration for the recruitment ” is abolished.

The employer must contribute to various funds on behalf of the employee: social insurance, annual leave, redundancy, human resource development and social cohesion.

The employer may however be exempt from contributing to the Central Holiday Fund.

The employer must pay into the previously mentioned funds by the end of the calendar month which follows the month for which contributions are due.

The related applications are available here and you can find billingual (Greek-English) samples that can guide you on how to fill them out here.

The Human Resources Development Authority assists people to enter the market and helps them with professional development. It also provides benefits (subsidies) to employers who take on the long-term unemployed or young people with little or no experience.

Hiring EU citizens

The Migration Department (MD) 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 MD (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:

Fill in application MEU1A;
Present an original identity card or passport;
Present confirmation of engagement by the employer (Part III of the MEU1A) or certificate of employment for employed activity or certificate of registration at the Social Insurance Services as self-employed;
Pay the application fee (€20) for yourself and €20 for every family member who is also a citizen of an EU member state.

Please note that photographs are now taken during the application process at the MD and the district immigration offices, so you do not need to supply them yourself.

Hiring non-EU citizens

General Employment

Residence and employment permits for non-EU citizens (third-country nationals) are mainly granted on a temporary basis and for a specific work position as governed by the general employment procedures presented here.

Key-Personnel employed in (registered) Companies with Foreign Interests

Eligible companies which fulfil the certain conditions can apply to the Business Facilitation Unit (BFU) for registering as Companies with Foreign Interests and benefit from the simplified procedure for employing highly-skilled, third-country nationals.

Please follow the link above for the “Eligibility criteria” and more information.

Any third-country national (including directors, secretaries, shareholders, UBOs etc.) can be employed given that the following conditions/criteria are met:

They are highly-skilled individuals;
They have a minimum gross monthly salary of €2,500;
They have a university diploma or degree or equivalent qualification or credentials or relevant experience of at least 2 years.;
They have an employment contract of not less than two years and up to 3 years.

Please note that a third-country national who has been granted a residence and employment permit under this employment policy has the right to family reunification.

Foreign companies may approach private employment agencies to recruit staff. Local staff may also be found through the Department of Labour; EU staff may be found through EURES, the European Job Mobility Portal.

Terms of employment

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:

Parties to the employment contract (employer and employee);
Place of work – if there is no fixed place of work, you should indicate that the employee will work in various locations and where your business is registered;
Title, grade, category of work or a job description / brief specification of tasks;
Start date;
Expected duration of the job if the contract is temporary;
Number of days offered as paid annual leave;
Regarding termination, the length of notice period that must be provided either by the employer or the employee, depending on who wishes to end the contract;
Initial basic salary, frequency of payments and any other components of remuneration;
Length of the normal working day or working week (working hours);
Rules of any collective agreements governing the employee’s work conditions.

For annual leave, length of notice periods, working time and remuneration, relevant national / regional laws and administrative provisions apply.

Salaries and social insurance contributions

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 €1000 gross. More specifically, every employee who works full-time must receive an initial monthly wage of at least €1000 gross. Employees who either before January 1, 2024 or after January 1, 2024 have not completed six (6) months of continuous employment with the same employer, from January 1, 2024 must receive a monthly salary of at least €900 gross for full-time work, until completion six (6) months of continuous employment.

Employees must contribute 22.8% on their insurable earnings; contributions are divided between the employer, the employee and the state in the proportion of 8.8%, 8.8% and 5.2%, respectively. The self-employed must contribute 21.8% on their insurable income; 16.6% of which is paid by the self-employed and 5.2% by the state.

Voluntary contributors owe 19.7% on their declared earnings, 15% of which is paid by the voluntary contributor and 4.7% by the state. Voluntary contributors working abroad for Cypriot employers pay contributions of 17.6% 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 5.2% 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.

Health and safety at work

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.

Terminating contracts of employment

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.

Professional development for staff

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.

Strengthening your business

European and international partnerships

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 Enterprise Europe Network 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.

The European Union also offer a variety of funding programmes for the formation of international collaborations between European companies so as to encourage innovation and business development.

Setting up a European Company

Incorporating a European Company (Societas Europea or SE) facilitates business activity across European countries. There are several advantages to SEs:

Business activity can be carried out in more than one member state without having to set up a network of subsidiary companies in each state;
SEs provide ease of movement in the common market through the ability to transfer their corporate seat to another member state without dissolving the company;
SEs can more easily employ personnel from more than one member state.

A Cyprus-based SE operates as an independent legal entity, in that it’s separate to the individuals incorporating or managing it. SE members are not therefore personally liable for the debts or other obligations of the SE and cannot be sued by the company’s creditors.

There are two types of SE:
a) Pubic limited liability company by shares;
b) Limited liability company by guarantee with a share capital.

SEs can be incorporated in one of five ways:
a) Incorporation of an SE by merger;
b) Incorporation of a holding SE;
c) Incorporation of a subsidiary SE;
d) Conversion of a public company to SE;
e) Transfer of SE corporate seat into Cyprus.

Support for import and export companies

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) Services exhibitions 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 Export HelpDesk service for promoting and strengthening Cyprus’ export performance and the strengthening the extroversion of Cypriot businesses.