The Turkish Republic of Northern Cyprus has a favorable location at the crossroads of important trade routes, making it an excellent place to set up a company. The local economy is steadily growing at an annual rate of 5%, which makes it a good jurisdiction for foreign businesses. The local authorities have worked hard to create the best possible conditions for entrepreneurs from abroad by offering various benefits and modifying the taxation system. If you are seeking to expand your business horizons, a company in Northern Cyprus may be your ideal choice.
Setting Up a Company in Northern Cyprus: Main Benefits
Entrepreneurs from other countries can take advantage of an attractive system of benefits and discounts provided to non-residents. A customs duty will equal a tiny 3.5%, for instance, if you import office and transport equipment to the country.
Let’s look at the main takeaways:
- Easy company establishment process. You will have no hassle whatsoever if you delegate the whole thing to professionals. Otherwise, you will still have to make an effort and study the local regulations.
- Stable currency. As Turkey provides considerable support to the country, the local currency experiences minimal fluctuations.
- Tax incentives. Northern Cyprus is not a zero-tax jurisdiction, but corporate tax may still amount to 0% in some cases.
- Currency personal and business accounts. You can use the funds kept in your account opened with a TRNC bank from anywhere in the world.
The local tax authorities do not exercise strict control over cash and cashless settlements made by non-resident companies in Northern Cyprus. The system of tax accounting and financial monitoring is simplified, which reduces the document flow and minimizes the risk of your account being clocked.
LLC Formation in Northern Cyprus
Let’s take a look at the main reasons why an LLC establishment in Northern Cyprus may be a good solution:
- If you are interested in acquiring local citizenship, you can do so after 10 years of work.
- A permanent residence permit will be accessible to you after 6 years of residence in Northern Cyprus.
- You will be able to easily obtain work visas for all company employees.
- The services of numerous subsidiaries of Turkish banks (IBAN, SWIFT) will be available to you.
- You can easily withdraw or deposit funds from/in the company’s accounts.
- You will be able to operate on the domestic market of Northern Cyprus without restrictions.
Let’s look at some important characteristics of the local Limited Liability Company:
- The company must have a secretary and at least one director.
- The minimum number of co-owners is 2.
- The company’s actual place of registration is its legal address.
- The LLC’s authorized capital should amount to at least 25,000 euros, and this amount should be reserved in the bank account in full during the period of company formation (which usually takes 2 to 4 weeks if everything goes as planned).
- There are some restricted activities that are prohibited for non-resident LLCs. These include factoring, currency exchange, sale of real property, medicine, construction, and tourism.
- An LLC cannot purchase commercial/residential real estate in the territory of the Turkish Republic of Northern Cyprus.
Documents Required for Company Formation
- A bank statement to prove the reservation of funds in a Cypriot bank to be used as the company’s authorized capital later on.
- Confirmation of the residential address (a place of residence in Northern Cyprus is required).
- Passports or IDs of all LLC founders.
- A certificate of no conviction with an apostille
You will also have to provide a letter of guarantee issued by the bank for 10 minimum monthly wages (the period of its validity should be at least 2 years).
Important Considerations
The main document you will have to draft before you go any further is the company’s Articles of Association, and we would like to discuss some of its peculiarities when it comes to the LLC in Northern Cyprus.
First of all, you are required to include all kinds of activities that your company will engage in. Why is it so important? The matter is that you will have to obtain a court decision if you decide to amend this clause at some point of time in the future, so the document has to be drafted accurately. You will not be able to add or remove this or that activity from the Articles of Association unless you obtain a court decision.
Operation in some spheres will require having a company member who possesses 51% of its shares and is a citizen of Northern Cyprus. The LLC founders can own no more than 90% and no less than 10% of shares.
The Master Agreement, one more important document for LLC formation, is required to provide the details about the number of the entity’s directors and the minimum percentage of votes that the shareholders have to cast to replace one of them.
Company Registration Step-by-Step
- Select a name for your company and check whether it is available.
- Draft the corporate documents (Master Agreement and Articles of Association being the main ones).
- Contact your bank to receive all the required letters from it.
- Prepare all the remaining documents and submit the whole package to the registration authorities of Northern Cyprus (make sure to double-check all the documents before you do).
- Pay all the necessary fees and duties.
- Receive a package of the LLC’s constituent documents.
- Register the company with the local tax authorities.
- Create a corporate account with a bank based in Northern Cyprus (or a branch).
- Obtain a license or a permit for the main type of activity your company is going to engage in (a separate license fee is payable in this case, and you will have to extend the license on an annual basis).
- Record the information about the company in the municipal register.
- Record the information about the company in the Pension Fund and the Ministry of Labor.
Company Maintenance Expenses
You will incur monthly expenses:
- VAT (5 to 20%)
- Payroll taxes
- Nominee founder’s fee
- Accountant’s fee
As for the annual expenses, they will be as follows:
- License fee
- Permits to rent an office and hang a sign
- Obtaining/extension of business visas for founders/directors
- Obtaining/extension of work visas for employees
- Income tax
Interested in LLC incorporation in Northern Cyprus? You can follow the above link to read more articles or get in touch with an expert who will answer all your questions and give you professional advice for free. Good luck with your business in Northern Cyprus!
