by Andria PapageorgiouUnderstanding Non-Governmental Organizations (NGOs)
Non-governmental organizations (NGOs), also known as civil society organizations, are groups or entities of volunteers that operate independently from any government. These organizations are established to contribute at community, national, or international levels, aiming to fulfill humanitarian purposes or environmental protection goals.
The Legal Framework for Establishing and Maintaining NGOs in Cyprus
In Cyprus, there are three primary options for establishing an NGO: Clubs, Foundations, and non-profit companies limited by guarantee. Clubs and Foundations are governed by the Clubs and Foundations Law (Law 104(I)/2017, as amended), with the latest amendment in 2020. Non-profit companies are regulated under the Cyprus Companies Law, Cap. 113.
If any of these entities are approved by the Council of Ministers of the Republic of Cyprus as a ‘charitable organization,’ their income is exempt from taxation. Donations to such approved organizations may also be tax-deductible under the Law on Income Tax (Law 118(I)/2002), though the tax treatment of donations depends on the laws of the donor’s jurisdiction.
Characteristics and Obligations of Different NGO Structures
Clubs:
- Require at least 20 members to form and must serve public purposes without commercial aims.
- Governed by their constitutional documents and the law, clubs must register with the Ministry of Interior’s Registrar of Clubs.
- Clubs must submit audited accounts annually and report changes in membership and board composition.
Foundations:
- Managed by a minimum of three persons, Foundations must register their incorporation act, detailing their purpose and assets.
- Must hold property valued at no less than €1,000, dedicated to non-profit purposes such as education, health, or environmental protection.
- Foundations are overseen by Commissioners or a Board of Directors and must file annual audited accounts.
Non-Profit Companies Limited by Guarantee:
- Established under the Companies Law, Cap. 113, these companies limit members’ liability to their guaranteed amount.
- Must state non-profit purposes in their memorandum of association and prohibit profit distribution to members.
- Managed by a Board of Directors, these companies must file annual audited accounts with the Registrar of Companies.
Conclusion
Establishing an NGO in Cyprus requires careful consideration of the legal form and compliance with specific regulatory requirements. Each type of entity—Club, Foundation, or non-profit company—offers distinct advantages and obligations. Proper registration and adherence to governance and reporting standards are crucial for maintaining the status and benefits of an NGO in Cyprus.
Should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.
Disclaimer: Please note that the information provided above is intended as an overview of the four types of non-profit organizations and should not be regarded as legal advice. To ensure proper understanding and compliance with the specific requirements for registering a non-profit company, society, foundation, or club, it is strongly recommended to seek professional legal advice. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouAbolishment of Annual Levy for Cyprus Companies
On February 21, 2024, the government issued an official statement regarding the abolition of the €350 annual company levy, effective immediately for the fiscal year 2024.
This strategic decision is aligned with broader economic initiatives aimed at fortifying businesses within our evolving global landscape and elevating Cyprus’s allure as a preferred destination for business activities.
Further information regarding the logistical aspects of this policy change will be communicated as it becomes accessible.
In case you need our legal support, please do not hesitate to contact us for further professional assistance.
Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouNew Membership Announcement
We are thrilled to announce a momentous achievement for our esteemed Founding Lawyer, Ms. Andria Papageorgiou, who has been elected by the Board of the Cyprus Bar Association (CBA) to serve on the prestigious Committee of Finance of the CBA. This appointment stands as a testament to Ms. Papageorgiou dedication, expertise, and unwavering commitment to excellence in the finance industry.
This Committee will be responsible, among others, for the below:
This appointment not only reflects Ms. Papageorgiou’s individual accomplishments but also highlights the caliber of talent and expertise within our Firm. It reinforces our commitment to fostering a culture of excellence and innovation that extends beyond our Firm’s boundaries.
The role of Ms. Papageorgiou in the Committee of Finance at the CBA will undoubtedly pave the way for groundbreaking initiatives and strategic decisions that will shape the future of the finance industry in Cyprus. We are immensely proud of her achievement and are confident that her invaluable insights and expertise will continue to drive positive change and growth within our Firm and the industry at large.
We look forward to witnessing the continued success and impactful contributions that Ms. Papageorgiou will bring to both the CBA and our Firm.
