If your clients are located outside Northern Cyprus, the suitable structure is a Free Zone company. The application, approval and registration processes are handled by our team in Nicosia.
The Free Port and Zone is an area in Famagusta that is treated as outside the state customs line. A company registered there is legally a limited company; the difference lies in its tax regime, which depends on the direction of its activity.
How each item works is shown in the diagram beneath it.Each item is shown in the diagram.
No corporate or income tax applies to activity directed at companies outside Northern Cyprus and inside the Free Zone.No tax or VAT on activity outside Northern Cyprus; sales inside Northern Cyprus are taxable.
The official language is Turkish and the currency is the Turkish lira; company accounts are opened in lira and foreign currency.
You are required to be in Northern Cyprus once for the signature and bank account; the application, approval and registration processes are carried out on your behalf.One visit is enough; the process is run on your behalf.
Funds can be transferred abroad freely.
If your clients are located outside Northern Cyprus or within the Free Zone, the suitable structure is a Free Zone company.
Businesses that ship goods abroad through the Free Zone.
Businesses that provide software, consultancy or design services to clients abroad.
Sales to companies in the Free Zone are also covered by the exemption.
Turkish lira and foreign currency accounts are opened at a Northern Cyprus bank; lira payments from Turkey can be accepted.
Both are limited companies. The difference between them is who the sales are made to.
| Free Zone company | Local limited company | |
|---|---|---|
| Market sold to | Free Zone companyOutside Northern Cyprus and within the Free Zone | Local limited companyNorthern Cyprus domestic market |
| Corporate tax | Free Zone companyNone on this activity | Local limited company10% |
| Dividends | Free Zone companyNo tax in Northern Cyprus | Local limited company15% income tax |
| VAT | Free Zone companyNot a VAT payer | Local limited companyStandard rate 16% |
| Minimum capital | Free Zone company€25,000 | Local limited company€25,000 or the Turkish lira equivalent |
| Suitable for | Free Zone companyBusinesses whose clients are outside Northern Cyprus | Local limited companyShops, offices and restaurants in Northern Cyprus |
The exemption depends on the activity being directed outside Northern Cyprus and within the Free Zone. Customs, VAT and corporate tax rules apply to sales made within Northern Cyprus.
Does not apply to activity directed at companies outside Northern Cyprus and within the Free Zone.
No tax arises in Northern Cyprus on dividends either; profit can be transferred freely.
The company is not a VAT payer; VAT and customs duty are paid on sales within Northern Cyprus.
Dividends may need to be declared in your country of residence. Please consult your home-country tax adviser.
The capital belongs to your company; it is not paid to any party. It is blocked at the bank only until registration, after which it is released in the company account.
The minimum capital if one of the shareholders is not a citizen of Northern Cyprus. The share of the foreign shareholder is blocked.
At the signing visit you open the company's capital account at the bank; the capital is sent at the stage when it is required.
Registration is approved; the foreign shareholder's share of the capital is blocked at the bank.
The bank is approached with the company's registration documents and the block is lifted; the amount is available in the company account.
Formation is subject to two approvals: first the Free Zone administration, then the Council of Ministers. Once the documents are complete, the process takes approximately 30-40 working days.
2-3 alternative names are determined for the company; name suitability is checked.
The formation documents are prepared by us; you are invited to Northern Cyprus for the signature.
During the same visit you open the company's capital account at the bank.
The application is made by us; following Free Zone approval, it is forwarded to the Council of Ministers.
Registration is approved; the share of the capital attributable to foreign shareholders is blocked at the bank.
The company's registration documents are issued and the bank account becomes active.
Tick the documents that are ready; we carry out the process.
The signature is given in Northern Cyprus.
The address requirement can also be met through an agreement with an accounting office; in this case a representative who is a Northern Cyprus citizen, determined by the Free Zone, is appointed.
Formation and the first year are a single amount with all items included; accounting is invoiced separately.
Activity in the Free Zone is carried on under an operating licence of unlimited duration issued by the Free Port and Zone Directorate. Even though it pays no tax, the company pays the activity fee and submits its annual accounts every year.
Paid every year by the end of January for activity in the Free Zone; it is a fixed charge, not a tax.
The registered address and representation service is renewed every year at the same amount.
Annual accounts are prepared and the return is filed; the obligation continues even if the company is dormant.
Monthly for an active company, from the month the bank account is opened; €900 a year for a dormant company.
Not mandatory; prepared for an additional fee on request.
Annual income and expenditure, balance sheet and profit and loss accounts are open to state inspection.
We have provided accounting and tax services since 1996. The formation of a Free Zone company and its post-formation processes are handled from our office in Nicosia.
Nicosia officeŞht. Murat İlhan Sokak No:5, Kumsal
From the name check to registration, the Free Zone and Council of Ministers applications are handled by us.
The registered address and representation agreement is arranged together with the formation.
Records are kept by our own accounting team in Northern Cyprus.
We prepare the documents; the decision to open the account rests with the relevant bank.
It is an area in Famagusta that is treated as outside the state customs line. Profit that a company operating there earns from activity directed outside Northern Cyprus is exempt from income tax and corporate tax.
No corporate or income tax applies to activities directed at companies outside Northern Cyprus and inside the Free Zone; the company is not a VAT payer. Normal tax rules apply to sales to local companies within Northern Cyprus. The annual activity fee is a fixed charge, not a tax.
It can; however, these sales fall outside the exemption and customs, VAT and corporate tax rules apply. If most of the activity is within Northern Cyprus, a Free Zone company is not a suitable structure.
Yes, once. The documents are signed in Northern Cyprus and the company's capital account is opened at the bank during the same visit. The application, approval and registration processes are then carried out on your behalf.
It is not mandatory. If an address agreement is made with an accounting office, a representative who is a Northern Cyprus citizen, determined by the Free Zone, is appointed and no additional staff are required. If you rent your own office, you must employ at least one Northern Cyprus citizen.
Approximately 30-40 working days once the documents are complete. The timing is set by the approval schedule of the Free Zone administration and the Council of Ministers.
The company account is generally opened within 2-4 weeks after registration. We prepare the application documents; the decision to open the account rests with the relevant bank.
No. Northern Cyprus is not on the country list of Stripe or PayPal. Card payment collection is made through the local bank's virtual POS; payments are transferred to the company account in Northern Cyprus.
Forming a company does not by itself provide a right of residence. If you will reside in Northern Cyprus and manage the company, you must obtain a permit to set up a business from the Ministry of Labour and Social Security.
The exemption is based on the Free Port and Zone Law and is lawful. Its condition is genuine activity directed outside Northern Cyprus and records kept regularly; declaring the income in your country of residence remains your own obligation.
If your clients are located within Northern Cyprus, you can also review the other structure.
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