Re-domiciliation of Companies to Cyprus

What Is Re-domiciliation?

Re-domiciliation, also referred to as “continuation” or “transfer of seat,” is the process by which a company incorporated in one jurisdiction transfers its legal domicile to another jurisdiction without undergoing liquidation or dissolution. In Cyprus, the legal basis for re-domiciliation is found in Section 354 of the Companies Law, Cap. 113, which permits foreign companies to apply for registration as a continuation of their existing legal entity.

The re-domiciled company retains its original date of incorporation, its existing legal personality, and all its contractual obligations, assets, liabilities, and rights. It effectively becomes a Cyprus company subject to Cyprus law, while its history and corporate identity are preserved.

Why Re-domicile to Cyprus?

Companies choose to re-domicile to Cyprus for a variety of strategic, tax, and operational reasons:

• Favourable tax regime: Cyprus offers a corporate tax rate of 15%, an extensive network of over 65 double-tax treaties, participation exemptions on dividends and capital gains, and the IP Box regime with an effective rate of 3% on qualifying IP income.
• EU membership: A Cyprus-registered company has full access to the EU single market and benefits from EU directives, including the Parent-Subsidiary Directive and the Interest and Royalties Directive.
• Common law system: The Cyprus legal system is based on English common law, providing a transparent and predictable legal environment for international business.
• Business-friendly environment: Streamlined regulatory processes, a well-educated workforce, and a strategic geographic location make Cyprus an attractive operational base.
• Continuity: Re-domiciliation preserves the company’s legal identity, contracts, and operational history, avoiding the disruption and costs associated with liquidation and re-incorporation.
• Political and economic stability: Cyprus benefits from the stability of EU membership and the protections of the European legal framework.

Legal Requirements

For a foreign company to re-domicile to Cyprus, the following conditions must be met:

Requirements in the Country of Origin

• The laws of the company’s current jurisdiction must permit the transfer of domicile (outbound re-domiciliation).
• The company must obtain any necessary approvals or consents from its shareholders, regulatory authorities, and creditors in the jurisdiction of origin.
• The company must be in good standing and not subject to any pending liquidation, strike-off, or insolvency proceedings.

Requirements in Cyprus

• The company must apply to the Cyprus Registrar of Companies for registration under Section 354 of the Companies Law, Cap. 113.
• The company must adopt a Memorandum and Articles of Association that comply with Cyprus law.
• The company must appoint a registered office in Cyprus and at least one director and a company secretary.
• The Registrar must be satisfied that the re-domiciliation is lawful and that it does not prejudice creditors or other stakeholders.

The Re-domiciliation Process

1. Feasibility assessment: Verify that the laws of the company’s current jurisdiction permit outbound re-domiciliation and that Cyprus law permits inbound re-domiciliation of companies from that jurisdiction.
2. Shareholder resolution: Obtain a special resolution of the company’s shareholders authorising the transfer of domicile to Cyprus.
3. Prepare Cyprus constitutional documents: Draft a Memorandum and Articles of Association compliant with Cyprus Companies Law, Cap. 113.
4. Application to the Cyprus Registrar: Submit the application for continuation together with:
   • Certified copy of the certificate of incorporation from the country of origin.
   • Certificate of Good Standing from the country of origin.
   • Certified copy of the company’s current constitutional documents.
   • Shareholders’ resolution authorising the re-domiciliation.
   • New Memorandum and Articles of Association for the Cyprus entity.
   • Form HE1 (statutory declaration of compliance) and Form HE2 (details of officers and registered office).
   • Details of all directors, shareholders, and ultimate beneficial owners with KYC documentation.
5. Registrar’s review: The Registrar examines the application and may request additional documents or information.
6. Certificate of Continuation: Upon approval, the Registrar issues a Certificate of Continuation, confirming that the company is now registered as a Cyprus company.
7. De-registration in the country of origin: Obtain confirmation of de-registration or removal from the register in the original jurisdiction.

Effect of Re-domiciliation

Upon registration in Cyprus, the re-domiciled company:

• Becomes a company governed by Cyprus Companies Law, Cap. 113.
• Retains its original incorporation date and continuous legal existence.
• Maintains all existing contracts, assets, liabilities, rights, and obligations.
• Is subject to all rights and obligations of a Cyprus-incorporated company, including tax registration, annual filing, and audit requirements.
• May apply for a Cyprus tax identification number and establish Cyprus tax residency.

Timeline

The re-domiciliation process typically takes 2 to 4 months from start to completion, depending on:

• The speed of obtaining the required approvals and documents from the jurisdiction of origin.
• The completeness of the application submitted to the Cyprus Registrar.
• The complexity of the company’s corporate structure and the volume of due diligence required.

Re-domiciliation Out of Cyprus

It is worth noting that Section 354K of the Companies Law also permits Cyprus-registered companies to re-domicile out of Cyprus to another jurisdiction that allows inbound continuation. This bidirectional flexibility enhances the attractiveness of Cyprus as a jurisdiction that respects the evolving needs of international businesses.