Do you know what are the key obligations and responsibilities of companies, partnerships, or freelancers with income in the Republic of Cyprus in terms of bookkeeping compliance?
This article addresses the main requirements or obligations that your company needs to follow every year when it comes to accounting and book-keeping services in Cyprus.
When a company receives income through any activity, it is required to comply with the following:
1. Filing of an Annual Return To begin with, any company operating in Cyprus is required to hold an Annual General Meeting and file an annual return with the Registrar of Companies. This document summarises any changes that occurred throughout the year with the shareholders, the director, or the company's secretary.
The annual return needs to be accompanied by audited financial statements.
2. The Conduct of Audited Accounts
All Cyprus-based companies are required to audit their financial statements in accordance with International Financial Reporting Standards. The audit needs to be conducted by a certified accountant.
In the case of a freelancer, where his/her annual turnover does not reach €70.000, he/she is not required to have audited accounts. However, they are still required to maintain their accounting books and submit tax returns.
Accounting books must be kept for a minimum of 6 years.
3. Filing of VAT Reports
All companies exceeding the turnover threshold of €15.600 are required to register with the State VAT Department and have a VAT number. The same goes for freelancers if they meet the mentioned threshold (exemptions apply). Those who have already registered must then file their quarterly VAT returns, even if no transactions occurred during these months. Also, those who have transactions with other EU countries must submit monthly VIES forms.
It is vital to remember that the company's quarterly filings do not correspond to the calendar year divisions - they are determined by the tax office.
4. Filing of Tax Returns
All companies in Cyprus need to have audited financial statements and prepare and file tax returns based on those audited FS.
All yearly income tax returns must be completed by the end of March of the next tax year, and temporary tax returns must be filed by 31 July of the current tax year and be paid in two equal instalments on 31 July and 31 December. Any outstanding balances must be paid by August 1 of the next tax year.
Find the 2022 tax calendar deadlines here.
5. Pay the Special Government Levy Every year, companies in Cyprus are required to pay a special government “fee” of €350.00 by the end of June.
If a company fails to pay by the deadline but manages to do so within the following 60 days, there is a 10% penalty; if it pays within 5 months, the penalty is 30%.
If it exceeds even this time limit, the company will be removed from the register by the Registrar of Companies.
If the company seeks to be reinstated, it must pay €500 within two years after the company's name is removed from the register.
After two years, the charge for restoring the corporation climbs to €750.
If a company goes into liquidation before the end of June, it is exempted from paying this fee. The principles listed above are some of the most critical guidelines that businesses must follow when it comes to bookkeeping compliance.
ELSAVCO team consists of professional and experienced accountants that can assist you with your accounting and bookkeeping or audit and assurance needs.
We provide a professional approach to standard bookkeeping methods, quarterly financial statements, cash flows and reconciliations and more, depending on your company’s needs.
As a result, we place a high importance on creating and maintaining solid, long-term relationships with each of our clients in order to provide the best and efficient services.
Feel free to get in touch with ELSAVCO, for any information you need in regards to advisory, accounting or bookkeeping services in Cyprus. We will be very happy to answer any of your queries.