Liquidation vs Strike Off of Cyprus Companies - Short Overview

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 take 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 proceedings 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 as 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 to a law suit, 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 is 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 who needs to attend several court proceedings on top of the work of the auditors and this is really the extra cost (+ some disbursements) of the two approaches.

CYAUSE Audit Services Ltd

CYAUSE Audit Services Ltd deals with the incorporation of Cyprus and International companies for more almost a decade now and the closing of the Cyprus Companies has been, unfortunately, a task we have are dealing with frequently. Feel free to enquire with us any specifics with regards this topic at your convenience at [email protected].

Few words about us

CYAUSE Tax department has clients from every corner of the world and specialises in the provisions of Tax Planning Solutions for Companies and Individuals. Our membership with ACCACE and 3E International ensures that we are wired and closely connecting in all jurisdictions getting the latest corporate news and tax developments ensuring our tax planning is accurate and validated before finalisation.

Explanatory videos on how to Close or Set Up a Cyprus company can be obtained from our YouTube Channel called Cyprus Accountants ACADEMY which aims to provide valuable information for persons in need to relocate to Cyprus as well to educate our clients and businesses on how Cyprus taxes are been calculated and treated.

CYAUSE Audit Services is an Audit & Assurance firm with offices in Nicosia and Limassol. During 2015 we have been awarded by local regulator I.C.P.A.C and the A.C.C.A (local and international association of Chartered Certified Accountants) for the Quality of our Audit Services and our Office Procedures.

If you would like us to assist you applying for funding or any other related matter contact us at [email protected] or call us at +357 22 336 321.

Information about CYAUSE Audit Services and the Cyprus Corporate & Tax System can be obtained from our Website or our YouTube channel.

Thank you,

Kyriakos Tramountanellis