The Turkish Republic of Northern Cyprus (TRNC, Northern Cyprus) proclaimed its independence in 1983 but is not recognized by most states around the globe. Still, the jurisdiction takes steps for its development, including favorable conditions for doing business and attracting foreign capital to the country. It has developed tourism and financial sectors. The state offers numerous opportunities for carrying out business worldwide effectively, including from the tax perspective. So, company incorporation in Nicosia or any other city in Northern Cyprus may bring these benefits to the investor's table.
Why Register a Company in Northern Cyprus
If you consider a commercial option of buying or forming a company in Northern Cyprus, either of those may open the next benefits for your international business:
- strategic geographical location;
- general ease of company incorporation;
- high level of confidentiality;
- availability of free trade zones (with the exemptions of profit and income taxes);
- offshore companies are possible (1% profit tax on the worldwide taxable income should be paid only, VAT exempted);
- free movement of capital;
- no currency control limitations.
Legal and Organizational Forms
It is possible to form a company in Northern Cyprus or formalize an official presence in this state by utilizing one of these options:
- Private limited company – a TOP choice for most businessmen worldwide because of the narrowed monetary and legal obligations in relation to all hypothetical losses of a future enterprise. Shareholders will not cover such in excess of the funds invested. Two promoters are required at least in this case, perfectly, if at least one resident is involved. When non-residents are among shareholders, it is necessary to invest USD 100,000+.
- Branch – foreign companies may opt for a simplified option of doing the same business as abroad and arrange the interaction with local customers/contractors in a far easier way. Passing the simplified registration procedure is required in this case. No separate legal personality is granted – 100% liability over the results of the branch operation reserves its parent company.
Steps to Establish a Company in Northern Cyprus
If you wish to create a company in Northern Cyprus, these must-have steps are obligatory to pass:
- Choosing and checking the uniqueness of a commercial name.
- Collecting the details about the entity's promoters, managers, final beneficiaries, and mother company (if any). A natural person should provide, among others, proofs of identity and address, body corporate –statutory documents and confirmations of good standing.
- Arranging office premises as a legal address for a future company.
- Drafting entity’s corporate documents, including the Memorandum and Articles of Association and resolutions of founders.
- Paying all required incorporation fees. Lodging the complete set of documents to the Company Registration Office. Including the information about a new entity in the Commercial Register.
- Formalizing a new company for the purposes of paying taxes and must-have social payments.
- Opening corporate bank accounts.
- Getting separate licenses that may be needed for regulated activities.
Legal and Regulatory Aspects
The local legal system is made with the UK format in mind. Foreign businessmen get the same treatment as the locals when they are doing business in Northern Cyprus. In certain strategic industries, there can be a special rule of involvement of a local partner with a 51%+ share. The process of establishing a new entity in Northern Cyprus is generally straightforward. Some regulated activities, like construction or activities that may have an environmental impact, require getting a license from the local government.
Taxation in Northern Cyprus
Buying or starting a company in Northern Cyprus should be assessed along with the next points of taxation applicable in the jurisdiction:
- Profit tax (for businesses) – 10% (an extra 15% rate is applied for all other income after taxation of corporate profits)
- Income tax (for individuals) – a progressive scale is applied with the maximal rate of 37%
- VAT – differs taking into account the type of transaction (from 0% to 20%)
- Withholding tax – (1) dividends – 15/20% (2) interests – 10% (3) royalties – 10%
- Capital gains tax – depends on the type of transaction.
There are also specific local taxes, like a transfer fee tax. Contact Prifinance attorneys to get more detailed information about taxation nuances in the NTRC.
How Prifinance Attorneys Can Assist You
If you have any questions remained about how to register a company in Northern Cyprus, Prifinance attorneys are always available online to support you with finding the right answers. Lawyers possess versatile registration expertise gained through more than 11 000 cases closed worldwide, including in NTRC. Think about your priorities and expectations. Get fully professional and personalized legal assistance in return.