Cyprus is one of the most attractive jurisdictions for business thanks to its favorable tax system and transparent financial infrastructure. Proper accounting, auditing, and tax planning are essential for running a successful company. In 2024, the requirements remain strict yet fair, supporting investor confidence and business growth.
1. Accounting in Cyprus
All companies in Cyprus are required to maintain accounting records in compliance with International Financial Reporting Standards (IFRS).
Key requirements:
- Annual reporting: financial statements must include a balance sheet, profit & loss statement, and notes.
- Ongoing reporting: companies must file VAT returns, tax returns, and other statutory reports.
- Record-keeping: accounting records must be retained for at least 6 years.
2. Audit of Companies in Cyprus
Audit is mandatory for almost all Cyprus companies except micro-enterprises with turnover below set thresholds.
Main rules:
- Compulsory audit: all companies exceeding €70,000 turnover must undergo annual audits.
- Accredited auditors: audits must be performed by licensed firms recognized by ICPAC (Institute of Certified Public Accountants of Cyprus).
- Audit report: issued and filed with financial statements to tax authorities.
3. Taxation in Cyprus
Cyprus is known for its low tax rates and investor-friendly system.
- Corporate tax: 12.5% – one of the lowest in Europe.
- VAT: standard rate 19% (reduced rates 5% and 9% available). VAT registration required if turnover exceeds €15,600.
- Dividend tax: dividends paid to non-residents are not taxed.
- Capital Gains Tax (CGT): 20%, usually applied to property-related transactions.
4. Tax Registration Process
All companies must register with the Cyprus Tax Department and obtain a Tax Identification Number (TIN).
Required documents include:
- Articles of Association
- Incorporation certificate
- Shareholder and director IDs/passports
- Registration certificate
5. Documents for Accounting & Audit
- Financial statements (balance sheet, P&L, cash flow)
- Invoices, receipts, contracts, and payment records
- Agreements with partners or contractors
- Bank statements and reconciliations
6. Tax Benefits & Double Taxation Treaties
Cyprus has double taxation treaties with 60+ countries, reducing international tax burdens. Companies can benefit from exemptions on dividends and certain cross-border transactions.
7. Penalties for Non-Compliance
- Late filing penalties: hundreds of euros depending on company size.
- False or incomplete records: may trigger audits, sanctions, and fines.
8. Tips for Successful Accounting & Tax Compliance in Cyprus
- Work with professionals: hire certified accountants and auditors.
- Track deadlines: avoid penalties by timely filing.
- Use tax benefits: apply double taxation treaties and exemptions.
- Keep accurate records: maintain invoices, contracts, and receipts for smooth audits.
FAQ – Audit, Accounting & Taxation in Cyprus
Yes, except for micro-enterprises with turnover below €70,000. Most companies must undergo annual audits.
All companies must follow IFRS (International Financial Reporting Standards).
The corporate tax rate is 12.5%, making Cyprus one of the most tax-efficient jurisdictions in the EU.
The standard VAT rate is 19%, with reduced rates of 5% and 9% for specific goods and services.
Dividends paid to non-resident shareholders are generally not subject to tax in Cyprus.
CGT is 20%, usually applied to property-related transactions.
At least 6 years after the reporting period.
- Financial statements
- Invoices and contracts
- Bank statements
- Supporting documents for income and expenses
Yes. Cyprus has agreements with more than 60 countries, reducing international tax burdens and preventing double taxation.
Because Investia provides full-service accounting, tax compliance, and audit support, ensuring your business stays compliant while optimizing tax obligations.
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Conclusion
Audit, accounting, and taxation in Cyprus are strictly regulated under IFRS and EU standards, ensuring transparency and reliability. Proper organization, timely reporting, and professional support are the keys to business success on the island.