The first year of a Cyprus company: what to do, month by month

The first year of a Cyprus limited company follows a fixed order: register with the Tax Department, open the bank account, start the books, register for VAT when turnover says so, become an employer when you first pay someone, deal with provisional tax, then close the year with financial statements, an audit or review, the HE32 annual return and the corporate tax return. The dates come from two authorities running two different calendars, which is why the year feels confusing the first time through. We take new companies through this every week, so this guide lays out the whole twelve months in the order the obligations actually arrive, with a detailed article linked at each step. For the paperwork of the first days after the certificate, start with what to do after registering a Cyprus company.

What does the first year of a Cyprus company look like?

Like two calendars laid over each other. The Registrar of Companies measures its deadlines from your own dates: incorporation, the annual return's made-up date, the AGM. The Tax Department measures its own from the calendar: provisional tax in summer and at year-end, VAT returns by quarter, the corporate return per tax year. A company incorporated in March and one incorporated in October face the same obligations in a very different order, so read the sequence below against your own incorporation date rather than copying it as written.

1. 01

   Weeks one to four: register with the Tax Department

   first weeks

   The company needs its tax identification number before anything else can happen with the Tax Department: VAT registration, employer registration and every filing hang off it. Registration runs through the Tax For All portal with a CY Login account, and banks ask for the number during onboarding, so do this first.

2. 02

   Weeks two to eight: open the bank account and start the books

   first weeks

   Cyprus bank onboarding is document-heavy, so apply early and expect follow-up requests. The books open now regardless of the account: formation fees, the first subscriptions and anything you paid from your own pocket all belong in the ledger from day one.

3. 03

   As soon as you sell: the VAT decision and the first invoices

   when trading starts

   Registration is triggered by turnover: €15,600 of taxable supplies in a rolling twelve months, or the expectation of crossing that within the next 30 days. One signed contract can be enough. Every invoice must meet the Cyprus content rules from the first one you send.

4. 04

   When you hire: employer registration and monthly payroll

   first hire

   Paying anyone a salary, including yourself as director, makes the company an employer: registration with the Social Insurance Services, each hire notified through ERGANI before they start, then a monthly cycle of Social Insurance, GeSY and PAYE that does not pause.

5. 05

   Mid-year: the provisional tax estimate

   summer

   A company expecting taxable profit files an estimate by 31 July and pays half then, half on 31 December. From tax year 2026, a company incorporated after 30 June files by 31 December instead and pays in a single instalment.

6. 06

   Final quarter: close the books and revise the estimate

   Q4

   Reconcile every account, chase missing documents, book depreciation and accruals, and revise the provisional estimate before 31 December, the last day it can change.

7. 07

   After year-end: statements, audit or review, HE32, tax return

   months after

   The financial statements are drafted from the closed books, audited or reviewed, laid before the shareholders, filed with the HE32 annual return, and used to compute the TD4. Each step waits on the one before it.

Months one and two: tax registration, the bank account and the first entries

Start with the Tax Department. A new company registers in the tax register and receives its tax identification number, and that number is the key to everything that follows: VAT registration, employer registration, provisional tax and the corporate return all hang off it. Legal persons register through the Tax For All portal with a CY Login account, and because banks ask for the number during onboarding, this belongs in week one. Cyprus tax registration and the TIC walks through the process and the difference between the TIC, the VAT number and the employer number.

Run the bank application in parallel. Onboarding takes documents and patience: expect requests for the certificate of incorporation, the memorandum and articles, proof of address and a plain description of the business, with more questions when directors or shareholders sit abroad. The main full-service banks today are Bank of Cyprus, Eurobank, Alpha Bank Cyprus and Ancoria Bank. There is also no legal requirement to bank with a Cyprus bank, so an account with an EU bank or a licensed e-money institution works too. Opening a business bank account in Cyprus covers what to prepare. Until the account opens, record every company payment made from personal funds as a director's loan; the company owes it back to you, and it belongs in the books.

The third job is the one founders postpone: the books open in month one. Formation fees, software subscriptions, the laptop and the lawyer's invoice are company transactions even when you paid them personally. For income tax, deductibility follows a single test: the expense must be incurred wholly and exclusively in the production of income, and capital-nature start-up costs such as the incorporation fees themselves are not deductible. For VAT, a business that registers later can recover input VAT on services bought up to six months and goods up to three years before registration, but only with the invoices to prove it. Pre-establishment expenses in Cyprus works through both, and both reward keeping every document from before the company existed.