In case you need our legal support, please do not hesitate to contact us for further professional assistance.
Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouImportant update on the Cyprus UBO Register
The Department of Registrar of Companies and Intellectual Property has announced that the final electronic system solution of the Register of Beneficial Owners of Companies and other legal entities (UBO Register) is now implemented. The final system solution replaces the existing system, which was implemented with effect as of 12 March 2021 as an interim measure for the collection of information on beneficial owners. Access to the final system solution begins on 14/11/2023. You may access the official announcement of the Registrar (which is in Greek) by clicking here.
PERIOD A: 14/11/2023 – 31/12/2023
All companies established or registered under the Companies Law, Cap. 113, all European Public Limited Liability Companies (SE) and all Cooperatives (hereinafter Organizations) or their officers/partners are invited to enter the final system and proceed with the “Initial Registration”. That is, to update/ re-register their UBOs, even if they have already done so in the interim solution system. During this period there will be no fines imposition.
In effect, this means that all previously inserted UBO-related details into the interim system must be processed again into the final system with the most up-to-date status as of 14/11/2023 and also record any updates thereafter. In order to avoid fines this must be done by 31/12/2023.
Period B: 01/01/2024 – 29/02/2024
Those who have not complied with the updating/ re-registration of their UBOs into the final system during Period A, will be subject to a fine. The fine will be calculated daily from 01/01/2024 until the date of submission (* see fines note below). After the resulting fine is paid, they will then be able to proceed with registration and/or suspension and/or change without any further financial burden.
*Fines: By failing to comply, the legal entity and potentially each of its officers shall be subject to a fine of €200 and a further daily fine of €100 until the date of compliance, with a maximum charge of €20,000. Further, there could be a criminal liability or prosecution of any person failing to comply.
Period C: 01/03/2024 onwards
During this period, all actions based on the relevant Directive (K.D.P. 112/2021, as amended) will be available as below:
• Updating the Register of Beneficial Beneficiaries
• Confirmation of Beneficial Beneficiaries
• Mismatch
• Electronic Research in the Register of Beneficial Beneficiaries
• Request for exemption from disclosure of information
• Request for access to the details of a minor
• Calculations of monetary charges where applicable
In case you have any questions, please do not hesitate to contact us for further professional assistance.
Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouA Step-by-Step Guide to Setting Up a Partnership in Cyprus
A. Introduction:
Setting up a partnership in Cyprus can be an excellent way to establish a business and benefit from shared responsibilities and resources. Whether you’re looking to start a general partnership (GP) or a limited partnership (LP), this step-by-step guide will help you navigate the process and ensure compliance with Cyprus laws.
B. Process:
- Choose the Partnership Type: Before proceeding, it’s crucial to decide on the type of partnership that best suits your business goals. In a GP, all partners have unlimited liability and share equal management responsibilities. An LP, on the other hand, involves general partners with unlimited liability and limited partners with liability limited to their investment.
- Select a Name for Your Partnership: Choose a unique and distinguishable name for your partnership. It should not be similar to any existing businesses in Cyprus to avoid confusion. Ensure that your chosen name complies with the requirements set by the Department of Registrar of Companies and Official Receiver.
- Draft a Partnership Agreement: While not legally required, drafting a partnership agreement is highly recommended to establish clear guidelines and avoid potential disputes. The agreement should include key details such as the partnership’s purpose, capital contributions, profit-sharing arrangements, decision-making processes, and mechanisms for resolving conflicts.
- Register Your Partnership: To register your partnership, you’ll need to submit the necessary documents to the Department of Registrar of Companies and Official Receiver.
- Obtain Necessary Permits and Licenses: Depending on the nature of your business activities, you may need to obtain specific permits or licenses from relevant authorities in Cyprus.
- Register with the Tax Department: Once your partnership is registered, you must register with the Cyprus Tax Department for tax purposes. You will receive a Tax Identification Number (TIN) for your partnership. Comply with all tax obligations, including filing tax returns, maintaining proper accounting records, and paying taxes in a timely manner.
C. Conclusion:
Setting up a partnership in Cyprus involves a systematic approach to ensure legal compliance and a solid foundation for your business. By carefully following the steps outlined in this guide, you can establish a partnership structure that aligns with your goals and positions your business for success.
