Tests of doing business and penalties for unregistered entities considered as doing business in Cyprus

1) What is considered doing business without registration?

In Cyprus, you are considered to be doing business without registration if you carry out ongoing commercial activity—such as providing services, selling goods, or maintaining a physical or operational presence—without registering the required entity, branch, or business/trade name. This includes foreign companies operating in Cyprus without registering a local branch.

2) What are the key indicators of doing business?

Key indicators of doing business in Cyprus include having a continuous commercial presence, such as regularly providing services or selling goods. Other indicators are maintaining an office or staff in Cyprus, having clients on an ongoing basis, or carrying out business activities through a fixed place of operations. Foreign companies showing these signs may be viewed as operating a branch that must be registered.

3) What are the legal consequences of doing business without registration?

Carrying on business without the required registration can still trigger legal issues. If a foreign company operates in Cyprus without registering a branch, it breaches statutory obligations and risks enforceability problems and direct liability. Individuals or businesses trading without proper tax, VAT, or social insurance registration may face penalties from the relevant authorities. Overall, the risk arises from non-compliance with the specific registrations legally required for the type of activity carried out.

4) What is the penalty amount in 2025?

Varies on facts.

5) Is criminal liability possible?

Simply operating without forming an entity is not itself a criminal offence, but breaching specific legal duties connected to business activity can lead to criminal charges.

6) Who identifies unregistered business activity?

Unregistered business activity in Cyprus is typically identified by the Tax Department, Social Insurance Services when they detect activity that should have been registered. It may also be flagged through audits, complaints, or information from other government bodies.

7) What should be done if the activity is already ongoing without registration?

If activity is already ongoing without registration, the business should register as soon as possible in the appropriate form (company, branch, or trade name) and complete any required tax, VAT, or social insurance registrations. It is also advisable to regularize past obligations, seek professional advice, and disclose activity proactively to relevant authorities to minimise potential penalties.

8) What obligations arise after registering a business?

After registering a business in Cyprus, key obligations include meeting tax requirements (such as obtaining a Tax Identification Code and registering for VAT if applicable), keeping proper accounting records, and submitting annual tax returns. Companies must also file annual returns and financial statements with the Registrar of Companies and maintain statutory registers. All businesses must pay social insurance for employees and comply with labour, health and safety, and sector-specific regulations where relevant.Also file the UBO/s at the UBO Registry and confirm it annually.

9) From what income level must an individual register as an entrepreneur?

In Cyprus, there is no minimum income threshold that triggers “entrepreneur registration.” An individual must register as self-employed as soon as they start carrying out business activity, regardless of income level. The €19,500 threshold relates only to when income tax becomes payable.

Author: Cleo Loizou