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As a result of recent developments, the importance of companies to establish substance in order to operate and benefit from their tax residence in Cyprus has become more evident.

Lack of substance may not only mean losing benefits derived under tax treaties and EU directives but also such companies may be denied the right to operate bank accounts in Cyprus.

Central Bank of Cyprus

The Central Bank of Cyprus has on 14th June 2018 issued and sent to all banking institutions operating in Cyprus a circular against opening or continuing bank accounts for companies which do not meet certain criteria and are considered “shell companies”.

Nicos Georgiades, the partner of our firm in charge of Corporate Litigation, and Andrea Psara, a senior associate of our firm, have contributed the Cyprus chapter on “Complex Commercial Litigation” published by Getting the Deal Through.


The international tax landscape is changing. It is becoming increasingly clear that it is not a matter of moving from one jurisdiction to another. The initiatives undertaken by the G20 and the OECD are global in their reach and wide in their scope. The purpose of this note is to give you some information as to the recent trends and developments, that make it essential for international clients to have proper / appropriate / relevant “substance” in Cyprus.

Substance needs to be an important aspect of clients’ activities and we strongly recommend that clients discuss this issue with their legal and tax advisors. It is important to remain ahead of the developments and be well prepared for the challenges that lie ahead.

SUBSTANCE in Cyprus is vital in order to:

  •  support Cyprus tax residency status
  • avoid creating a taxable presence in another jurisdiction
  • support transfer pricing challenges

The law which governs the collection and processing of data concerning identified or identifiable individuals (“personal data”) is about to change.  The General Data Protection Regulation (Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016, known as “GDPR”) will become applicable throughout the EU, including Cyprus, on 25 May 2018.  It will replace the current national regimes of the EU member states, which are based on Directive 95/46/EC (which is repealed by the GDPR with effect on the same date). 

The GDPR has been described by the European Commission as an essential step to strengthen the citizen’s fundamental rights in the digital age and to facilitate business by simplifying the rules for companies in the digital single market.  Perceived benefits for companies include enhanced legal certainty and cost savings.  Companies will now have to comply with a single pan-European law of personal data protection, consistently applied across the internal market, and to deal with a single supervisory authority in the member state where the company’s main (or only) establishment is located. 

tracing fraud

Nicos Georgiades, a well-established corporate litigator and the partner of our firm in charge of Corporate Litigation along with Argyris Nicolaou an associate lawyer in our firm have co-authored the chapter relating to the Republic of Cyprus in the third edition of the book International Fraud & Asset Tracing published by The European Lawyer Reference. The chapter covers several topics including the management of an internal investigation, data protection, access to employee’s emails, legal privilege, anti-bribery and anti-corruption legislation and asset/document preservation.

The Cypriot Companies Law, cap. 113 was amended in May 2015 with the addition of Part IVA. This part, entitled “Appointment of Examiner” incorporated the procedure of examinership into the Cypriot legal framework, following the model of the equivalent Irish legislation. The purpose of the examinership procedure is to provide a rescue mechanism for companies which are in insolvent, but can nevertheless be saved. The case law is clear that examinership aims in rescuing troubled companies for the benefit of the economy and not in aiding shareholders whose investment has proved unsuccessful.

The filing of the petition

An examiner can only be appointed by a Court Order. A petition requesting the Court to appoint an examiner can be filed by the company itself, by a creditor, by a shareholder holding at least 10% of the paid-up and voting share capital of the company, a guarantor of the company’s debts or any of the above jointly. The petition must be accompanied by an Independent Expert’s Report which outlines the prospects of viability of the company. The Independent Expert must be either an auditor or an insolvency practitioner, and may be the company’s existing auditor.


The British Virgin Islands (the “BVI”) had at the end of 2012 enacted record-keeping rules for companies already registered and new, and limited partnerships to comply with OECD requirements. These rules were revised in September 2014 and the key requirements are:-

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