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Submitting Financial Statements in Cyprus

Submitting Financial Statements in Cyprus

Updated on Thursday 15th October 2020

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Submitting-Financial-Statements-in-Cyprus.jpgCompanies registered in Cyprus are required to submit their financial statements following specific regulations. The procedure can differ in accordance with the legal entity of the company, the period since the company has been incorporated or its yearly profits. Investors carrying operations on the Cypriot market are advised to study the requirements imposed in this sense and to receive legal advice from our team of Cypriot lawyers, who can provide an in-depth presentation on the legal matters referring to this issue. 

Tax obligations of companies in Cyprus

Apart from the registration requirements which must be met by all Cypriot resident companies, there are also the tax obligations which must be respected.

According to the tax legislation in Cyprus, a local company must:

  • -          register with the tax authorities and pay the taxes on the corporate income;
  • -          in order to pay their taxes, the companies must file a set of documents with the authorities;
  • -          register for the value added tax if their income exceeds a certain amount of money;
  • -          register for social security, pension and insurance for employment purposes.

These requirements apply to all types of companies, including branches and subsidiaries of foreign companies operating in Cyprus.

Bookkeeping in a company in Cyprus

In order to be able to submit financial accounts, a Cyprus company must complete a set of operations which reflect its economic activities. For this purpose, the financial accounts will be backed up by the invoices the company issues, the accounting books, and the audited accounts.

All the accounting documents of the company must contain information about the business, including its tax and VAT identification numbers. In case the company has trading activities outside the country, it must also obtain an EORI number.

Our law firm in Cyprus offers specialized company registration services and can help with the tax registration procedure as part of the incorporation process.

Filing tax returns in Cyprus

Another obligation of Cyprus companies is to file their annual tax returns. These must be submitted by March 31st of the current year for the past year. These are required to file the corporate tax return with the Tax Commissioner Office.

The tax return application must be filled out with the accurate financial information about the company. Also, the company must use the self-assessment method in order to calculate the amount of money due. It is also possible for the company to pay its taxes in two separate installments: the first one must be paid by July 31st and the second one by December 31st.

Requisites for preparing financial statements in Cyprus

According to the Commercial Code, it is the duty of one of the company’s directors to prepare and maintain the accounting documents of the business. He or she must make sure that these documents are correct at all times and that they respect the International Financial Reporting Standards (IFRS).

Upon submission, the financial documents will be completed by a management report put together by the director.

Another requirement related to the accounting of a company is the submission of consolidated accounts. These apply to companies with more than one subsidiary operating in Cyprus. The parent company has the duty of gathering the financial statements of all its subsidiaries and filing them with the Cyprus tax authorities.

All Cypriot companies are required to have their financial accounts audited by a certified auditor.

The following information must be comprised of a Cyprus company’s financial statements:

  • -          the balance sheet;
  • -          the profit and loss account;
  • -          the total value of the payments and expenses;
  • -          the total value of the sales and purchases;
  • -          information about the debit and the credit of the company.

All the information must be submitted in Greek with the tax authorities.

Our Cypriot lawyers can offer detailed information on the accounting regulations imposed by the Company Act to local and foreign companies operating in this country. We can also assist foreign investors who want to register various types of companies in Cyprus.

Deadline to submit financial papers in Cyprus 

All companies carrying commercial activities in Cyprus are required to submit their financial statements and tax returns no later than 31st December. However, if the management of the company decides to submit the financial documents on an electronically basis, the provisions of the Cyprus Company Law specify an extended period of 3 months from the above-mentioned date. As such, the financial statements can be submitted by 31st of March; our team of Cypriot attorneys can offer more details on this matter.  
 

How to submit financial statements in Cyprus 

 
The Cypriot legislation stipulates that a company must submit its financial statements at the Registrar of Companies, by filing the documents together with the Annual Return. When submitting the documents, the investors will have to provide a certificate which will certify that the statements represent true copies of the ones presented during the Annual General Meeting (AGM). 
 
It is important to know that the financial statements of a Cypriot company will become available to the general public and they can only be submitted if such documents were approved by the following: 
 
the Board of Directors;
the company’s secretary;
the AGM. 
 
In several cases, such documents will also have to be audited by an external auditor. 
 
An important aspect is that newly formed companies do not have to submit any financial documents for the first year of activity, but the documents should be registered at the Registrar of Companies within 18 months since the incorporation. 
 

The taxation system presented by our lawyers in Cyprus

Cyprus is one of the most appealing European jurisdictions from a taxation point of view. With one of the lowest taxes imposed on the corporate income which is set at 12.5%, Cyprus attracts many foreign investors who open companies here. Furthermore, incomes derived from the payment of dividends can benefit from tax exemptions or deductions. Interest payments can also take advantage of such exemptions.

These companies benefit from various tax deductions and exemptions granted by the government, but also under the double tax treaties signed by Cyprus over the years. Cyprus is also known as a reputed offshore jurisdiction and companies registered here benefit from the same tax advantages as local companies if they have a management seat here.

With a vast experience in corporate matters, our law firm in Cyprus can offer detailed information on how companies are taxed in this country. We also offer personalized company registration services and tax consultancy in Cyprus.

 
Businessmen interested in receiving further details referring to the financial statements and the procedure to submit them at the local authorities can address to our Cypriot law firm.