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

Year one of a Cyprus limited company runs in a fixed order. You register with the Tax Department, open the bank account and start the books. You register for VAT when turnover says so, and become an employer when you first pay someone. Provisional tax comes mid-year. Then you close the year with financial statements, an audit or review, the HE32 annual return to the Registrar and the corporate tax return. Two authorities set these dates on two different calendars, which is why the first year feels confusing. We take new companies through it every week. This guide lays out all twelve months in the order the obligations arrive, with a detailed article linked at each step. For the paperwork in 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?

It runs on two calendars at once. The Registrar of Companies counts its deadlines from your own dates: incorporation, the made-up date of the annual return, the AGM. The Tax Department counts 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. Read the sequence below against your own incorporation date rather than copying it as written.

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 gets its tax identification number, the TIC. VAT registration, employer registration, provisional tax and the corporate return all depend on that number. Companies register through the Tax For All portal with a CY Login account. Banks ask for the number during onboarding, so do this in week one. Cyprus tax registration and the TIC walks through the process and explains how the TIC differs from the VAT number and the employer number.

Apply for the bank account at the same time. Expect to hand over the certificate of incorporation, the memorandum and articles, proof of address and a plain description of the business. Expect more questions if directors or shareholders live abroad. The main full-service banks today are Bank of Cyprus, Eurobank, Alpha Bank Cyprus and Ancoria Bank. You don't have to use one of them. There is 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 you make from personal funds as a director's loan. The company owes that money back to you, and it belongs in the books.

The third job is the one founders put off. 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 yourself. For income tax, an expense is deductible only if it is incurred wholly and exclusively in the production of income. Start-up costs of a capital nature, such as the incorporation fees themselves, are not deductible. For VAT, a business that registers later can reclaim the VAT it paid 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 rules. Both reward keeping every document from before the company existed.

When do you register for VAT?

When turnover requires it. The threshold is €15,600 of taxable supplies over the preceding twelve months. The same figure works looking forward. If you expect to cross it within the next 30 days, you must 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 is paid. Below the threshold, registering voluntarily 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 how to apply through Tax For All.

Registration changes your paperwork straight away. Invoices must show your VAT number, the rate and the VAT amount, and the full rules in Cyprus invoice requirements apply from invoice number one. A return falls due every quarter. You submit it and pay 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. If you sell services to VAT-registered clients elsewhere in the EU, you also file a monthly VIES statement. VIES is the EU system that lists those cross-border sales so each country's tax office can match them.

What happens when you make your first hire?

The company becomes an employer, and that brings a monthly routine. Before the first payday you register with the Social Insurance Services. You notify each new hire through ERGANI no later than one day before employment starts. From the first payslip you deduct the employee's Social Insurance, GeSY and PAYE, and add the employer's own contributions. You file the monthly TD7 withholding return in Tax For All, then pay the withheld amounts by the end of the month following the month of withholding. Budget for the real cost. Employer contributions add about 15.4% on top of the gross salary in the offer letter.

A director who takes a salary is an employee for all of this. "We have no staff" stops being true the moment you pay yourself. Hiring your first employee in Cyprus covers registration, the rates and what every payslip must show. 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 you earn the profit. 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. You can revise the estimate 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 you pay €3,000 on 31 July and €3,000 on 31 December. This catches first-year founders out, because it lands before any financial statements exist and before anything has gone to the Registrar. From tax year 2026, late starters get some relief. A company incorporated after 30 June files its estimate by 31 December and pays it in a single instalment.

Estimate carefully, not hopefully. If the income you declare turns out below 75% of the final figure, you pay an extra 10% of the shortfall in tax. File no estimate at all and the 10% applies to the whole final tax. A company that truly expects no profit has nothing to declare. If profit shows up during the year, revise before 31 December. Provisional tax in Cyprus explains the mechanics and how the instalments come off the final bill.

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

Year-end is a chain of steps, each waiting on the last, so the order matters more than any single date. First the books close. You reconcile every bank account, chase missing documents, book depreciation and accruals, and revise the provisional estimate while you still can. The Cyprus company year-end checklist is the working list for that quarter. Your first financial period doesn't have to be a calendar year, but there is a hard limit. The first financial statements must cover a period ending no later than 18 months after incorporation, so agree your first year-end date with your auditor early.

The statements need independent sign-off. Every Cyprus company prepares financial statements under IFRS, the international accounting standards, and submits them for audit by a statutory auditor. Being new or small doesn't exempt you. The smallest private companies may swap the audit for a lighter review engagement once turnover stays within €300,000 and gross assets within €500,000 for two consecutive financial years. A brand-new company can't show that yet. Cyprus audit requirements explains who qualifies and what the auditor looks at.

The signed statements then go to two places. The Registrar gets them 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 a company that keeps missing it risks being struck off. The HE32 annual return guide covers the form itself. The Tax Department gets the TD4 corporate return, worked out 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. Returns for tax year 2025 keep the earlier 31 March 2027 deadline. Cyprus corporate tax covers what the tax is charged on and how the provisional instalments come off the final bill.

Why founders underestimate the first-year admin

Because each item looks small on its own, and most are. What keeps them small is the state of the books, and Cyprus law sets the standard. 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 starts year-end with a reconciliation and finishes 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. It usually also learns its provisional estimate was wrong after the last date it could have revised it.

Where Sumly fits in the first year

Sumly is built to run this year from week one. Connect your bank through a read-only feed. Email documents to your company's private Sumly inbox, or drop them in. The AI reads each one, books it double-entry and matches it to the bank transactions as they arrive, so your reconciliation is always current. You send invoices from Sumly with your logo, and the VAT and VIES returns build themselves from the live books. On Base you review what Sumly prepared and submit it through Tax For All yourself. On Plus, Sumly files every return except the year-end accounts. 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. Your auditor can get a Sumly login of their own. You can order the audit itself in the dashboard, through a partner auditor. And if we're also forming your company, the bookkeeping starts the day you order, before incorporation completes, so your first-year records are complete from the start.

Questions founders ask