Services · Audit & accounts for foreign companies

Cyprus company audit and accounts

What to file, by when, and what the 2026 reform changed. Open pricing, with the final quote fixed in writing before work starts.

The short version

Every Cyprus company runs the same annual loop: prepare financial statements under IFRS as adopted by the EU, have them examined by a licensed Cypriot auditor, file the HE32 annual return with those statements at the Registrar of Companies, and file the TD4 corporate income tax return with the Tax Department. The loop does not depend on whether the company traded. A dormant company goes through the same four steps, just with zeros in the numbers.

A lot changed in 2026: corporate income tax rose to 15%, the TD4 deadline moved, the turnover threshold for a lighter review engagement instead of a full audit rose to €300,000, and the Tax Commissioner gained new powers to suspend the operations of persistent defaulters. Below is how the annual cycle actually works now, which deadlines and penalties are real, and when a Cyprus company stops paying for itself.

We prepare both nil and active-company accounts with audit, register the company for VAT and OSS, file VAT, VIES and INTRASTAT returns, and obtain an EORI number. Standalone tasks include a tax residence certificate, an advance tax ruling, apostille of accounts and striking the company off the register if it is no longer needed. Audits are performed by licensed Cypriot auditors; we prepare the documents and run the process.

The annual cycle: what goes where, and when

The obligations sit with two different authorities and one does not substitute for the other. The Department of Registrar of Companies and Intellectual Property handles the corporate side; the Tax Department handles the tax side. Each has its own deadlines and its own sanctions, so filing one and forgetting the other is not an option.

One item worth correcting: the €350 annual levy payable to the Registrar was abolished with effect from 2024. Plenty of Cyprus guides still budget for it, which is simply out of date. Arrears for the years 2011 to 2023 do remain collectible, with surcharges.

Audit or review engagement: who qualifies for which

Until 2023 the audit was unavoidable. The Companies Law (Cap. 113) then added an option: a small company may replace the full statutory audit with a review engagement. There is no outright audit exemption of the kind found in the UK or Estonia - a licensed auditor looks at the accounts either way. What changes is the depth of the procedures and the wording of the report.

For financial years beginning on or after 6 February 2026 the turnover threshold rose from €200,000 to €300,000. The total assets threshold stayed at €500,000. Both criteria must be met for two consecutive financial years, otherwise the company falls back into full audit.

The practical difference for an owner is cost and turnaround: a review is cheaper and faster. The difference in how it is received matters too. An ISRE 2400 report gives limited assurance, and some banks, investors and foreign tax authorities treat it more cautiously than a full audit opinion. If the company plans to raise finance, open accounts with conservative banks or go through a sale process, the saving on a review can cost more than it saves.

Auditor requirements: not every accountant qualifies

Only a statutory auditor or audit firm holding a Cyprus licence and registered with ICPAC (the Institute of Certified Public Accountants of Cyprus) may sign an audit opinion or a review report. ICPAC is both the professional body and the oversight body: it maintains the register of auditors and runs quality assurance reviews of audit firms, including the smallest ones.

The practical consequence is simple. The bookkeeper who maintains the records and prepares the accounts, and the auditor who signs them off, are two separate providers. The same person cannot keep the books and audit them - that is a direct breach of independence. If you are offered a package where one person does everything and no licence is mentioned, ask for the auditor registration number before you pay, not after.

There is a second reason to check. A report signed by an unlicensed person rarely causes trouble immediately: the filing may go through, and the issue surfaces later, when a bank reviews the file, a foreign tax authority asks for documents, or a buyer runs due diligence. Redoing a closed year after the fact costs far more than checking the provider once.

HE32 and filing accounts with the Registrar

The HE32 annual return is the company corporate profile: directors, secretary, registered office, shareholders, and the structure and amount of share capital. The financial statements for the previous year, with the auditor report, are attached to it. Both documents land in the public part of the register, which means the accounts of a Cyprus company are public.

The deadline runs not from the calendar year but from the company annual return date. For a new company, the first such date falls 18 months after incorporation; after that it recurs exactly one year from the previous one. The HE32 itself must be filed within 28 days of that date. Accounts are normally not attached to the very first annual return, since none have yet been laid before a general meeting.

Late filing costs €50 on the first day of default plus €1 for each further day, capped at €150 in total, on top of the ordinary filing fee and a late filing charge of around €20 each. The rule applies to annual returns with reference dates from 2021 onwards, and the Registrar publishes a penalty calculator on its website.

The amount looks trivial, and that is the trap. The real sanction here is not money but strike-off. The Registrar issues notices and steadily strikes off companies that go years without filing HE32. A struck-off company ceases to exist: bank accounts are frozen, access to assets is lost, and restoration runs through the courts, costs many times the accumulated penalties and takes months. Directors also carry personal liability for failing to file.

TD4, provisional tax and self-assessment

TD4 is the corporate income tax return. It is filed electronically and is built on audited or reviewed accounts: without a signed report it cannot be completed properly. That is why audit timing and filing timing have to be planned together rather than separately.

The deadlines have been moved several times by ministerial decree in recent years, which is why so much published material on them is out of date. As at September 2026 the picture is as follows.

Alongside the return there is provisional tax. The company estimates its own current-year profit and pays in two equal instalments, by 31 July and by 31 December. The estimate can be revised at any point up to 31 December. If the declared profit turns out to be less than 75% of the actual figure, a 10% additional tax is charged on the shortfall. This is the single most expensive routine mistake at growing companies: the year closes ahead of plan, the December instalment is never revised, and the surcharge follows.

