There are two ways to close down a Cyprus Company. The liquidation process and the strike-off process.

Both ways require the same level of preparatory work as explained below with the exemption that once the liquidation process is completed the company can never be reinstated by the Cyprus Registrar of Companies which is not the case with the strike-off process where a Cyprus company can be reinstated via a court offer.

 

Procedure for Strike-off Process

a) Company must prepare audited financial statements up to the year preceding the strike off

b) Company must file its tax returns (IR4 for all companies and IR7 if it is an employer and any other filings requirements that may apply at the time)

c) Company must file its annual returns to the Cyprus Registrar of Companies

d) Once all of the above takes place, the service provider (usually the auditor) writes to the Income Tax Office requesting a tax clearance and to the Registrar of Companies requesting the company to be removed from the register of Cyprus companies.

 

Procedure for Liquidation

All of the above with the exemption of point d as the auditor will request a Tax Clearance for the Company and the Lawyer will make all necessary procedures and attend local court to request for the liquidation of the Company.

 

Documents / Actions Required

a) All accounting records, bank statements, invoices, agreements, etc so that the accountants and auditors will bring the company up to date with accounting, audit, and filing requirements.

b) Register the company with Taxisnet and the Registrar of Companies to make all necessary filings that apply at the time.

 

So what's best for me, the shareholder/director

It is really simple. It is a matter of exposure and closure cost!

 

The Strike-Off Option

If your company was small and never had any issues with third-party creditors, the VAT, or the Income Tax Office and has never entered into any agreements that could at some point backfire and result in a lawsuit, then the Strike Off Option is more suitable as it will be cheaper and easier.

 

The Liquidation Option

On the other hand, if your company was a fully-fledged company with several agreements and sufficient vat exposure as well as substantial 3rd party creditors then the liquidation option will offer you a piece of mind as once the company has been liquidated everything surrounding it ceases to exist.

 

Fee Difference between the Two

The legal fees

The liquidation option is more expensive than the strike-off option but Faster, as a lawyer is also involved and needs to attend several court proceedings on top of the work of the auditors and this is the extra cost (+ some disbursements) of the two approaches.

Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as legal or tax advice. Please consult with a professional tax advisor for advice on your specific situation.

CYAUSE Audit Services Ltd is a dedicated firm committed to providing SMEs and individuals with unwavering levels of tax and accounting services. Our knowledgeable staff work tirelessly to ensure clients' needs are met at the highest level. We provide a full spectrum of services with an emphasis on Company Incorporation offshore & onshore, Audit & Assurance services, Accounting and International Tax Planning to our local and international clientele. 

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