Cyprus is an attractive destination for entrepreneurs due to its competitive corporate tax rate of 12.5%, one of the EU's lowest, complemented by extensive double tax treaties with over 40 countries, ensuring no double taxation of income. Governed by the Cyprus Companies Law, Cap.113 of 1951, Cyprus provides a flexible legal framework for various types of business entities, including:

1. Public Companies: Require at least seven founders and can publicly trade shares.
2. Limited Private Companies: The most common and preferred type for small to medium enterprises.
3. Companies Limited by Guarantee: Ideal for non-profit organizations.
4. Foreign Company Branches: Allows international businesses to operate in Cyprus, requiring translation of foundational documents into Greek.
5. European Societies: EU-based companies that can relocate or register in Cyprus.

Company Registration Process:
Engaging a law firm is recommended for navigating the registration process, which involves:

• Proposing company names.
• Specifying the business line and share capital, with €1,700.00 suggested as a starting point.
• Submitting personal details of shareholders and directors, alongside notarized identification documents.

Key Roles:

• Directors: At least one required, preferably Cyprus residents for tax benefits. Nominee directors can be provided for governance and tax planning purposes.
• Secretary: Mandatory by law, with a preference for Cyprus residency to ensure effective management.
• Shareholders: A minimum of one, with nominee services available for privacy.

Registered Office: Must be located in Cyprus, often provided by law firms.
Registration Steps:

1. Apply for company name approval with the Companies Registrar, taking about 3-5 working days.
2. Submit the Memorandum and Articles of Association along with officer information.
3. Receive corporate certificates within 4-5 working days post-submission.

Post-Registration:

• Open bank accounts in Cyprus or abroad, facilitated by law firms with most banks requiring corporate documents and identification for account signatories.

Before finalizing any business sale in Cyprus, it's crucial for both buyers and sellers to seek advice from tax and legal experts. With Cyprus law rooted in the English legal system, those familiar with Anglo-Saxon laws will find the process of transferring or acquiring a UK-based business to Cyprus more straightforward.
Businesses in Cyprus are categorized into four main segments:

1. Listed Companies
2. Non-listed Medium to Large Companies
3. Small Enterprises (with a turnover of less than €10 million)
4. Micro Enterprises (turnover under €2 million, often referred to as Small Businesses)

This guide focuses on Small and Micro Enterprises, which represent more than 98% of the business landscape in Cyprus, highlighting the importance of professional guidance for navigating the complexities of business transactions in this vibrant economy.

The Micro to Small Enterprise sector in Cyprus is diverse, attracting buyers with varying motives and strategies. Understanding these motivations is crucial for tailoring the approach to buying or selling a business effectively.
Corporate Acquisitions:
Corporations, whether local or international, may pursue acquisitions to expand their market presence in Cyprus or the EU, aiming for growth in market share, geographic reach, product line expansion, or brand acquisition. Sellers might seek a strategic partnership or a complete exit. Intermediaries, including financial service firms and legal advisors, often play a key role in facilitating these transactions, focusing on confidentiality and strategic alignment.
Personal/Lifestyle Businesses:
Individuals often buy businesses for personal income and lifestyle fulfillment, valuing factors beyond financial gain, such as location, business size, and work-life balance. This makes finding the right match challenging, as the business must meet specific personal and lifestyle criteria.
Passive Investments:
Investors looking for passive income sources view businesses as part of their investment portfolio, prioritizing profitability and easy management. Such buyers favor businesses that can be efficiently audited and controlled, avoiding cash-intensive sectors.
Permanent Residence and Citizenship:
Cyprus's Golden Visa program offers permanent residency or citizenship to non-EU nationals through investment, including business purchases. This initiative, subject to changing regulations, adds an attractive layer of incentive for international investors considering business opportunities in Cyprus.

The business sale market in Cyprus remains nascent, with an estimated 60,000 Micro to Small Enterprises potentially translating to about 6,000 business transactions yearly. However, actual sales are believed to fall short of this, likely under 1,000 annually. Cultural tendencies play a significant role in this underdevelopment; many Cypriot business owners traditionally hold onto their enterprises until circumstances such as retirement, health issues, or financial challenges necessitate a sale. Additionally, there's a strong preference for starting new businesses rather than purchasing existing ones.
Contrastingly, the expatriate segment within Cyprus exhibits a more vibrant market dynamic, driven by greater mobility and a broader openness to business transactions. This group predominantly includes:

• EU nationals, particularly Britons, either seeking business opportunities as they move to Cyprus or looking to sell as they return home.
• Cypriots aiming to return from abroad, especially from the UK, South Africa, Australia, or the USA, and those considering leaving Cyprus once more.
• Individuals from other countries, like Russia, interested in acquiring Cypriot businesses for investment alongside residential purposes.

Despite its activity, the expatriate market represents a small fraction of the overall business landscape in Cyprus, accounting for less than 3% or roughly 2,000 enterprises, not including the numerous offshore companies registered in Cyprus but operating externally.

The relatively low volume of business transactions in Cyprus contrasts sharply with the bustling property market, leading to a scarcity of specialized intermediaries like business brokers. This gap means that businesses for sale often rely on traditional promotion methods rather than specialist services. Word-of-mouth, assistance from accountants, and classified ads in local newspapers (available in Greek, English, and Russian) are common channels for connecting buyers and sellers.
Furthermore, online classified websites and social media platforms like Bazaraki.com are gaining traction, for many Cypriots.
This situation underscores the complexity of buying or selling a business in Cyprus, where personal networks and traditional media play a pivotal role in market transactions. Despite the digital age, the reliance on conventional methods reflects a market still in evolution, with digital platforms slowly emerging as viable alternatives for business listings.
For those navigating this market, selecting experienced legal and financial advisors is crucial. Cyprus boasts a wealth of qualified professionals, yet the niche expertise required for successful business transfers is less common due to the market's limited size. This highlights the importance of choosing advisors with specific experience in business sales to ensure a smooth and efficient transaction process.

In Cyprus, the acquisition of businesses engaged in lawful commercial activities generally operates within a non-regulated framework, with specific exceptions primarily in the financial and real estate sectors. These exceptions include:
Financial Services Sector:

• Banks and Financial Institutions: Regulated by the Central Bank of Cyprus, covering banks, foreign bank subsidiaries, and branches.
• Investment and Fund Management: Alternative Investment Funds (AIFs), UCITS Funds, and their managers fall under the Cyprus Securities & Exchange Commission's regulation.
• Insurance Companies: Oversight is provided by the Ministry of Finance's Insurance Companies Control Service.

Real Estate Ownership by Non-EU Entities: Restrictions apply to non-EU citizens and companies regarding the ownership of real estate assets, contrasting with the open policy for EU nationals and EU-domiciled companies.
The regulatory landscape also presents challenges for non-Cypriot companies and individuals in professions requiring local licensure, such as real estate, construction, and various professional services. Regulatory and licensing requirements vary, significantly impacting both EU and non-EU citizens differently.
Prospective buyers, especially those looking into professional service sectors, are advised to consult with relevant authorities for guidance on licensing and regulatory compliance. This ensures a smooth transition and adherence to Cyprus's specific regulatory environment.