When do you register for VAT?

You register when turnover requires it. The threshold is €15,600 of taxable supplies over the preceding twelve months, and the same figure applies looking forward: expecting to cross it within the next 30 days obliges you to register from that point. The forward test is the one that catches new companies, because one signed contract can meet it before the first invoice has been paid. Below the threshold, voluntary registration is often worth it when your clients are VAT-registered businesses and your own costs carry Cyprus VAT. VAT registration in Cyprus sets out the test and the application through Tax For All.

Registration changes the paperwork immediately. Your invoices must carry the VAT number, the rate and the VAT amount, and the full content rules in Cyprus invoice requirements apply from invoice number one. A return falls due every quarter, submitted with payment by the 10th day of the second month after the quarter ends, so the quarter ending 30 June is filed and paid by 10 August. And if you sell services to VAT-registered clients elsewhere in the EU, a monthly VIES statement joins the calendar as well.

What happens when you make your first hire?

The company becomes an employer, and employer status comes with a monthly rhythm. Before the first payday you register with the Social Insurance Services, and each new hire is notified through ERGANI no later than one day before employment starts. From the first payslip you deduct the employee's Social Insurance, GeSY and PAYE, add the employer's own contributions, and pay the withheld amounts by the end of the month following the month of withholding, with the monthly TD7 filed in Tax For All first. Budget realistically: employer contributions add about 15.4% on top of the gross salary in the offer letter.

A director who draws a salary is an employee for all of this, so "we have no staff" stops being true the moment you pay yourself. Hiring your first employee in Cyprus covers the registration, the rates and what every payslip must show, and whether a salary is the right way to take money out at all is the subject of salary vs dividends in Cyprus.

What is due mid-year: the provisional tax estimate

Cyprus collects corporate tax during the year the profit is earned. A company that expects taxable profit files an estimate by 31 July of the tax year and pays in two equal instalments, on 31 July and 31 December, and the estimate can be revised any time up to the second date. Say you incorporate in March and expect €40,000 of taxable profit: corporate tax at 15% comes to €6,000, so €3,000 is due on 31 July and €3,000 on 31 December. The timing takes first-year founders by surprise because it lands before any financial statements exist and before anything has gone to the Registrar. From tax year 2026 there is relief for late starters: a company incorporated after 30 June files its estimate by 31 December and pays it in a single instalment.

Estimate with care rather than optimism. If the declared income turns out below 75% of the final figure, an additional 10% of the shortfall in tax is charged, and filing no estimate at all means the 10% applies to the whole final tax. A company genuinely expecting no profit has nothing to declare, but if profit shows up during the year, revise before 31 December. Provisional tax in Cyprus explains the mechanics and how the instalments are credited against the final bill.

What the year-end brings: statements, audit, HE32 and the tax return

The year-end is a chain of dependent steps, so the order matters more than the individual dates. First the books close: every bank account reconciled, missing documents chased, depreciation and accruals booked, the provisional estimate revised while it still can be. The Cyprus company year-end checklist is the working list for that quarter. Your first financial period does not have to be a calendar year, but the outer limit is fixed: the first financial statements must cover a period ending no later than 18 months after incorporation, so agree the first year-end date with your auditor early.

The statements need independent sign-off. Every Cyprus company prepares IFRS financial statements and submits them for audit by a statutory auditor, and being new or small is no exemption. The smallest private companies may replace the audit with a lighter review engagement once turnover stays within €300,000 and gross assets within €500,000 for two consecutive financial years, which a brand-new company cannot yet show. Cyprus audit requirements explains who qualifies and what the auditor looks at.

The signed statements then go two ways. To the Registrar they go with the HE32 annual return, and here the first year is kinder than founders expect: the first HE32 is made up 18 months after incorporation and filed within 28 days of that date, so a company incorporated in March 2026 files its first HE32 around October 2027. Missing it costs €50 plus €1 per day, capped at €150 per return, and persistent non-filing risks strike-off. The HE32 annual return guide covers the form itself. To the Tax Department goes the TD4 corporate return, computed from the same statements and due by 31 January of the second year after the tax year, with the self-assessed balance payable the same day. A company whose first tax year is 2026 files and pays by 31 January 2028; tax year 2025 returns keep the earlier 31 March 2027 deadline. Cyprus corporate tax covers what the return is charged on and how the provisional instalments come off the final bill.