Should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.
Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as financial or investment or legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouRegistration of a Non-Profit Organisation in Cyprus
In Cyprus, there are currently four primary types of non-profit organizations:
- Non-profit Companies: These entities are established with the purpose of serving non-profit objectives. They operate with the intention of benefiting the public or a specific group without pursuing commercial gains.
- Foundations: Foundations are established with the unique characteristic that all their assets are dedicated to a specific cause or purpose. They are typically created to support charitable, educational, scientific, or cultural activities.
- Societies: Societies are formed as unions comprising a minimum of 20 members. Their primary objective is to achieve a specific non-profit goal or purpose. These organizations work towards common interests or causes, fostering collaboration and collective efforts.
- Clubs: Clubs are associations formed by a minimum of 20 members, primarily for entertainment or recreational purposes. These organizations provide a platform for individuals with shared interests to come together, engage in activities, and promote social interactions.
These distinct types of non-profit organizations in Cyprus play crucial roles in various sectors, contributing to the betterment of society, the promotion of social causes, and the cultivation of shared interests.
It is important to note that each type of organization may have specific legal requirements and regulations governing its establishment, operation, and governance.
1. Non-Profit Companies:
Non-profit companies in Cyprus, governed by the Companies Law (Cap. 113), differ from for-profit companies in terms of their main characteristics:
- Dividend Distribution: Non-profit companies are prohibited from distributing dividends to their members or shareholders. Instead, any surplus generated is to be reinvested into furthering the organization’s non-profit objectives.
- Objectives: These companies can be registered to promote specific causes such as art, science, charity, or any other similar non-profit objective. The primary focus is on advancing public welfare or specific societal needs rather than generating profits for the shareholders.
- Regulatory Requirements: Non-profit companies are subject to the same legal requirements as for-profit companies, including the maintenance of audited accounts, adherence to annual levy obligations, and compliance with dissolution procedures such as strike-off or liquidation.
- Registration Authority: The Registrar of Companies is the competent authority responsible for the registration and oversight of non-profit companies in Cyprus.
2. Foundations:
Foundations in Cyprus are governed by the Societies and Foundations Laws of 1972 and 1997.
The main characteristics and requirements of foundations can be summarized as follows:
- Legal Definition and Purpose: Foundations are established with the principle that the entirety of their assets must be dedicated to a specific purpose or cause. This ensures that the resources are utilized for the intended objectives, such as charitable, educational, scientific, or cultural endeavors.
- Membership and Funding: Foundations can be established by a single individual (one member) and there is no specific minimum amount of funds required for their formation.
- Registration Authority: The Ministry of Interior is the competent authority responsible for the registration and oversight of foundations in Cyprus. To initiate the registration process, certain documents must be submitted, including the founding act, details of administration members, foundation name and address, foundation emblem (if applicable), and a lawyer’s letter.
- Dissolution or Liquidation: Foundations may undergo dissolution or liquidation under certain circumstances. In such cases, the remaining funds of the foundation are transferred to the authorities of the Republic of Cyprus, who are responsible for utilizing these funds for the cause originally supported by the dissolved or liquidated foundation.
3. Societies (or Associations):
Societies also referred to as associations, are governed by the Societies and Foundations Laws of 1972 and 1997 in Cyprus. Here are the key points and requirements related to societies:
- Definition and Purpose: According to the law, a society is defined as an organized union of at least twenty (20) individuals who come together to achieve a specific non-profit objective. These objectives can range from charitable, educational, cultural, or other similar non-profit endeavors.
- Registration Authority: The Ministry of Interior is the competent authority responsible for the registration and oversight of societies in Cyprus. It is through this authority that the registration process should be initiated.
- Registration Requirements: To register a society, the following documents and information are typically required: a memorandum of association, names and addresses of the administration members, articles of association signed by the members, the society’s emblem (if applicable), and a description of any movable and/or immovable property held by the society at the time of application.
- Publication: The certificate of registration, in the prescribed form, is published in the official Gazette of the Republic of Cyprus to formalize the society’s legal status.
