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Starting and Managing a Business in Cyprus Liquidation of a company in Cyprus

Mykola Sirenko

Lawyer

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sirenko@prikhodko.com.ua

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Expert in corporate and international corporate law. Has extensive experience in supporting the acquisition of financial licenses in Ukraine, as well as business incorporation in the EU, the United Kingdom, Switzerland, the UAE, and key Asian jurisdictions.

Liquidation of a company in Cyprus

Cyprus law requires mandatory liquidation of a company if it ceases to operate.

Sometimes the company’s articles of association may provide for the possibility of cancellation even at the time of registration.

Then the statute must contain the conditions under which the company must be liquidated, the body that makes the decision on liquidation, and the procedure for repaying debts.

Methods of liquidation of the company

According to the laws of Cyprus, there are three ways to liquidate a company:

By court decision.
Voluntarily.
With the help of judicial supervision.

First of all, it should be noted that there are 2 types of voluntary liquidation

By decision of the participants, i.e. shareholders of the company.
At the initiative of creditors.

The first type of voluntary liquidation assumes that at the time of initiating the liquidation procedure, the company must be solvent and may or may not have assets.

By the time of liquidation, the company must close all bank accounts, which is confirmed by references, and also prepare liquidation reports.

It will also be useful: Liquidation of a company (firm) in Europe

Stages of the liquidation procedure

First. Selection of the date of liquidation: a liquidator is appointed, the director signs a declaration of solvency, affixes an affidavit on it and submits documents to the register of companies.
Second. Submission of two publications to the newspaper.
Third. Addition of documents that were not previously submitted to the register of companies.

Under standard conditions, after three months, the company must be liquidated. In confirmation of this fact, a certificate is issued by the register of companies.

The advantage of this type of liquidation is the time frame clearly limited by the law and the minimal involvement of the court.

He can only be involved if the appointed liquidator is incompetent and needs to be replaced.

The second type of voluntary liquidation involves a rather complicated and expensive procedure. In fact, it is liquidation through bankruptcy.

Strike-off procedure: administrative exclusion from the register.

Based on the resolution from the company’s shareholders, the board of directors makes a decision to exclude the company from the register. All necessary financial statements of the company must be submitted before the procedure begins.

The company must be removed from the tax register and must have a tax clearance certificate. A letter is sent to the registrar of the company on behalf of the director of the company indicating a request to exclude the company from the register and confirming that the company has no outstanding liabilities.

After submitting such a letter, the registrar conducts an inspection of the company and publishes an official notice in the official newspaper of Cyprus about the removal of the company from the register.

The peculiarity of this method is that it is not a full-fledged method of liquidation. After 20 years from the moment the company was removed from the register, it can be restored at the initiative of the tax authority or any interested third party.

The company can be excluded at the initiative of the registrar himself if he becomes aware that the company is not carrying out economic activity or because of the company’s debts; or at the request of the company itself.

This method is suitable for companies that have neither assets nor liabilities to third parties and the state. Although this method is quite quick and easy, it also requires the submission of all financial statements.

If you have decided to liquidate a company in Cyprus, the specialists of the law firm “Prikhodko and Partners” can help you choose the method of liquidation just for you, in order to start and go through the whole process as quickly as possible.

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1 question

Have you chosen the method of liquidation of the company?

Yes

2 question

Have you submitted your financial statements?

Yes

3 question

Do you need advice on the procedure for liquidating a Cyprus company?

Yes

The corporate tax rate in Cyprus was raised to 15%. Doesn't this create problems for Ukrainian business?

On the contrary, it is a strategic advantage. The Tax Code of Ukraine provides for exemption from CFC taxation if the effective rate in the foreign jurisdiction is at least 13%. The 15% rate in Cyprus automatically allows legally exempting the profit of a Cyprus company from additional taxation in Ukraine.

How does the updated IP Box regime for IT companies work?

The Cyprus IP Box applies the Modified Nexus Approach, where the benefit depends on actual development costs. If a company develops software locally, 80% of qualifying profit is exempt from taxes. The 15% corporate tax applies only to the remaining 20% of profit, giving an effective tax rate of 3%.

Is it necessary to pay tax on undistributed profit and the annual company levy?

No. The Deemed Dividend Distribution (DDD) rule was completely abolished for profits generated from January 1, 2026. The annual fixed Annual Levy of €350 was also abolished starting in 2024.

Can I get Cyprus tax residency as a business founder?

Yes, the “60-day rule” applies to business founders. It allows you to obtain tax resident status by staying in Cyprus for only 60 days a year if you own or rent housing, have business ties to the country, and are not a tax resident of another state.

What is Notional Interest Deduction (NID) and who is it suitable for?

NID is a powerful incentive for capital-intensive businesses (e.g., industrial or investment holdings). It allows deducting notional interest on the amount of new equity capital introduced from the taxable base. The deduction amount equals the yield of 10-year government bonds of the country of investment plus 5%. This tool can reduce taxable profit by up to 80%.

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