Before Incorporation: Avoiding Mistakes and Preparing the Ground

Setting up a company in Cyprus is an excellent strategic move, but only if done correctly. Many clients underestimate the importance of proper planning and fall into common traps.

Frequent mistakes include:

• Registering a company without substance: no local office, no employees, no management presence.

• Appointing nominee directors while all decisions are taken abroad — undermining Cyprus tax residency.

• Neglecting proper records: books, board minutes, and compliance filings.

• Using the company as a passive holding vehicle, ignoring transfer pricing or CFC rules in the home country.

How to prepare effectively:

• Define your purpose: Is the company for trading, holding, investment, or services? Each activity may require different licensing, VAT registration, and tax considerations.

• Plan your structure: Identify shareholders, directors, and UBOs clearly from the start.

• Collect required documents early: Passport, proof of address, and source of funds for individuals. For corporate shareholders: incorporation certificate, shareholder/board registers, structure chart.

• Understand the timeline: Incorporation takes on average 7–14 working days:

  • Name approval: 2–3 days

  • Document preparation/signing: 2–5 days

  • Registrar registration: 5–7 days

Careful preparation avoids delays, strengthens compliance, and ensures your new company begins operations on a strong foundation.