Sole Proprietorship In Cyprus

Cyprus is known for its amalgamation of distinct cultures, diverse communities, and excellent business prospects. A significant trade partner of the EU, Cyprus has also been an essential partner to Slovenia, Germany, and Italy.

The political stability in the country and its connections with China, Serbia, and Bosnia & Herzegovina have made it a favored investment destination.

The tax rules are pro-foreign investors too. Offshore companies setting up business in the country can benefit from its low corporate tax rate of 12.5 % for up to a million Euros of turnover yearly.

Several free trade zones make it worthwhile for entrepreneurs to establish a sole proprietorship in Cyprus. Per the World Bank’s Ease of Doing Business 2020 report, the country ranks 51st among 190 countries in business establishment. This also underlines the ease of documentation, registration, and company-related processing in the country.

Setting up a sole proprietorship in Cyprus is suitable for global expansion. Read and understand details about how to register a sole proprietorship in Cyprus and similar considerations. 

Who can be a Sole Proprietor in Cyprus? 

A sole proprietorship is a company operated and owned by an individual that may or may not employ additional staff. Such firms can engage in the trade of services or goods. Individually owned and controlled, sole proprietorships come with no liability regarding capital requisites or shareholdings. The sole proprietor enjoys profits since business, and personal incomes are not distinguished.

When setting up a sole proprietorship in Cyprus, developing insight into how the business culture works can quickly help you set up a sole proprietorship in Cyprus.

Benefits of Sole Proprietorship in Cyprus

Any self-employed individual can indulge in setting up a sole proprietorship in Cyprus. The major benefits of setting up a sole proprietorship in Cyprus are-

• Establishment costs are relatively inexpensive over most other forms of business. 
• There is no excess hassle of documentation in setting up a sole proprietorship in Cyprus.
• Proprietors get quicker sanctions on business and tax applications.
• Essential record management works with sole proprietorships since no shareholders or board members are involved.
• Proprietors enjoy complete control over a proprietorship business.
• An owner can keep all profits by setting up a sole proprietorship in Cyprus.
• Since most sole proprietorships come under small or medium-scale businesses, the government often launches special schemes and loans for these setups.

Documents Required for Registering Your Business in Cyprus

The documents needed to register a sole proprietorship in Cyprus are as follows: 

1. A valid ID or passport of the owner
2. Company Registrar-approved business name
3. Completed HE2 form signifying registered address for official correspondence 
4. ARIADNI profile creation for registration
5. Completed Form HE1
6. The founding document
7. Witness Signature to be used for Electronic Registration
8. A fee of €165
9. Memorandum of Association specifying objectives and the company name
10. VAT office registration using Certificate of Incorporation
11. Business License

Other Criteria for Registering a Sole Proprietorship in Cyprus

To establish a sole proprietorship in Cyprus, you have to ensure the following things are in order-

• You need a corporate bank account to conduct business activities.
• Tax ID post registration with the tax department
• Passport 
• Translated documentation, if applicable 
• Social security registration

Post-registration compliances

Once the proprietorship is set up, a few things must replace the business activity.

• Tax registrations– Once setting up a sole proprietorship in Cyprus is completed, get it registered at the Tax Office.
• Obtain local licenses– You might require licenses for operating in specific industries. 
• All documents need to be in Greek and duly notarized. 
• Bank account opening happens after a thorough evaluation of the business. Keep this in mind while applying to the same.

Taxation

When setting up a sole proprietorship in Cyprus, the main tax structure is as under-.

• Corporate tax at 12.5%
• Income tax at 20 to 35% at a progressive rate 

How to Register a Sole Proprietorship Firm in Cyprus?

Setting up a sole proprietorship in Cyprus involves the following steps-

 Step 1: Company’s name 

• Send the name you have chosen for approval to the Cyprus Companies Registrar.
• The application for company name approval is examined and verified within seven days.

Step 2: Registration

• Have the name registered under the Trade Register and check if any specific licenses are required for your trade line.
• Submit the required documents to the Department of Registrar and Official Receiver. It includes Articles of Association, a memorandum, and sworn statements from the lawyer. Also include the details of the registered office of all secretaries and directors.

Step 3: Opening the bank account

• Open a local bank account for all business transactions related to the sole proprietorship.

Step 4: Social Security and tax registration

• At the nearest Tax Department District Office, submit the form T.D. 2001 to obtain a tax number and the form T.D. 1101 to register for VAT.
• Visit https://www.mlsi.gov.cy/mlsi/sid/sidv2.nsf/page3m_en/page3m_en?OpenDocument and click on the relevant form. Fill in the completed form and submit it via post or physically at any District Office of Social Insurance or a Citizen Customer Center.

How Can Multiplier Help

Setting up a sole proprietorship in Cyprus has no specific capital requirements but has to comply with all local rules and tax frameworks. Keep the local language and cultural norms in mind while starting a business in the country. 

Seek assistance from Multiplier, a popular global employment solution for sole proprietors. It provides reliable EOR solutions for international employee recruitment and company-related establishment and management processes.