Why founders underestimate the first-year admin

Each item looks small on its own, and most of them are. What decides whether they stay small is the state of the books, and Cyprus law does not leave that to taste: accounting records must be updated no later than the end of the fourth month after the month of the transaction. A company that books as it goes walks into year-end with a reconciliation and walks out with statements. A company that starts in February with twelve months of bank statements and a folder of missing receipts pays its accountant to rebuild the year before the auditor can begin, and usually learns that the provisional estimate was wrong after the date it could have been revised.

Where Sumly fits in the first year

Sumly is built to run this year from week one. Connect the bank through a read-only feed, email documents to the company's private Sumly inbox or drop them in, and the AI reads each one and books it double-entry, matched against the bank transactions as they arrive, so the reconciliation is always current. Invoices go out from Sumly with your logo, and the VAT and VIES returns assemble themselves from the live books. On Base you review what Sumly prepared and submit it through Tax For All yourself; on Premium a Sumly certified bookkeeper reviews the books, submits the returns, keeps the provisional tax dates and prepares the year-end file for your auditor, who can get a Sumly login of their own. The audit itself can be ordered in the dashboard through a partner auditor. And if we are also forming your company, the bookkeeping starts the day you order, before incorporation completes, so the first-year record begins complete.

Questions founders ask

Frequently asked

Does the first year run from incorporation or from 1 January?

Both calendars run at once. The Registrar of Companies counts from your own dates: the first financial statements are due within 18 months of incorporation, and the first HE32 annual return is made up just after that 18-month point and filed within 28 days. The Tax Department follows the calendar year: provisional tax on 31 July and 31 December, VAT returns by quarter, and the corporate return for the tax year. A company incorporated in September therefore meets a provisional tax date within four months of existing, and files its first annual return well into its second year.

When is a new Cyprus company's first tax return due?

For tax year 2026 and later, the TD4 corporate return is due by 31 January of the second year after the tax year, and the self-assessed tax is payable the same day. A company incorporated during 2026 files its first TD4 and pays the balance by 31 January 2028. Returns for tax year 2025 keep the earlier 31 March 2027 deadline. The HE32 annual return to the Registrar is a separate filing on a separate clock: it is first made up 18 months after incorporation and filed within 28 days of that date.

What can safely wait, and what cannot?

Tax registration, the bank account and the bookkeeping cannot wait, because everything later is built on them. VAT registration waits until taxable supplies pass €15,600 in a rolling twelve months or you expect them to within the next 30 days, which a single large contract can trigger. Employer registration waits until you actually pay someone, including yourself as a salaried director. The year-end filings are months away, but they depend entirely on books kept since month one, so bookkeeping is the one job that cannot be caught up on later without cost.

My company has not traded yet. Does any of this apply?

The company-law obligations apply in full. A non-trading company still registers with the Tax Department, still files an HE32 annual return with financial statements attached, and still needs those statements signed off by a statutory auditor; Cyprus has no dormancy exemption. What a dormant company usually escapes is VAT registration, because it has no taxable turnover, and provisional tax, because it has no expected profit to estimate.

Can I keep the books myself in the first year?

Yes, and many founders do. Bookkeeping is not a regulated activity; the statutory audit or review engagement is, and that is the one step reserved for a licensed auditor. What decides the question in practice is volume: a company with a few invoices a month is a different job from one with payroll, EU clients and a quarterly VAT return. In Sumly, the Base plan is built for keeping the books yourself with the AI doing the matching and the returns prepared for your review, and on Premium a Sumly certified bookkeeper takes the work over.

What is the most expensive first-year mistake?

Treating bookkeeping as a year-end task. Cyprus law expects accounting records to be updated by the end of the fourth month after each transaction month, and a year of unreconciled bank statements has to be rebuilt before financial statements can be drafted. The rebuild raises the accountant's bill and the auditor's bill at the same time, and it usually surfaces too late to fix a provisional tax estimate that was set too low, which adds 10% of the shortfall in tax on top.