Overseas companies may register a branch in Cyprus according to the Companies Law, Chapter 113, regulated by Section 347 and operate through it for their international activities.
Registration procedure in Cyprus
A branch of an overseas company may be registered in Cyprus under Section 347 of the Companies Law, Cap. 113 (the “Law”) provided that within one (1) month of the establishment of the place of business, it registers itself as an overseas company with the Registrar of Companies in Cyprus. Overseas companies may establish a branch in Cyprus by filing with the Registrar of Companies in Cyprus the following documentation:
a) a written report, signed by an authorized by the company person, which provides (i) the name and legal form of the overseas company (the name of the Branch will be the same as the one of the overseas company in English language) (ii) the head office and the address of the overseas company, as well as the address of the place of business in Cyprus; (iii) the purpose and objects of the overseas company; (iv) where applicable, the register abroad of the overseas company, where its basic data has been entered; (v) its subscribed capital where this exists; (vi) in the case of an overseas company of a non-member state of the European Union, the law of the state, governing the company.
b) the original full set of certificates of the overseas company and its original memorandum and articles or other instrument constituting or defining the constitution of the company as well as every amendment to the said documents.
c) a list of the directors and secretary of the company as well as of all the persons which are authorised to represent the company.
d) the name and address of one or more persons residing in Cyprus who are authorized to accept on behalf of the company service of legal documents and any notices required to be served on the company.
All the aforementioned documents should be in their original form, signed and sealed, and should be translated in Greek by the Press & Information Office Cyprus and apostilled.
The establishment of a branch does not amount to the creation of a new legal entity in Cyprus; the entity incorporated abroad simply has a branch and may operate through it for some of its international activities.
More than one branch
Section 347A of the Law provides that in the case where the overseas company has more than one branches within the Republic, the disclosure imposed by this Law as regards the information which is common for all branches, shall be complied with by the reference of each new branch to the information entered as to the first branch.
The Law further provides that every overseas company is obliged to have in its letters, invoices, official publications and other office letters, the name of the company, the country of its incorporation and state if the liability of its members is limited.
Power of overseas company to hold immovable property
Section 348 of the Law provides that where an overseas company has delivered to the Registrar of Companies the documents and particulars mentioned in Section 347, it shall have the same power to hold immovable property in the Republic as if it were a company incorporated in Cyprus under this Law.
In light of Section 349 of the Law, if any alteration is made in the M&A of an overseas company or in the particulars contained in the list of the directors and secretary or the names or addresses of the persons authorized to accept service on behalf of an overseas company, the company shall have the obligation to deliver to the Registrar a return containing the prescribed particulars of the alteration.
Financial Accounts, Directors’ report and Auditors report
Audited financial statements of the overseas company are required to be filed with the Registrar of Companies. If the accounts are in a foreign language a certified translation in Greek/English must be annexed.
A branch is required to prepare every financial year audited financial statements. This is a legal requirement that applies for any other company registered in Cyprus. However there is an explicit exemption in the Law from these obligations for companies of a member state of the European Union which in accordance with the legislation of that State, and in accordance with the provisions of Directive 2013/34/EU and Directive 2006/43/EC, is exempted, in whole or in part, from the above obligations. These exempted companies must deliver to the Registrar a certificate signed by a director and the secretary of the Company stating that it is an exempt company and the law that provides for such exemption. Furthermore a statement from the relevant authority of the home state providing that the said company is exempted pursuant to the provisions of the said law will also be required.
Relating to tax obligations, a branch is obliged to file an Income Tax Return every year which is based on audited financial statements. This is a legal requirement that applies to any other company registered in Cyprus. The branch will be obliged to pay 12.5% income tax on any profits arising from the permanent establishment situated in the Republic, and vat tax if applicable.
Regarding vat registration, it should be noted that a branch, established in the Republic, is considered to be acting as a legal entity for vat purposes thus can register for vat, under certain conditions. To be able to determine whether this branch will be entitled to register for vat require more information will be required by us with regards to the activities/transactions of the branch.
Charges by overseas companies
If the overseas company creates any charges over any of its assets that are located in Cyprus, then these charges must be registered with the Cyprus Company Registrar in the same manner and procedure as if the company has been incorporated in Cyprus.
If the management and control of the branch takes place in Cyprus, then the profits of the branch are subject to the Cyprus corporate tax rate.
If the management and control of the branch is not in Cyprus, then the profits of the branch are exempted from taxation in Cyprus.
N. Pirilides & Associates LLC is in a position to provide guidance and advice as well as assist clients wishing to establish a branch in the Republic. For any enquiries and/or questions, please contact us at firstname.lastname@example.org.