Partnerships in Cyprus are regulated by the General and Limited Partnership and Business Names Law, Cap 116 (the ‘Law’).
What is a Partnership?
According to the Law, a partnership is the relationship which subsists between two or more individuals, carrying out a business together in Cyprus, with a view of making profit.
Formation of Partnerships
The Law provides for three types of partnerships:
- A general partnership, in which all partners are liable, jointly and separately, for all the obligations of the partnership,
- A limited partnership, in which at least one partner is liable for all the obligations of the partnership and the other partners have limited liability up to the amount they have contributed to the partnership,
- A limited by shares partnership, which has share capital and the shares are allotted to the partners depending on the amount they have contributed.
All partnerships, either general or limited, must operate under a registered name and they must register with the Cyprus Registrar of Companies within one month from the date of commencement of business.
Except for partners in limited partnerships, partnerships are not considered to be separate legal entities and therefore the actions of the partners are considered as actions in their personal capacity and the profits generated by the partnership are taxed as income received by the partners.
Obligations of Partnerships
Some of the main obligations of partnerships under the Law is their registration with the Tax Department and with the VAT Department, if they make taxable supplies of goods and services. Partnerships must also keep books of accounts which exhibit transactions and their financial position, activities or profession, submit annual returns and financial statements.
Partnership Agreements
A partnership agreement sets out the relationship between the partners and clarifies each partner’s duties and responsibilities.
Should you wish to find out more, contact our team at info@paraschou.com.cy.
