Financial Management and Accounting

The obligations of Cyprus companies concerning financial management and accounting are essential to guarantee transparency, integrity, and efficiency in business operations. Ensuring compliance with relevant laws and regulations enhances corporate governance, facilitates financial planning, and attracts both local and foreign investments.

Legal Framework:

The Companies Law, Cap 113.

The legal framework governing Cyprus companies’ financial management and accounting obligations is anchored on the Companies Law, Cap 113. This legislation mandates companies to maintain proper accounting records, ensuring they reflect a true and fair view of the company's financial position.

International Financial Reporting Standards (IFRS).

Additionally, Cyprus has adopted the International Financial Reporting Standards (IFRS), making it mandatory for companies to prepare their financial statements following these global standards. This alignment guarantees uniformity, accuracy, and transparency in financial reporting.

Accounting Records:

Maintenance of Proper Books of Account.

Cyprus companies are obliged to maintain proper books of account. These records provide insights into the company's transactions and are crucial for the preparation of financial statements. They should be kept at the registered office of the company or at another suitable location.

Language and Currency.

The accounting records must be maintained in a language and currency that ensures clarity and preciseness. While the Euro is commonly used, other currencies may also be employed, provided the translation and conversion are accurate.

Financial Statements:

Preparation and Presentation:

Cyprus companies must prepare their financial statements annually. These statements, including the balance sheet, income statement, and notes to the accounts, should provide a clear, comprehensive, and accurate picture of the company's financial position and performance.

Audit Requirements:

Companies are required to have their financial statements audited by licensed auditors in Cyprus. The audited financial statements must be filed with the Registrar of Companies, ensuring public transparency and accountability.

Taxation:

Corporate Tax Compliance

Compliance with taxation laws is a crucial financial management obligation. Cyprus companies are required to register for tax and ensure timely submission of tax returns. The corporate tax rate in Cyprus is 12.5%, and companies must adhere to this while making tax submissions.

Value Added Tax (VAT):

Companies involved in the supply of goods and services must register for VAT and ensure timely and accurate VAT filings. The standard VAT rate in Cyprus is 19%, though reduced rates and exemptions may apply to certain goods and services.

Financial Management:

Budgeting and Financial Planning.

Effective financial management necessitates robust budgeting and financial planning. Companies should undertake prudent financial planning to ensure liquidity, profitability, and long-term sustainability.

Financial Risk Management:

Companies must implement comprehensive financial risk management strategies to mitigate various financial risks, including currency, interest rate, and credit risks.

Reporting to Regulatory Authorities:

Regular Reporting:

Cyprus companies are obligated to submit regular reports to various regulatory authorities, including the Registrar of Companies and the Tax Department. Timely and accurate reporting enhances regulatory compliance and corporate governance.

The obligations of Cyprus companies for financial management and accounting encompass a range of aspects, including maintaining proper accounting records, preparing and presenting financial statements, ensuring audit compliance, adhering to tax regulations, and implementing effective financial management practices. Adherence to these obligations is paramount in promoting corporate transparency, accountability, and sustainability.

Through the assistance of our qualified colleagues, we can provide to our clients the following services:

• Handling the issue of purchase orders, sales invoices, credit notes and debtor statements;
• Active coordination between various involved parties and professionals, such as (tax) lawyers, notaries, banks and relevant governmental departments;
• Registration of Companies and employees (if required) with the Cyprus Social Insurance Department
• Preparation of payrolls of employees and executives;
• Preparation of bank reconciliations;
• Accounting, including management reporting services, or any other report required from the client.