Private Company Limited by Shares (Ltd)
Ιδιωτική Εταιρεία Περιορισμένης Ευθύνης
Company formation in Cyprus
The Ltd is best suited for: EU holding structures with participation exemption, IP-heavy businesses seeking the 2.5% effective IP Box rate, International trading companies routing through the EU, HNW individuals establishing non-dom tax residency, Foreign-owned subsidiaries seeking an EU base. Corporate profits are taxed at a flat 12.5% rate. The IP Box regime, aligned with the OECD modified nexus approach, provides an 80% deemed deduction on qualifying IP profits, resulting in an effective rate of 2.5%. The Notional Interest Deduction (NID) allows companies financed by equity to deduct a notional interest amount calculated on new equity introduced, reducing the effective tax burden further. Cyprus imposes no withholding tax on dividends paid to non-residents (subject to certain conditions), and no withholding tax on interest or royalty payments to non-residents. Capital gains are exempt from tax except on disposals of immovable property in Cyprus. The participation exemption ensures dividends received from subsidiaries are tax-free where the parent holds at least 1% of the subsidiary. Group relief is available for 75%-owned Cyprus-resident companies.
- EU holding structures with participation exemption
- IP-heavy businesses seeking the 2.5% effective IP Box rate
- International trading companies routing through the EU
- HNW individuals establishing non-dom tax residency
- Foreign-owned subsidiaries seeking an EU base
Key Facts
Step-by-Step Formation Process
Approve the company name
Submit a name approval application to the Department of the Registrar of Companies and Intellectual Property (DRCIP). The name must not be identical or misleadingly similar to an existing registration. Approval is typically issued the same day or within one business day.
Prepare the Memorandum and Articles of Association
Draft the memorandum of association (setting out the company's objects, share capital, and liability) and the articles of association (governing internal management). These documents follow English-style company law conventions and must be signed by all subscribers.
File incorporation documents with the Registrar
Submit the signed memorandum and articles, Form HE1 (statement of first directors and secretary), Form HE2 (declaration of compliance), and Form HE3 (registered office address) to the DRCIP along with the applicable filing fee.
Receive Certificate of Incorporation
The Registrar reviews the application and, if all requirements are met, issues a Certificate of Incorporation confirming the company's legal existence and registration number.
Register for tax with the Tax Department
Apply for a Tax Identification Code (TIC) from the Cyprus Tax Department. Register for corporation tax, VAT (if applicable), and employer obligations. This can be done concurrently with or shortly after incorporation.
Open a corporate bank account
Approach a Cyprus-licensed bank (Bank of Cyprus, Hellenic Bank, or licensed international banks) with the Certificate of Incorporation, memorandum and articles, director and shareholder identification, and proof of business activity. Remote account opening is available through some banks but in-person verification may be required.
Required Documents
- Memorandum of association (signed by all subscribers)
- Articles of association
- Form HE1 (details of first directors and secretary)
- Form HE2 (statutory declaration of compliance)
- Form HE3 (registered office address notification)
- Director identification (certified passport copy)
- Director proof of address (utility bill or bank statement, less than 3 months old)
- Shareholder identification and proof of address
Cost Overview
Tax Treatment
Corporate profits are taxed at a flat 12.5% rate. The IP Box regime, aligned with the OECD modified nexus approach, provides an 80% deemed deduction on qualifying IP profits, resulting in an effective rate of 2.5%. The Notional Interest Deduction (NID) allows companies financed by equity to deduct a notional interest amount calculated on new equity introduced, reducing the effective tax burden further. Cyprus imposes no withholding tax on dividends paid to non-residents (subject to certain conditions), and no withholding tax on interest or royalty payments to non-residents. Capital gains are exempt from tax except on disposals of immovable property in Cyprus. The participation exemption ensures dividends received from subsidiaries are tax-free where the parent holds at least 1% of the subsidiary. Group relief is available for 75%-owned Cyprus-resident companies.
Pros & Cons
- Lowest corporate tax rate in the EU at 12.5%, equal to Ireland
- IP Box regime offers an effective 2.5% tax rate on qualifying intellectual property income
- Notional Interest Deduction reduces effective tax on equity-funded companies
- No withholding tax on dividends paid to non-resident shareholders (in most cases)
- Extensive double-tax treaty network covering 67 countries
- EU membership provides access to the single market and EU directives
- Common law legal system familiar to UK and international businesses
- Non-dom status eliminates dividend and interest tax for individuals for 17 years
- Post-2022 substance requirements have increased significantly under EU and OECD pressure
- Banking sector has consolidated — fewer domestic banking options than larger EU states
- Small domestic market limits local revenue opportunities
- Perception challenges — some counterparties associate Cyprus with aggressive tax planning
- Real local directors and genuine office presence are now essential for credibility
Other Structures in Cyprus
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Get StartedThis content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.