Northern Cyprus (Turkish Republic of Northern Cyprus, TRNC) is known not only as an attractive destination for tourism or profitable investment in real estate but also as an excellent location for starting your own business. Foreign entrepreneurs, too, can set up their own venture in the TRNC.
The rapid economic rise of the TRNC is primarily due to the investments by overseas nationals. Financial injections into various economic sectors, especially into tourism, construction and services, provide tremendous support for the state’s economic development. This is the reason why the country’s authorities encourage foreign business people and give them the green light to do business in many industries.
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In the TRNC, you can start your own business in literally any field, be it trade, hotel service, investment or foodservice industry. A huge number of establishments and enterprises opened by immigrants have been successfully operating in the country for many years. The favourable tax regime, privacy, non-corruption, an accessible entry into the market, and ease of doing business are the main reasons why foreign nationals choose the TRNC.
Before opening a business in the country, it is necessary to research the market. Demand for the current product or service, customer acquisition and loyalty, possibilities and pricing are important aspects to consider when starting a new venture. Opening a profitable business in Northern Cyprus is easy if you are aware of all these nuances.
Immigrants can do business in the TRNC on their own or in partnership with Turkish Cypriots. If you intend to open a real estate development business, a foreign national can only own 49% of shares, while the remaining stake must be owned by a local representative.
Setting up a business in the TRNC
One of the most important points to consider at the start is whether you are going (immediately or in the future) to buy a property for your legal entity or you are better off renting. This is crucial because it determines whether the company can consist only of foreign nationals. If the firm is going to own a property, most of the co-founders on the management board must be locals. Non-compliance with this rule leads to a restriction in the scale of operation: the company can own only one property with an area of no more than five donums or a land plot of up to one donum. In Northern Cyprus, a donum is equal to 1,337.8 m2, that is, you are allowed to own a building or office of up to 6,689 m2.
In order for the company to scale up and acquire a larger area, at least 51% of its shares must be held by TRNC citizens. You can hire nominal directors who will act on your behalf by entering into a fiduciary management agreement—such services are provided by specialised agencies in Northern Cyprus.
In case you do not plan to own a commercial property, all shareholders and founders can be foreign residents.
Requirements for the company
According to the laws of the TRNC, you must meet several conditions in order to open a business:
- At least two shareholders, a director, and a secretary.
- A registered office in the TRNC (can be rented).
- Share capital of at least USD 49,000 or the euro equivalent. This amount must be deposited with a TRNC bank where it will be blocked until the company is established. Once the funds are deposited, the bank receives a letter as proof of compliance with the requirements and submits it to the Registrar of Companies. The funds will be released upon completion of the registration process.
- If there are any foreign directors on the board, each of them must provide a guarantee letter from a TRNC bank in the amount of TL 100,000 for a period of 18 months as security for any tax liabilities that may be incurred. This bank guarantee letter will be submitted to the TRNC Tax Office and a Tax Security Certificate will be obtained in return, which is then submitted to the Registrar of Companies.
Company registration process
The registration process begins with choosing a company name and several alternatives in case it is already taken, and submitting them for approval to the Registrar of Companies. You can register any name that does not contain “undesirable” words and does not infringe on existing ones.
A memorandum of association and articles of association are then drawn up, outlining the company’s strategy, rules, and regulations. To prepare these constituent documents, you should seek legal advice from an expert, since any mistake or oversight can interfere with the company’s further activities. In addition, revising them can be quite cumbersome, since any changes and/or annexes to the memorandum of association require both a special resolution and a court order.
Once the company name is approved and all the required documents are completed, the founders apply for business registration. What you need to complete the registration process:
- Constituent documents.
- Proof of registration of the company’s office.
- Activity licences.
- For each foreign shareholder:
- A certified copy of the passport.
- A police clearance certificate from the country of origin. The document must be translated into Turkish or English and apostilled.
- A document confirming residence in Northern Cyprus or a utility bill as proof of address.
- For each foreign director:
- A Tax Security Certificate from the TRNC Tax Office.
- A certified copy of the passport.
- A police clearance certificate from the country of origin with a certified translation.
- A document confirming residence or a utility bill showing name and address.
- A printed letter from a TRNC bank confirming that the amount of share capital has been deposited and will remain blocked until the company registration process is complete.
Summary
To sum up, to open a company in Northern Cyprus, you need to:
- Determine the scope of activities.
- Come up with several options for the name.
- Prepare passports and police clearance certificates for all company members.
- Make a deposit at a local bank. If the company is owned only by foreign nationals, the amount is USD 100,000. Companies with 49% of shares owned by foreigners deposit USD 49,000. The amount must be kept in one of the TRNC banks at the time of registration.
- Register the company’s legal address (you can buy or rent an office) and prepare the documents listed above.
Once you meet these conditions, you will be able to open your own business in Northern Cyprus. Good luck!