- Dissolution: A society can be dissolved either by a resolution passed by the assembly of its members or if the number of members falls below twenty. Alternatively, a court order can also initiate the dissolution process.
4. Clubs:
Clubs in Cyprus are regulated by the Club Registration Law of 1972 (Cap. 112). The key characteristics and requirements of clubs can be summarized as follows:
- Definition and Purpose: A club is defined as the association of at least twenty individuals who come together for social activities, mutual entertainment, or any other lawful non-profit purpose. The primary focus of clubs is to foster social interactions and provide a platform for shared interests and recreational pursuits.
- Minimum Number of Members: A club must have a minimum of twenty members to be considered valid.
- Registration Authority: The registration of clubs is overseen by the local district office where the club premises are located. Prior to commencing operations, the club must submit an application to the local district office.
- Application Requirements: The application must include essential information such as the name and purpose of the club, the club’s address, the names of the secretary and all members, the total number of members, and the club’s memorandum.
Should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.
Disclaimer: Please note that the information provided above is intended as an overview of the four types of non-profit organizations and should not be regarded as legal advice. To ensure proper understanding and compliance with the specific requirements for registering a non-profit company, society, foundation, or club, it is strongly recommended to seek professional legal advice. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.
by Andria PapageorgiouCyprus Company Formation
A. Cyprus main Company Types
1. Limited Company (LTD)
- no minimum share capital requirement
- number of shareholders can be between one to fifty
- the company must have at least one director and a secretary
- annual accounts must be audited and filled either in Greek or English language
2. Branch
- foreign company responsible for all liabilities of a Cypriot branch
- branch required to register with Registrar of Companies and CY Tax department
- accounts to be filed annually, in Greek or English
3. Partnership
- general partnership: between two to twenty members
- limited partnership: at least one partner with unlimited liability
- required to register with Registrar of Companies and Cyprus tax department
B. Uses of Cyprus Companies
A Cyprus registered company can be used in various ways supporting the needs of the company’s operations. Cyprus registered companies can have activities related to:
- Imports/exports
- Services providers
- Online shops
- Tech Start-Ups
- Finance companies
- Shipping companies (Merchant Shipping)
- Property Holdings
- Investment Companies
- Holding companies
- Intellectual Property Holding
C. Registration Timeframe
The formation of a Cyprus company usually takes 8 working days. More specifically:
- Day 1: Application to the Registrar of Companies for the company name approval.
- Day 3: Name approval for the authorities; completion of memorandum and submit online to the Registrar of companies for approval.
- Day 7: Issue of company’s official documentation. (Certificates of registration, certificate of board of directors and secretary, certificate of shareholders and office address, Authentication of company memorandum and Articles of association)
- Finally, the application to the Tax department for Tax Identification Number is submitted. Also, the application for Bank account opening in Cyprus.
After the registration of the company, it takes approximately 3 to 5 working days to open a bank account, given that all required information and documents are available to the Bank.
D. Registration Process
- You will need a registered address in order to setup a company in Cyprus. Our firm has the capacity to help you find an office space, without the need for you to look around.
- You don’t need to visit Cyprus in order to register your company. Everything can be arranged from your country and we can take care of it. Our experts will communicate and advice you via email or a teleconference and then sent you the paperwork to be signed.
- There is no minimum requirement of shares capital to start your Cyprus company.
- The documentation needed to register your company are:
- A certified copy of Passport or ID
- A certified copy or an original utility bill, as a proof of address.
- A reference letter from a bank institution, lawyer or accountant for the good standing of the beneficial owners.
- A questionnaire provided from AP Law Firm.
- A recent CV
- Last year’s tax return
E. Fees and Obligations
The annual fee to keep a company active is 350 Euro and is paid to Cyprus company registrar via the online portal or via your services provider.
Annual Reports and Audited financial Statements have to be submitted online to the Cyprus company Registrar department in 28 days after the end of the fiscal year.
Cyprus companies have to convene at least one Directors meeting per year. This meeting is mandatory. The first annual directors meeting of the company has to take place in 18 months after the registration date of the company.
A Cyprus company has to be registered to the Tax department and issue a Tax Identification number within 60 days after the registration date.
The annual Tax return form has to be submitted 15 months following the year end.
