Is the preparation of Financial Statements mandatory for Cyprus Companies?
Yes, according to the Companies Law in Cyprus (Cap.113), Cyprus Companies (active and/or dormant) have to prepare Financial Statements on the basis of the International Financial Reporting Standards (IFRS).
Is audit mandatory in Cyprus?
Yes, the following companies are required to have their financial statements audited by registered auditors in Cyprus:
- Public companies
- Any company that has to prepare and submit consolidated financial statements
- Any other company (for the exemptions please see below)
What kind of companies are required to submit consolidated financial statements?
Cyprus Companies that control either directly or indirectly other companies (subsidiaries) have to prepare Consolidated Financial Statements for the whole Group of companies, which will have to be audited by a registered auditor in Cyprus.
If a subsidiary company belonging to the Group prepares and files Statutory Consolidated Financial Statements in its jurisdiction, then an exemption may be granted.
Also, if the Group meet doesn’t exceed two of the following criteria, then it may be exempted from submitting consolidated financial statements:
- The net assets of the Group do not exceed €17.5 million.
- The turnover of the Group does not exceed €35 million.
- The personnel of the Group does not exceed 250 employees during the year.
Are there any exemptions to the preparation and submission of audited financial statements?
Yes, the company can be exempted from preparing audited financial statements, provided that two of the following conditions are met:
- The net assets of the Company do not exceed €3.4 million.
- The turnover of the Company does not exceed €7 million.
- The personnel of the Company has not exceeded 50 employees during the year.
However, please note that the Tax Department has the right not to accept financial statements that have not been reviewed and certified by a registered auditor. This, means that it is highly recommended to submit audited accounts, even for companies meeting the above criteria.