Q: How do I Become Self-Employed in Cyprus?
Learn about what you need to work as a self-employed freelancer in Cyprus.
The island nation of Cyprus is more than a tropical tourist destination. Thanks to its low tax rates, Cyprus has become a popular home base for many businesses. Here, we break down everything you’ll need to do to get started as a self-employed worker in Cyprus. The information here should not be used in place of legal counsel.
What is a self-employed person in Cyprus?
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A self-employed person in Cyprus is someone who performs work and has no employees. As a self-employed worker, you will be responsible for paying Social Insurance Contributions, Personal Income Tax, and VAT.
How does a self-employed person differ from an employer in Cyprus?
It’s important to note that according to employment law in Cyprus, if you take on an employee, you are now defined as an employer and are no longer self-employed.
What is a Limited Liability Company in Cyprus?
One of the most popular forms of small business in Cyprus, a Limited Limited Company (LTD), can help protect one’s personal assets from any liability the company incurs. The downside is that it takes more time and paperwork to establish.
If you choose to form an LTD, then you’ll need to take the following steps:
- Perform a Company Registrar search to ensure the name you’ve chosen for your business is available. If it is, then you’ll apply online to reserve that name.
- Complete form HE 2 to establish a registered address where all correspondence can be sent.
When you’ve completed these two steps, you’ll create a profile in ARIADNI, the government’s online portal for business registration, where you’ll register the business name and address with the Department of Registrar of Companies.
You’ll also need to submit the following corporate documents here:
- Form HE 1
- Founding document
- Witness Signature for Electronic Registration
- A €165 registration fee
- Memorandum of Association (these specify the company’s objectives and legal name)
- Article of Association (these specify the company’s internal regulations)
You can find a guideline to the Memorandum and Article of Associations here.
Once you acquire a Certificate of Incorporation, you’ll be required to file with the VAT Office. You may also have to file for a business license if you intend to operate a hotel, restaurant, private school, retail shop, financial institution, restaurant, import/export, or finance.
How do I become a self-employed person in Cyprus?
Becoming a self-employed person in Cyprus is, unfortunately, not a process that can be accomplished online. To become self-employed, you will need to go to the Department of Labor to register a business name. You’ll also need to register for Social Insurance, and you’ll be assigned a Social Insurance Number. Finally, you will use your company name and Social Insurance Number to register the business.
While English is a popular second language in Cyprus, you should know ahead of time that all the forms at the Department of Labor will be in Greek.
What kind of taxes will I need to pay while self-employed in Cyprus?
Cyprus collects 15.6% of your earnings for social insurance. Additionally, you’ll be required to pay personal income tax. If you have a sales income over €15,600 in any twelve-month period, you will also need to register with the VAT Office and pay a 19% VAT rate. More information on VAT can be found on the BusinessinCyprus website.
Receiving Payments in Cyprus via Liquid
Liquid supports payments to Cyprus and 175+ countries worldwide in USD as well as select foreign currencies, including EUR. Payments arrive in 2-5 business days via wire transfer, whether the invoice was sent to an existing Client using Liquid or a Client who is new to Liquid.
Invoices in Liquid are in USD by default but can also be sent in Euros and other select foreign currencies, allowing Vendors to receive payment in their local currencies instead of USD. In addition, Work orders / Project Proposals can also be agreed to in HRK, EUR, and other select foreign currencies in Liquid.
Liquid charges Clients who initiate payments $3 per US invoice paid and $8 per international invoice paid.
Liquid never charges Vendors to receive payments, even when Vendors are requesting payments from Clients who are not current users of Liquid.
Now you’re ready to start making money in Cyprus!
As a self-employed person in Cyprus, you’re ready to start working for the best boss you can have – yourself! Now you can dive in and get to work. Don’t forget to make timely payments to social insurance, and if you hire employees, remember to change your registration to that of an employer.
Ready to invoice your United States-based clients? Try Liquid today.
Updated: June 17, 2021
Quick note: This is not to be taken as tax advice or legal advice or payroll advice. Since tax rules and laws change over time and can vary by location and industry, consult a CPA / tax advisor and/or attorney for specific guidance.