Overseas companies may register a branch in Cyprus, according to the Companies Law, Chapter 113, regulated by section 347. A branch will not essentially consider as being a new legal entity in Cyprus.
In reality, the entity incorporated in a foreign country owns a branch in Cyprus therefore it may operate through it for international activities. These can be set up as separate entities from the parent company (for example, Cypriot companies having the foreign company as Shareholder) or extension of the parent-company in Cyprus. The head office will be fully liable for all activities the branch is undertaking hence the foreign company is liable for all debts, obligations and can also effectively manage profit.
Notwithstanding that the procedure for a branch registration in Cyprus is the same as a company’s registration in that proof of an existing parent company shall be provided. In particular, within one month the following documents should be filed to the Companies Register:
A Cypriot representative shall be authorised, through a Power of Attorney, to collect on behalf of the company any notices, documents and to fulfill in general the establishment of the process. The documentation listed above, should be legalised and apostilled in the country of origin or legalised by both public notary and the Consul of the Republic of Cyprus in the country of origin. The documents should be also translated into Greek.
Forms AE1, AE2 and AE3 have to be completed and filed to the Registrar of Companies. In the event of any changes to the company’s particulars the Registrar of Companies should be notified. The registered office of the branch should be situated in Cyprus and the name of the branch must be the same as registering the parent company’s name. A Shareholder cannot be appointed for the branch due to the fact that it is only an extension of the head office. A bank account set up in the company’s name is also one of the initial steps for the branch registration.
Furthermore, it is mandatory to obtain a document certifying the capital deposit. Once the registration procedure of the branch is finalised, its management should be provided with a full set of documents. The Certificate of Registration should be provided to the Ministry of Commerce by the authorised representative, in order to submit an application to the tax register. Furthermore, details of the parent company, list of Directors, Shareholders, and business activities must also be provided. There is also an obligation to register VAT and a requirement to file annual accounts.
The parent company with a branch in Cyprus has to submit, for each financial year, copies of its financial statements (as per its last AGM) and published in accordance with the legislation of the country of incorporation and tax return of the parent company, required to be filed with the Income Tax Office. Tax rates that apply to branches, if the management and control of the activities of the branch is in Cyprus then the profits of the branch have a reduced tax rate (rate of 10%). However, if the management and control is not based in Cyprus, the profits of the branch are exempt from taxation.
Registering a Cyprus branch may best serve your clients business needs within the European Union. The procedure to register a branch in Cyprus is quite simple, once an appropriate company name has been decided from a list of pre-approved names and the completion of its registration should not take longer than a week, once all requested documentation is provided to the Registrar of Companies.
Contact us for more details or advice on how to register a branch in Cyprus.