Obligations of Cypriot Companies

OBLIGATIONS OF CYPRIOT COMPANIES

Companies registered in Cyprus have obligations imposed on them amongst others by the Companies Law and the Income Tax Laws irrespective of whether a company is active or dormant.

Companies Law Cap. 113 (the “Law”) requirements:

Section 142 (1) (a) of the Law provides that the directors of a company shall cause in every year to be prepared financial statements on the basis of International Accounting Standards.

Section 152A of the Law provides that every company which is not a small size company must have its financial statements audited by a Cyprus registered auditor.

The term “small sized company” means a company that fulfills simultaneously at least two of the following three criteria during the whole financial year:

(a) its total assets do not exceed € 3.4 million,
(b) its net turnover does not exceed € 7 million,
(c) its average number of employees does not exceed 50 persons.

A company which initially fulfills the above criteria is classed as a “small sized company” but will loose this status if it exceeds the above criteria during two consecutive financial years.

Section 118 (1) of the Law provides that every company having a share capital must once in every year, within 42 days from the date of its Annual General Meeting, make a return to the Registrar of Companies containing details of its registered office, authorised issued and capital, shareholders, directors and secretary etc. This annual return must be accompanied with a copy of the financial statements of the Company of the previous year translated in Greek.

Assessment & Collection of Taxes Laws (the “Tax Laws”)

According to the section 30(1) of the Tax Laws, every Company deriving income from sources both within and outside Cyprus, as this is specified in the Tax Laws, shall for each year of assessment maintain books and records on the basis of which financial statements are prepared in accordance with acceptable auditing standards by the auditor of the Company.

A Company that fulfils the exemption criteria under section 152A of the Cyprus Companies Law is, however, required by the Tax Law to prepare audited financial statements on the basis of which the necessary tax return is prepared.