Reminder: Accountant-Client and ASP-Client Privilege Does Not Exist in Cyprus

Only Lawyer–Client Privilege Exists in Cyprus: Understanding the Legal Reality,

In the field of professional services, clients often assume that the communications they have with their accountants, auditors, or corporate service providers are protected by a form of legal privilege, similar to the confidentiality that exists in the lawyer-client relationship. However, in Cyprus, this assumption is not just inaccurate; it carries important legal implications.

There is no legally recognised accountant-client privilege under Cyprus law, nor is there any legal privilege covering communications with non-lawyer Administrative Service Providers (ASPs), even though these are regulated by the Cyprus Securities and Exchange Commission (CySEC).

The purpose of this article is to address a common question among clients: whether their discussions with non-lawyer professionals, such as accountants, auditors, or corporate service providers, enjoy the same legal privilege as those with lawyers. It further explains why this distinction matters, outlines the legal framework behind it, and clarifies what clients should know about how legal privilege operates in their interactions with various professional advisors.

1. What Is Legal Professional Privilege?

Under Cyprus law, legal professional privilege is a substantive right protecting communications between a lawyer and their client when made for the purpose of legal advice or in connection with litigation. This principle is rooted in Cyprus’ common law tradition and codified under the Advocates Law, Cap. 2, and the Advocates Code of Conduct Regulations of 2002 (the Regulations), and it applies only to qualified lawyers who are members of the Cyprus Bar Association and practice as such. Under the said rules, the legal professional privilege is recognised as a fundamental and primary right and duty.

Specifically:

– Legal advice privilege protects lawyer-client communications for the purpose of seeking or giving legal advice, even outside litigation.

– Litigation privilege protects materials prepared for actual or anticipated legal proceedings.

Communications with accountants, auditors, tax advisors, or corporate service providers who are not lawyers (active members of the Cyprus Bar Association) do not benefit from this legal protection, even if they are bound by strict confidentiality obligations.

2. Accountants, ASPs, Other Advisors Vs. Confidentiality

In Cyprus, accountants and auditors are regulated by the Institute of Certified Public Accountants of Cyprus (ICPAC), while Administrative Service Providers (ASPs) – companies providing nominee services, company secretarial functions, registered office services, and company administration – are regulated by CySEC. Both sets of professionals are bound by confidentiality and professional secrecy obligations under their regulatory frameworks.

However, this professional confidentiality:

– Is an ethical and regulatory obligation.

– Does not confer legal privilege or the right to resist disclosure if compelled by a regulatory authority, or tax investigation.

This distinction is crucial: confidentiality is not privilege. If an accountant, auditor, or ASP is subpoenaed or required by law to provide records or testify, they are obliged to comply.

It is not only accountants and non-law firm connected ASPs whose services fall outside the protection of legal privilege. Many financial services advisory firms in Cyprus, including those specialising in CIF licensing applications, compliance advisory, investment services structuring, and regulatory consulting, who are not law firms are also not regulated under the Advocates Law, Cap. 2, thus cannot offer the lawyer-client confidentiality protection.

Even though these professionals provide highly specialised services, and may be regulated by CySEC or ICPAC, and are bound by confidentiality obligations, these firms, whether they offer regulatory advice, financial structuring, or compliance consulting, do not enjoy the protection of legal professional privilege.

This means that:

– Their internal communications, advice, and reports can be disclosed if required by regulatory investigations, or audits.

– They cannot resist disclosure or claim privilege in the way a lawyer can under Cyprus law.

Again, this does not diminish the professionalism of these firms; rather, it highlights that their work is governed by regulatory confidentiality, not legal privilege.

3. Why Lawyer-Client Privilege Stands Apart

Only communications with a qualified lawyer / law firm can be protected under Cyprus’ legal professional privilege rules. This is particularly relevant in:

– Litigation or anticipated disputes.

– Regulatory investigations (e.g. tax, competition, AML).

– Cross-border legal and compliance matters.

When lawyers are involved, communications made for the purpose of seeking legal advice or preparing for litigation are, in general, protected from disclosure.

