On 21 February 2024, the Cypriot authorities announced the abolition of the annual fee of €350, which was levied on all companies incorporated in the jurisdiction. The levy is expected to be abolished starting from the current year, 2024. The decision is to be formalised in the Cyprus Companies Law shortly.
Why does Cyprus waive the annual levy?
Although the annual levy is a small fixed non-tax payment, its abolition will definitely affect government revenues. Cyprus used to receive around €40 million annually from its collection. However, much more important is that the abolition of the fee aims to improve the business environment and ease the financial burden for the country’s corporate sector.
The removal of the annual levy is expected to reduce the operating costs of Cypriot companies, facilitate their annual administration and promote economic development. Moreover, this measure can increase the competitiveness of Cyprus as a jurisdiction favourable for structuring an international business.
The annual levy in Cyprus: amount and deadlines
- Under the current rules, all existing Cypriot companies must pay the levy of €350 no later than 30 June each year.
- In case of a delay in payment by no more than two months (no later than 31 August), 10% is added to the levy amount, and the total amount payable increases to €385.
- If the delay is up to five months (no later than 30 November), another 30% is added, and the fee increases to €490.
- Further non-payment will result in the entity’s strike-off from the Company Register.
Cyprus introduced the annual levy on companies in 2011 as one of the stabilising measures that the Cyprus economy required at the beginning of the previous decade. It was in force in addition to the corporate taxation in Cyprus at a rate of 10% (up to 2012) and 12.5% (from 2013 on).
Thus, for more than twelve years, Cyprus imposed both a corporation tax (similar to other EU countries) and a flat annual fee typically charged in offshore (no-tax) jurisdictions. Now, the annual fee is becoming a thing of the past. This means that, when planning to set up a company in Cyprus, you can no longer take the annual 350 euros into account.
