Before relying on anything in this Blog please read the disclaimer
Company migration to Cyprus is possible. Under the Companies Law (the “Law”), nonetheless migrating a company to Cyprus is not without its challenges.
Cooperation for the Migration of Companies to Cyprus
The migration of a company to Cyprus requires strong cooperation between the local advisers and the foreign advisers. The advisors are tasks with ensuring that the process and procedures required at a national level, in Cyprus and the foreign jurisdiction are followed. Ultimately though, the registrar of companies in each jurisdiction will approve the Company migration to Cyprus or not.
Crossborder differences in the migration of companies
With the migration process being at the discretion of each jurisdiction, often I have seen that this leads to competing requirements:
- Foreign law requiring that the company is de-registered in foreign jurisdictions before it is registered in Cyprus;
- Foreign law requiring that the company is migrated to Cyprus prior to de-registering from the foreign jurisdiction
For a smooth and successful migration to Cyprus you should:
- Examine every step of a common step plan;
- Understand how each step of the common step plan will affect the company migrating to Cyprus and the legal status at the time of the step.
Not having an excellent understanding of the flow of steps and sitting down with the foreign and local advisors coming up with a detailed step plan your risk of the cross-boarder differences negatively affecting the smooth and successful migration is imminent.
Post – Migration
A very important aspect of the company migration to Cyprus is the administrative part, the preparation of financial statements, the first-year adoption of IFRS and more importantly trying to explain to the client that Cyprus works in a different way to what other jurisdictions do.
A few pointers to have in mind:
- IFRS adoption must be undertaken in the first year
- The Company migrating to Cyprus must have management and control in Cyprus
- The board of directors must meet in Cyprus at least once a year for important business
- Taxes are paid on profits, and you can even avoid paying a penalty if you file your temporary returns
- An independent audit firm will review the financial statements and issue an opinion
- If a premium existed prior to the company migrating to Cyprus it is not automatically so under the Law
- Once the company is registered with the Registrar of Companies it has 60 days to obtain a tax identification code.
- You will need to pay the annual levy
The above and other pointers are spread out through several laws, regulations, and circulars choosing the right adviser is key to a hassle-free and successful migration.