The final self-assessment payment used to be due by 1 August of the second year following the tax year. From tax year 2026 it is merged with the filing date, so the same 31 January applies.

Penalties for delay: an administrative fine for a late return (historically €100, increased by the 2026 reform, with published figures pointing to €150 - we confirm the exact amount at filing time), a 5% surcharge on unpaid tax and a further 5% if it is still unpaid after two months, plus interest at a rate set annually by the Ministry of Finance. The 2026 rate was reduced compared with 2025; the exact figure is confirmed at the payment date.

What the 2026 reform changed

Parliament passed the tax reform package on 22 December 2025, the laws were published on 31 December, and most provisions took effect on 1 January 2026. Six points matter for a Cyprus company owner.

• Corporate income tax at 15% instead of 12.5%. The rate was aligned with the OECD minimum. It changes provisional tax arithmetic from the 2026 year onwards.
• Losses carry forward for 7 years instead of 5. A meaningful relief for companies with a loss-making start.
• Special defence contribution on dividends drops to 5% from 17% for profits earned from 1 January 2026. Profits earned up to 31 December 2025 follow a transitional rule on distribution, so two payments made on the same day can attract different rates.
• Deemed dividend distribution is abolished for profits from 2026. Undistributed profits of 2024 and 2025 stay within the old regime until 31 December 2027. SDC on rental income is abolished.
• Filing and payment dates moved to 31 January of the second year following the tax year, replacing 31 March for the return and 1 August for the final payment.
• Transfer pricing thresholds went up. From 2026 a Local File is required where controlled transactions exceed €10 million for financing, €5 million for goods and €2.5 million for services, royalties, intellectual property and other categories. The Summary Information Table remains mandatory for anyone with controlled transactions at all.

One related change is often misread: the turnover threshold in the tax legislation above which audited accounts must be prepared rose from €70,000 to €120,000. That mainly concerns self-employed individuals. It does not release a company from its Companies Law obligation - an audit or review is required regardless of turnover.

One more change worth keeping in mind: the Tax Commissioner can now suspend business operations as a last resort after a series of notices, where two income tax returns or three VAT returns are outstanding, or where tax debt exceeds €20,000. Non-compliance used to cost money; now it can cost trading.

Does a dormant company need an audit

Short answer: yes. Cyprus has no concept of a dormant company exempt from reporting. A company with no transactions still prepares IFRS financial statements, obtains an auditor report, files HE32 with those statements at the Registrar and files TD4 with the Tax Department. Zeros do not remove the procedure; they only make its content simpler.

The one relief is the same review engagement. A dormant company has nil turnover, and if total assets are also below €500,000 the criteria are met. But the two consecutive years condition means the first period of a newly incorporated company is often closed with a full audit. Agree the treatment of the first year with your auditor before the period ends, not afterwards.

It helps to do the arithmetic honestly. The annual cost of keeping a dormant Cyprus company consists of the reviewed or audited accounts, the registered office, the secretary and, where used, nominee services. For a structure that earns nothing, that is a steady loss of several thousand euro a year. If the company is being kept for a future project that has failed to start two years running, closing it and incorporating a new one later is cheaper: a strike-off costs less than two or three years of empty maintenance. We are equally happy to run the annual filings or to close the company - that call is yours, not ours.

What can go wrong, and who this is not for

A backlog of unfiled years. A common story: the company was set up for a deal, the deal fell through, and filings were forgotten for three or four years. Catching up does not cost one nil year multiplied by four. The auditor works through each period separately, bank statements for old years have to be reordered, and some source documents are gone. Budget and timing in that situation can only be assessed after looking at the actual state of the file; quoting a number in advance would not be honest.

The company has already been struck off. Once the Registrar has struck a company off, simply catching up on filings does not work - restoration goes through the courts. That is a separate budget and several months, during which the bank accounts stay inaccessible.

No supporting documents. An auditor signs a report on the basis of evidence. If there is movement on the accounts but no contracts or invoices behind it, they will either issue a modified opinion or decline the engagement. A modified opinion does get read by banks and counterparties, and it complicates everything downstream, from account renewal to selling the company.

Management sits outside Cyprus. A tax residence certificate is issued to companies whose management and control genuinely take place in Cyprus. If the director, the bank and every decision sit in another country, the certificate may be refused, or a foreign tax authority may decline to recognise it. An audit does not fix that problem; it documents it.

Who Cyprus does not suit. A project turning over a few tens of thousands of euro a year: the mandatory review of accounts, registered office and compliance support eat the saving on the tax rate. Anyone looking for a structure without public reporting: the financial statements go into the public register, and beneficial ownership data is collected separately. And anyone who budgeted on 12.5%: from 2026 the rate is 15%, the gap against several alternative jurisdictions has narrowed, and the decision deserves a fresh calculation rather than a copy from a three-year-old deck.

Fees

Prices are indicative and cover our work on a typical case. We confirm the exact quote in writing after a short call - you know the final number before we start. Government fees and bank tariffs are billed separately unless explicitly included.

Rates, thresholds and deadlines on this page reflect the position as at September 2026. Cyprus filing deadlines have been extended by decree several times, so we confirm the exact date for your tax year at filing time.

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