ANNUAL OBLIGATIONS OF A CYPRUS COMPANY
AUDITED FINANCIAL STATEMENTS
TAX OBLIGATIONS for tax resident companies
OBLIGATIONS for companies having an office in Cyprus
ANNUAL GENERAL MEETING (AGM)
ANNUAL RETURN filed with the Registrar of Companies
ANNUAL FIXED CHARGE
OUR CONTACT DETAILS
1. AUDITED FINANCIAL STATEMENTS filed with the Registrar of Companies
The company must prepare and submit annually to the Registrar of Companies, Financial Statements according to International Financial Reporting Standards (IFRS) showing the true and fair picture of the affairs of the company and explaining its transactions. Even if the company had no operations for a particular year it is obliged to prepare and file financial statements AND tax returns as specified below and in such case, Dormant Financial Statements must be prepared.
Consolidated Financial Statements
Cyprus companies which have subsidiaries must consolidate their audited financial statements with the financial statements of their subsidiaries according to IFRS.
The above obligation does not apply if the group meets the requirements of the law to be qualified as a small or medium group.
2. TAX RETURNS filed with the Income Tax Authorities
The company must prepare and file annually with the Income Tax Authorities tax returns prepared by local licensed auditors.
The Income Tax Authorities request that tax returns are audited and in practice they reject tax returns that are not prepared and approved by qualified local auditors. In order for the auditors to prepare the audited tax returns demanded by the Income Tax Authorities, audited financial statements must be prepared.
Documents to be provided
Full disclosure of the operations / activities of the company for the year under consideration must be submitted to the accountants / auditors of the company in time, in order to meet the time limits for the preparation and filing of the relevant financial statements and tax returns.
Non-compliance with the above obligations 1 and 2
In case of non-compliance with the above obligations, the Income Tax Authorities may take criminal court proceedings against the company and its directors and the company will face penalties for no or late filings.
3. TAX OBLIGATIONS for Tax resident companies
Provisional Income Tax Declaration
31st July of each year
Submission of provisional income tax declaration for the current year of assessment. The provisional tax liability is payable in 2 equal instalments.
Payment of the first instalment of provisional income tax liability. (Second is paid in December)
1st August of each year
Filing of self – assessment declaration of final income tax liability for the previous year as determined by the financial statements and income tax returns.
Payment of the previous year’s final corporation tax under the self-assessment method.
31st of December of each year
Payment of the second instalment of the provisional tax liability.
Submission of the financial statements and income tax returns for the previous year.
Special Defence Contribution Tax
For Special Defence Contribution Tax, if interest and dividends are received gross without any deduction at source, any amount due is payable at the end of the month following the month in which they were received or credited.
The above applies only to passive interest income.
4. OBLIGATIONS for companies having an office in Cyprus
PAYE – Pay as You Earn System
End of each month the payment of employees’ tax is effected which is deducted directly from the employees’ salary (PAYE). The deductions made are related to the salary of the previous month - For companies having a real office in Cyprus with employees.
Social Insurance contributions are paid monthly for all employees working in Cyprus. Employees of Cyprus companies working outside Cyprus are not obliged to be registered and pay Social Insurance.
Until the 31st July electronic submission of Employer’s return as to the total payroll and employees’ details of the previous year (IR7 and IR7 Analysis) – for companies having an office in Cyprus and employees in Cyprus.
Employer’s Liability Insurance
An insurance covering the employees for possible accidents during work must be maintained.
Incentive of employment of high salary non tax residents in the Republic
Non tax resident persons who take up residency in Cyprus for employment are entitled to an exemption of 50% of their annual salary earned from Income Tax. This exemption is granted to employees’ salaries which exceed Euro 100.000 annually and it is valid for a period of 10 years from the year of commencement of employment.
Withholding tax on Rent
Following the 2010 amendments, the lessee of the property has a withholding obligation under which any company paying rents on property situated in Cyprus is obliged to withhold defence tax and submit such tax to the tax authorities.
The SDCT rate on rents is 3% on the 75% of gross rent amount and is paid in two six monthly instalments in June and December.
5. ANNUAL GENERAL MEETING (AGM)
The company must hold an Annual General Meeting each year. No more than 15 months must lapse between one AGM and the following one.
The first AGM may be held within a time limit of 18 months from the incorporation of the company. If a company holds its first AGM within 18 months from its incorporation, then there is no need to hold this first AGM during the year of its incorporation or the subsequent year.
6. ANNUAL RETURN (form HE. 32) filed with the Registrar of Companies
Every company must prepare and file with the Registrar of Companies an Annual Return (HE. 32) once a year which must includes, among others, information as to the registered office of the company, Registered Shareholders, debentures, liabilities, directors and secretary.
The company must prepare its Annual Return (HE.32) within 14 days after the Annual General Meeting and within a time limit of 28 days from that date must submit it to the Registrar of Companies. In effect, the Annual Return must be completed and filed with the Registrar of Companies within a time limit of 28 days from the Annual General Meeting of the company.
Financial Statements filed with Annual Returns
The financial statements of the previous year must be filed with the Registrar of Companies together with the Annual Return of the current year. Companies must be up to date with their legal obligation to prepare financial statements and annual tax returns. On the contrary, the Registrar of Companies will refuse to issue certificates connected with the Annual Returns of the company and information listed therein, as the Annual Returns will not be accepted for filing without the financial statements.
For more details as to the above, please refer to our publication “Cyprus Companies Tax Diary & Compliance Issues” which can be find in our website:
9. OUR CONTACT DETAILS
Lawyers’ Limited Company
12 Egypt Street, 1097, Nicosia
P.O. Box 22303, 1520 Nicosia, Cyprus
Tel: + 357 22 55 88 88 – Fax: + 357 22 66 25 00
E-mail: – Web site:
This publication has been prepared as a general guide and for information purposes only. It is not a substitution for professional advice. One must not rely on it without receiving independent advice based on the particular facts of his/her own case. No responsibility can be accepted by the authors or the publishers for any loss occasioned by acting or refraining from acting on the basis of this publication.