Under the Companies Law, Cap 1 13, foreign companies may register a branch in Cyprus.
The procedure is the same as registering a new company; however, foreign companies need to submit an application within one month of their formation to the Department of the Registrar of Companies and Official Receiver of the Ministry of Trade, Industry and Tourism.
A characteristic of the branch office is that the parent company is fully liable for the liabilities of the branch. As such it does not enjoy separate legal personality.
Taxwise, branches are permanent establishments of non-resident companies and a Cyprus branch is not a separate legal company from its parent.
The branch must have the same name as the parent company.
A branch of a non-resident company must appoint a resident individual or a company to represent it in its dealings with the tax authorities. The representatives may be held jointly and severally liable for the tax debts of the permanent establishments of non-resident entities, which they represent.
To register a branch, evidence of the parent company’s existence has to be provided, as well as certified copies of the Articles or Statues, the names of the directors, the share capital, the registered office, and the names of the representatives who will act for you.
Certificates have to be legalised by a notary public and the Cyprus consulate of the country in which the company was initially registered. The branch office must have the same name as the parent company.
Official documents must be officially translated into Greek – the necessary documents are:
- business registration certificate
- company’s articles of association;
- the names of the company’s directors and secretary, as well as the name of at least one resident of Cyprus to whom public documents and any announcements in connection with the company and the branch office may be sent
- A certified copy of your balance sheet for the branch office must be translated into Greek and sent annually to the Department of the Registrar of Companies and Official Receiver.
A Branch or a Company?
We recommend avoiding the registration of a Cyprus branch as its operation has many drawbacks. The key disadvantages are summarised below:
- The parent company is fully liable for the liabilities of the branch
- The representatives of the branch may be held jointly and severally liable for tax debts
- The financial statements of the parent must be lodged at the Companies Registry
- The obligations of the branch are the same as those of the parent, including filing VAT returns, employees returns and corporation tax returns; so there are few savings in administering a branch
- Banks and clients may prefer dealing with a Cyprus company rather than a foreign branch
- A branch is rarely ideal for substantial projects because the parent company runs the entire risk
- Upon registration of a branch, evidence of the legal existence of the parent has to be provided
- Any public act by the branch is likely to need ratification by the board of the foreign parent. A company that signs contracts in front of a notary on a regular basis, should incorporate for administrative ease