Recent jurisprudence from the Supreme Court of Cyprus, notably the October 2025 decision in the AC & Associates LLC case concerning the citizenship-by-investment investigations, reminds us that this protection is not absolute when criminal offences investigation is involved (such as conspiracy to defraud, false statements in relation to naturalisation applications, money-laundering). The Court upheld a search warrant over a law firm’s servers, finding that the warrant sought to identify and secure potentially relevant electronic evidence, not to review privileged material. The ruling illustrates that while privilege remains a cornerstone of the lawyer-client relationship, upheld and recognised by the Supreme Court, it cannot be invoked to obstruct lawful investigative measures when proper judicial safeguards are observed.

It is important to clarify, that:

– Privilege belongs to the client, not the lawyer.

– Not every communication with a lawyer is automatically privileged, it must meet the legal tests.

– Privilege does not extend merely because a lawyer is copied on correspondence or casually involved.

4. Clarifying the Role of Corporate Service Providers and Financial Services Advisors

A key area of misunderstanding arises with non-law firm related ASPs, accountants, and financial services advisory firms offering corporate, regulatory, or investment advisory related services.
These providers deliver valuable and regulated services under the supervision of authorities like the CySEC or ICPAC. This includes firms assisting with:

However, under Cyprus law:

– Their services are not protected by lawyer-client privilege.

– Their records and communications can be accessed by authorities (such as regulators, or tax authorities) if legally required.

Clients engaging with ASPs, accountants, or financial services advisory firms should be aware that, although these professionals are bound by regulatory and professional secrecy rules, they do not enjoy the same level of legal shielding as communications with qualified lawyers under Cyprus law.
This distinction is particularly important when handling sensitive matters, where only legal communications with lawyers may potentially benefit from legal professional privilege protections.

5. Why This Matters for Clients

It is essential for clients to understand these distinctions, not because they must change their service providers, but so they can make informed decisions about:

– What types of communications they have with which advisors.

– What expectations they should have regarding disclosure and confidentiality.

– When it is appropriate or necessary to involve legal counsel to ensure privilege applies, particularly in sensitive or high-stakes matters.

For example, when dealing with complex transactions, tax structuring, regulatory inquiries, or cross-border disputes, clients should be aware that only a lawyer can provide advice under the protection of legal privilege.

This does not diminish the professionalism of accountants or ASPs, rather, it highlights the different nature of their roles under Cyprus law.

6. When the Privilege May Not Apply

While legal professional privilege is a fundamental right under Cyprus law, it is not absolute and does not apply in every situation involving a lawyer. Specifically, privilege generally does not apply when:

A licensed lawyer is not acting primarily in their capacity as a legal advisor but instead serves in another role, such as:

o A business advisor;

o A member of the Board of Directors;

o A commercial negotiator;

o A personal or commercial representative in non-legal matters.

In these cases, even though the individual is a licensed advocate, the communications and documents exchanged are not considered privileged because they are not part of a legal advice or litigation context. Privilege is tied to the function the lawyer is performing, not merely to their professional title.

This principle was reaffirmed in the October 2025 Supreme Court decision in AC & Associates LLC v Republic of Cyprus, where the Court upheld a search warrant against the law firm involved in the citizenship-by-investment investigations. The Court reasoned that while legal privilege is vital to the administration of justice, it cannot be used to shield non-advisory or potentially evidentiary material from legitimate judicial scrutiny. The ruling illustrates that privilege applies only to communications made for the genuine purpose of legal advice, not to every document or record held within a law firm.

7. No Privilege with Communications with In-House Lawyers

The European Court of Justice (ECJ) clarified this point decisively in the landmark Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v Commission (Case C-550/07 P). In the Akzo Nobel judgment (binding in Cyprus), the ECJ ruled that communications between a company and its in-house lawyers, even if those lawyers are admitted to the Bar or Law Society, do not enjoy legal professional privilege under EU competition law investigations.

The Court reasoned that, under EU professional standards, in-house lawyers are not considered sufficiently independent because:

– They are economically dependent on their employer;

– There is a structural risk that their professional duties will conflict with the aims and interests of the company;

– As a rule, they are more closely aligned with the company’s commercial objectives than external, independent lawyers.

As a result, only communications with external independent lawyers qualify for the fundamental protection of legal privilege in the EU framework, including in Cyprus.

This has significant implications for companies relying solely on in-house legal teams, especially in regulatory, competition, and compliance matters.

8. Do ASPs Operated by Lawyers Enjoy Legal Privilege?

Some Administrative Service Providers (ASPs) in Cyprus are operated by licensed lawyers or law firms regulated by the Cyprus Bar Association (CYBAR). Like many other law firms in Cyprus, AGPLAW is a full-service law firm that not only provides legal advice but is also an active ASP under CyBAR regulations, offering a wide range of corporate services, including nominee directorships, company secretarial support, governance, registered office services, and trusts administration.