The yearly tax has to be paid in three instalments on the 31st of July, the 31st of December and the last one on the 30th of June of next year. All Cyprus companies have to calculate and submit their own tax payments within the tax year.
Every Cyprus registered company is obliged to keep accounting records and prepare audited financial statements.
F. Taxation
- The corporate tax rate is 12.5%.
- No there are no any extra taxes.
- Given that your company employes only yourself, the tax rate will depend on the paid salary you will receive from your company. If you earn less than €19.500
You have no tax obligation. - How you will be taxed on your income in any of the below cases?
(a) Cyprus Tax resident, director and employee of the company.
Taxed on worldwide income if is over €19.500
(b) Non-Cyprus Tax resident, director and employee of the company.
Taxed only on Cyprus income if is over €19.500
(c) Cyprus Tax resident, director, employee and a shareholder of the company.
Taxed on worldwide income if is over €19.500
Dividends are exempted from income tax and Cy withholding tax, but will pay National Health Insurance Scheme on 2.65% from 01/03/2020
(d) Non-Cyprus Tax resident, director and shareholder of the company.
Taxed only on Cyprus income if is over €19.500
Dividends are totally exempted from Cyprus.
G. Banking
For account opening, it usually takes approximately 3-5 working days from the day the signed documents from beneficial owners are delivered to the bank.
The paperwork needed to open up a company bank account are the below:
- Company certificates (Shareholder’s certificate, registered office, Incorporation certificate, Directors and secretary certificate)
- Memorandum and Articles of association
- Identification documents of the beneficiary person (Id, Passport and proof of permanent address)
In case you are not a resident, you can still open a corporate bank account.
You can also get a connected card to the company’s bank account, when this is opened successfully.
The annual fees for the card depend on the cart type (i.e. Mastercard, Visa etc.).
You can also open a personal account, as well, given that all relevant required information is provided.
The fees when receiving payment in your company’s account depend on each bank’s fees policy.
In general, the fees of the company towards the bank depend on the each bank’s policies. Usually banks charge from €500 – €800 per year. A company is obliged to provide all requested information to the bank such as activities, owners, clients and customers.
H. Board of Directors
A Cyprus registered company has to have Director(s) , Shareholder(s) and a Secretary stated.
- At least one director has to be tax resident and annual meetings have to be held in Cyprus.
- You can have a single director for a Cyprus company.
- Anyone can act as a secretary.
- Anyone from Cyprus or abroad can act as a director, given that he/she has no criminal record.
I. Employment
It’s easy to employee staff in Cyprus. Cyprus has one of the most educated labor force in Europe.
Our firm can assist you and advice on the recruiting process.
- You can hire a non-Cypriot resident to work for your company. In the case of an EU citizen he has to visit Cyprus and obtain the yellow slip permit. If is a third country national (outside of CY/EU) then the application of visa is required and different employment criteria according to the Cyprus Department of Labour.
- The minimum wage in Cyprus is 870 Euro gross and after the continuous employment from the same company goes to 924 Euro. The hourly rate varies depending on the job profile starting from 4,55.
- The total insurance fee is 20.3%. The fee of 12% is employer’s responsibility and the rest of 8.3% is paid by the employee. Employer’s contributions include the Social Insurance Fee (8.3%), Redundancy Fund (1.2%), HR Development Authority Fund (0.5%) and lastly the Social Cohesion Fund (2%). Please note that these numbers may change year after year according to the Social Insurance Department.
J. AP Law Firm
Andria Papageorgiou Law Firm can assist you with the incorporation of you company, providing you the following services:
- Advice as to the most efficient Cyprus company structure.
- Preparation and submission of company documents.
- Opening of bank accounts (both personal and corporate).
- Maintenance and Management of the Company:
- Registered office address
- Company secretary
- Directors
- Alternate directors
- Nominee shareholders
- Legal advice and assistance/trustee services
Should you have any further questions, please do not hesitate to contact us at info@apapageorgiou.com.
Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any matter. Andria Papageorgiou Law Firm is not responsible for any actions (or lack thereof) taken as a result of relying on or in any way using information contained in this article and in no event shall be liable for any damages resulting from reliance on or use of this information.