If you want to expand your operations, you can open a branch office or a subsidiary in Cyprus. The article below will help you determine which legal entity is suitable for you, while our local lawyers will assist with its incorporation as soon as you decide.
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What are the main features of a Cypriot branch office?
The branch office is a dependent entity or a satellite of another company. It cannot make its own decisions and is limited to completing the same operations as the parent business.
What are the characteristics of a Cypriot subsidiary?
By comparison with the branch, the subsidiary is a fully independent business, which can make its own decisions and undertake any activities, without being limited to those of the parent company.
Are there any registration differences between a branch and a subsidiary in Cyprus?
The main difference is linked to the:
- trading name: the branch must operate under the same name as the parent company, while the subsidiary must not abide by this rule;
- incorporation: the branch will be registered by the parent company through a local agent (our Cypriot lawyers can offer representation), while the subsidiary can be registered as an independent business.
Which entity is easier to register in Cyprus?
The branch office is simpler to register, as the documents and compliance requirements are fewer.
We have also created an infographic highlighting the main differences between branches and subsidiaries in Cyprus:
Are there any differences in the taxation of a branch office and a subsidiary in Cyprus?
Yes:
- the branch office will pay the corporate income tax on the profit it generates in Cyprus;
- the subsidiary will be taxed on its worldwide income.
What should I consider when choosing between a branch and a subsidiary in Cyprus?
Here are the main aspects:
- control: establish the level of control you want to have over the Cypriot entity;
- liability: the parent company of a branch office is fully liable for the branch office’s obligations, while the parent company of a subsidiary is not liable at all;
- operations: the branch is limited to certain activities, while the subsidiary can adjust better to Cyprus’s market conditions.
Are there differences in the documents required to open a branch and a subsidiary in Cyprus?
The documents which need to be filed in order to open a subsidiary in Cyprus are not very different than those required to set up a branch office; however, there are certain differences.
The following paperwork is required for the creation of a subsidiary in Cyprus:
- the Memorandum and Articles of Association of the subsidiary to be opened in Cyprus;
- information about the foreign company; however, only a certificate of good standing is required;
- proof of the registered address of the subsidiary is also necessary, just like in the case of the branch office;
- the dated and signed resolution of the parent company to open the Cypriot subsidiary;
- proof of depositing the share capital of the Cyprus-based company, which also implies opening a bank account here.
The documents a foreign company must submit with the Companies House in Cyprus in order to open a branch office are:
- a copy of the parent company’s certificate of registration issued by the authorities in its home country;
- the foreign company’s statutory documents, which can include the Memorandum and Articles of Association in original;
- a copy of the certificate of good standing of the parent company which is also issued by the authorities in its home country;
- information about the parent company’s directors and secretary (where applicable);
- information about the representative appointed by the parent company for the Cypriot branch;
- proof of registered address of the branch office in Cyprus (a rental or lease agreement).
Another difference between subsidiaries and branches in terms of registration in Cyprus is that the subsidiary must also register with the Ministry of Commerce, Industry and Tourism.
How do I choose between a branch and a subsidiary in Cyprus?
Choosing between a branch office and a subsidiary in Cyprus can be more difficult than in other countries, as both types of structures offer benefits; however, foreign investors can base their decision on the activities they want to complete in Cyprus. The main difference between a Cypriot branch and subsidiary is that the branch is limited to undertaking the same activities of the parent company, while the subsidiary can complete more activities outside the scope of the foreign business.
Our lawyers can help you open a business in Cyprus, no matter the business form you choose. Please contact us for more detailed information.