While AGPLAW is uniquely positioned to deliver both legal and corporate services under one roof, it is important for clients to understand that not all services are automatically protected by legal professional privilege simply because they come from a law firm.

Specifically:

– The legal advisory component provided by AGPLAW, such as advising on company formation, corporate structuring, shareholder agreements, regulatory compliance, or governance issues, is protected by legal professional privilege, provided the applicable legal conditions are met.

– The purely administrative or fiduciary functions, such as acting as nominee director, signing corporate resolutions, maintaining company registers, or providing routine company administration, are commercial activities and do not automatically enjoy privilege, even when carried out by a law firm or licensed lawyer, unless advisory is included.

This distinction matters because legal privilege attaches to the nature and purpose of the communication or service, not merely to the professional identity of the provider. Courts, regulators, and investigative authorities will always examine whether the activity was truly legal advice or simply commercial administration.

For AGPLAW clients, this means they benefit from the unique advantage of having one provider deliver integrated legal and corporate services, but they must also understand the limits of privilege and engage the firm explicitly in its legal advisory capacity when privilege protections are required.

9. Conclusion

In Cyprus, there is no accountant-client or ASP-client privilege. Only communications with a qualified lawyer are protected by legal professional privilege; and even then, exception can apply.

This distinction is not a criticism of non-lawyer providers; it is simply a reflection of Cyprus’ legal framework. By understanding where privilege applies, clients can better manage their legal risk and ensure that their most sensitive communications are appropriately protected.

Frequently Asked Questions (FAQ)

1. Does accountant-client privilege exist in Cyprus?
No. Under Cyprus law, there is no legally recognised accountant-client privilege. While accountants are bound by professional confidentiality under regulatory and ethical rules, they can be compelled by courts or authorities to disclose information when legally required.

2. Are communications with my Administrative Service Provider (ASP) protected by legal privilege?
No. Even though many ASPs are regulated by CySEC or ICPAC and bound by professional confidentiality, they are not lawyers, and their communications with clients are not covered by legal professional privilege.

3. What is the difference between confidentiality and legal privilege?
• Confidentiality is an ethical and regulatory duty to keep client information private but does not prevent disclosure if required by law.
• Legal privilege is a legal right that protects specific communications with lawyers from being disclosed in court or to authorities.

4. Can I make my accountant’s or ASP’s work privileged by involving a lawyer?
In certain cases, when accountants or ASPs are instructed through a lawyer and their work is carried out for the dominant purpose of legal advice or litigation preparation, the resulting communications may fall under legal privilege. However, this must be carefully structured, and privilege is not automatic.

5. Should I change my service provider to a law firm offering corporate services?
Many regulated ASPs and accountants provide excellent services. The key is for clients to understand the limits of legal privilege and involve legal counsel where appropriate to ensure the right protections apply in sensitive or high-risk matters.

6. When should I involve a lawyer to ensure privilege applies?
You should consider involving a lawyer when:

– You need legal advice on contentious or sensitive matters.

– You are preparing for or anticipating litigation.

– You are dealing with cross-border or regulatory issues where legal protections are critical (it includes corporate structuring and corporate services of course, offered through a law firm).

7. How can a law firm offering corporate services help?
A law firm that provides both legal advice and corporate services can coordinate your corporate and legal needs under one roof. Where applicable, communications connected to legal advice are protected by privilege, giving you stronger safeguards in sensitive matters.

8. Are financial services advisory firms covered by legal privilege?
No. Even if a financial advisory firm or CIF licensing consultant is highly experienced, regulated by CySEC or ICPAC, and bound by confidentiality, their services are not protected by legal professional privilege. Only communications with licensed lawyers under Cyprus law can qualify for privilege.

9. If I work with a financial advisory firm or ASP, how can I ensure privilege over sensitive matters?
To secure legal privilege where needed, you should engage a lawyer to lead or supervise the sensitive aspects of the work, particularly when legal advice is sought or when preparing for litigation or regulatory challenges. This ensures that communications fall under the scope of legal privilege, where applicable.

If you have questions about how legal privilege applies to your business or personal affairs, or how legal and corporate services work together in Cyprus, you are welcome to reach out to our team at AGPLAW for further clarification.