There are several ways through which one can start a business in Cyprus in terms of legal forms to use. One of them is the general partnership. This is a non-corporate entity that can be created by Cypriots and foreigners, and which requires at least two members.
Below, our lawyers in Cyprus explain the main characteristics as well as the steps to create a general partnership. You can also rely on us if you need support in buying a property in Cyprus and move here to carry out a business through a partnership.
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The Partnership Law in Cyprus
Partnerships in Cyprus are regulated by the Partnership Law. The Partnership Law is part of the Cypriot Civil Law distinguishes two types of partnerships:
- the general partnership;
- the limited partnership.
We invite businessmen to watch a short video on the regulations related to a general partnership in Cyprus:
The Partnership Law recognizes the legal relation between the founders of the partnership, but does not recognize the partnership as a separate legal entity. Because of this particularity, partnerships’ activities are distinguished from the activities carried out by companies registered under the Cypriot Commercial Law.
What are the conditions of existence of Cypriot general partnerships?
According to the Partnership Law, Cypriot general partnerships may only exist if it represents a relation between persons conducting business activities with the purpose of obtaining a profit. The general partnership must satisfy three conditions according to the Partnership Law in Cyprus:
- it must carry out a business,
- it must have at least two partners,
- it must have the purpose of obtaining a profit.
Partnerships registered as Cypriot limited liability companies under the Commercial Law or any other laws are not considered general partnerships. General partnerships may have a maximum of 20 members, or if conducting banking activities, a maximum number of 10 members. All members of Cypriot general partnerships are considered jointly and separately liable for the partnership’s debts and obligations.
General partnership names in Cyprus
Just like other legal entities, such as the private limited liability company, Cypriot general partnerships must also comply with certain formalities imposed by the Companies Act. Among these, having a suitable name.
One must choose the suggested name for the partnership and get it authorized by the Registrar of Companies before moving further with the incorporation procedure.
One is advised to perform a search on the business entities’ registered with the Trade Register once a person has decided on the proposed name of the general partnership and before submitting an application for approval of the proposed name in order to find out whether there is already a registered company with the same or a similar name. If the name is available, it can be further used to incorporate the general partnership in Cyprus.
The application for the partnership’s incorporation may be submitted within one month of the partnership’s establishment, once the proposed name has been approved and provided that the necessary arrangement regarding the establishment of the entity have been made.
While it simpler than registering a business, the creation of general partnerships in Cyprus is still subject to strict requirements which can be adhered to with the help of our law firm.
At the same point, our civil lawyers can help you with marriage registration in Cyprus.
The registration procedure for general partnerships in Cyprus
In order to register a general partnership, a written statement signed by all the founding members must be submitted with the Cypriot Companies Registrar. The statement must contain the following information:
- the partnership’s name,
- the nature of the business activities,
- the place where the business will take place,
- details about the partners such as names, nationality, residency and business occupation,
- the date of commencing the business activities,
- the contribution of each partner,
- the authorized representatives of the general partnership.
The statement must be submitted within one month from the formation of the Cypriot general partnership.
Documents to file to register a Cypriot general partnership
One can submit the registration request electronically through the Registrar of Companies’ e-filing system. However, it is recommended to use specialized services in order to respect the Companies Act’s requirements. In the case of a general partnership in Cyprus, the following documents must be filed:
- a declaration of signature witness;
- the application for name approval;
- proof of payment of the registration fee.
The procedure can be sped up provided an additional fee is paid. So, if you choose to have your business up and running sooner, you can rely on our Cypriot lawyers.
Steps after registering a partnership in Cyprus
Every partnership is required to submit an application for registration with the Tax Department and obtain a tax identification number within 60 days of the date of incorporation.
In addition, VAT registration must be completed by any partnership based in Cyprus that has made taxable supplies of goods and services over the course of the previous 12 consecutive months or that will make such taxable supplies of goods and services over the course of the following thirty 30 days.
Apart from these, a partnership must also register for social insurance, as well as to register its name as a trademark in Cyprus. The last step, however, is optional.
Taxation of partnerships in Cyprus
From a taxation point of view, here are the main aspects to consider about general partnerships in Cyprus:
- each partner will pay the personal income tax of 25%, 30% or 35% in accordance with their profits;
- financial statements must be filed within 6 months of the end of the financial year, if any legal entity is a member of the respective partnership;
- the financial statements must be presented in a general meeting no later than 18 months after the first year of activity and every year starting with the second year.
For complete information about the establishment and taxation of general partnerships please contact our law firm in Cyprus.