Understanding and complying with annual reporting obligations is vital for all companies registered in Cyprus. These requirements not only ensure your company’s good standing but also demonstrate transparency and accountability. This guide outlines the key obligations, including updates on the Ultimate Beneficial Ownership (UBO) registry, to help you stay compliant.
Annual Return (HE32)
Every company registered in Cyprus must file an annual return, referred to as Form HE32. This document provides an updated snapshot of the company’s structure, including details of directors, shareholders, and the registered office. The annual return must be prepared as of a specific date, known as the company’s "annual return date," and filed with the Registrar of Companies within 28 days of preparation.
For newly established companies, the first annual return is due 18 months after incorporation. For all other companies, the filing is due annually, following the last filed return. It is essential to ensure that the information included is accurate and up to date, as discrepancies may lead to penalties or delays.
Financial Statements
Along with the annual return, companies are required to file audited financial statements. These statements must adhere to International Financial Reporting Standards (IFRS) and provide a clear and accurate representation of the company’s financial position. The audited financial statements for the prior financial year must accompany the annual return. For instance, for the year ending 31st December 2024, the audited financial statements must be included with the annual return filed in 2025.
Failing to file audited financial statements on time can lead to penalties and administrative complications, so it is crucial to work closely with your auditors to ensure timely preparation and submission.
Tax Returns
All companies in Cyprus are required to submit annual tax returns electronically through the Tax Department’s online system. The deadline for filing is 31st March of the second year following the tax year. For example, the tax return for the financial year ending 31st December 2023 must be submitted by 31st March 2025.
Late submission of tax returns may result in penalties or interest charges. To avoid unnecessary fines, ensure your tax compliance obligations are planned well in advance and supported by proper record-keeping.
VAT Returns
If your company is registered for Value Added Tax (VAT), you are required to file quarterly VAT returns. These returns are due by the 10th day of the second month following the end of each VAT quarter. For example, if your VAT quarter ends on 31st March, the VAT return must be submitted by 10th May. Even if there are no transactions during the quarter, a nil return is still mandatory.
Proper bookkeeping and timely submission of VAT returns are essential to avoid penalties. If you are uncertain about VAT requirements, consulting a qualified accountant is highly recommended.
Social Insurance Contributions
Employers in Cyprus are obligated to pay social insurance contributions for their employees. These contributions, along with the employee’s share, must be paid to the Social Insurance Department by the end of the month following the month in which salaries were paid. Late payments may incur interest and additional administrative charges, so timely payment is essential.
Ultimate Beneficial Ownership (UBO) Registry
The UBO registry is an integral part of Cyprus’s compliance with anti-money laundering (AML) and transparency standards under EU directives. All companies and legal entities registered in Cyprus are required to submit and update information on their Ultimate Beneficial Owners (UBOs) to the Registrar of Companies.
A UBO is defined as a natural person who ultimately owns or controls a company, typically holding at least 25% of the shares or voting rights, either directly or indirectly. The information must be submitted electronically through the Beneficial Ownership System (BOC), and any changes to the UBO must be updated within 14 days of the change.
Failure to comply with UBO reporting obligations can result in severe penalties. It is crucial to ensure your company’s UBO details are accurate and up to date to avoid regulatory scrutiny.
Practical Tips for Staying Compliant
- Keep a well-maintained calendar or use compliance software to track filing and reporting dates.
- Work with local accountants, auditors, and legal advisors who specialise in Cypriot compliance to ensure all obligations are met.
- Cyprus’s regulatory landscape evolves, so staying informed of any updates to reporting requirements is essential.
- Regularly review your UBO information to ensure it reflects the current ownership structure.
By staying on top of these obligations and seeking professional guidance when necessary, your company can operate seamlessly and avoid unnecessary penalties.
This article serves as general guidance only. For specific advice tailored to your company, consult a qualified professional.
Interested in Cyprus Corporate Law? Read more: https://www.eltrc.com/courses/introduction-to-cyprus-companies-law-practice
