Cyprus law recognized two types or partnerships: (i) General Partnership and (ii) Limited Partnership.

•  The General Partnership: In the General Partnership every partner is liable jointly and severally with all the other partners for an unlimited amount for the debts and obligations of the Partnership.  Partner can also be a company with limited liability or another Partnership. 

• The Limited partnership: The Limited Partnership is a Partnership in which at least one of the partners must have unlimited liability for the debts and obligations of the Partnership, whereas the remaining partners may have limited liability. Limited liability companies may also be partners in a Limited Partnership.

• The legal framework after 9 October 2015 defines the Cyprus LLP as a partnership, having a share capital, and in which the liability of the limited partners is limited up to the amount which remains unpaid if any, for the shares that they hold.
• A limited partner in a Cyprus LLP means the limited partner who contributes in the share capital of the Cyprus LLP and to whom shares are allotted, depending on the amount contributed.
• Cyprus LLP’s regardless of whether they have share capital or not, are not considered legal entities with a separate legal personality.

What are the conditions of existence of Cypriot limited liability partnerships?

According to the Partnership Law, Cypriot Partnerships may only exist if it represents a relation between persons conducting business activities with the purpose of obtaining a profit. The Partnership must satisfy three conditions according to the Partnership Law in Cyprus:

• it must carry out a business;
• it must have at least two partners;
• it must have the purpose of obtaining a profit.

The amending statute has introduced a change over the maximum number of persons that can be partners in any type has been increased to 100 (one hundred), or if conducting banking activities a maximum number of 10 members.

The registration procedure for limited liability partnerships in Cyprus

In order to register a limited liability partnership, a written statement signed by all the founding members must be submitted with the Cypriot Companies Registrar. The statement must contain the following information:

• the partnership’s name;
• the nature of the business activities;
• the place where the business will take place;
• details about the partners such as names, nationality, residency and business occupation;
• the date of commencing the business activities;
• the contribution of each partner;
• the authorized representatives of the general partnership.

Formation of the Partnership

The procedure for registration of a Partnership is as follows:

An application to the Registrar of Cyprus Companies has to be made for approval of the name of the Partnership before any application for registration of the Partnership is made to the Registrar of Cyprus Companies.

• Limited Partner – has interest in the Partnership is determined by the contribution, thereby limiting his responsibilities and liabilities/obligations towards Partnership and its creditors in case of dissolution;
• Securing the partnership’s name;
• Preparing the partnership contract;
• Filing with the Registrar of Companies a special form in which certain information is given as to the names, addresses, description of the partners, the unlimited or limited liability of each partner, the duration of the partnership, the person authorized to sign and bind the Partnership etc;
• Payment of the registration fees.

Structuring by using Cyprus LimitedLiability Partnership

A Limited Liability Partnership when is used in International Planning the General Partner must be a Cyprus Company limited by shares, in which case the liability of a member to contribute to the company’s assets is limited to the amount, if any, unpaid on his shares.

This is an alternative way of limiting the unlimited liability of the General Partner to the unpaid share capital of the Cyprus Company who is acting as a General Partner.

Taxation on Limited Liability Partnership

A Cyprus Limited Liability Partnership is not considered as a legal entity from a Cyprus Tax perspective. Thus, it is the partners who will be subject to taxation in accordance with the transactions that will be concluded by the partnership. LLP members must maintain accurate accounting records for the work they carry out, which they will then use to complete and file their Self-Assessment tax returns.

New section 64A is inserted in the Cyprus Partnerships Law.

Partnerships fall in the scope of the Amending Law if they are registered under the Cypriot Partnerships Law and whose partners are:

• Limited liability companies which are incorporated under the Companies Law;
• Companies of a member state;
• Companies registered in any other jurisdiction but are in similar form to those mentioned above;
• Partnerships formed under the Cyprus Partnerships Law;
• Partnerships formed under any other relevant law of the European Union.

Article 64A goes on to specify the annual requirements Partnerships must comply with.

Preparation of Financial Accounts

Partnerships must prepare financial accounts in accordance with section 118-122 of the Cyprus Companies Law. To the extent required by the new section the financial accounts are:

• prepared within 6 months from the end of the financial year
• comply with several requirements specified in the law

Where sections 118-122 of the Cypriot Companies Law requires the secretary to do certain actions such responsibilities will be undertaken by the partner charged with the secretarial work. Where the term registered office is used it shall mean the main place of business and where the term member is used it shall mean every partner. The term director shall be interpreted to mean all the managing partners of the partnership.

If for any reason financial accounts are not prepared every person responsible will be liable to a default fine. If the financial accounts do not present a true and fair view of the Cypriot Partnerships activities are commit a criminal offence and is subject to imprisonment which does not exceed one year or a fine of one thousand seven hundred euro or both chargers.

Submission to the Registrar of Companies

The partnership’s financial accounts once prepared and signed must be submitted along with an annual return and submitted to the registrar of companies in Cyprus.

For complete information about the establishment and taxation of limited liability partnerships please contact our law firm.

Please contact a member of our staff for further information and/or clarifications.