Buying a Cyprus Company in 2026: Share Purchases, Due Diligence and Approvals
Buying an existing Cyprus company is often more practical than starting a new one. The buyer acquires a going concern with its contracts, staff, licences, banking relationships and market position, and it can shorten entry into the market by months or years. A share purchase also passes on the company's whole history, including liabilities nobody has yet identified. Since 1 January 2026 the cost and mechanics of Cyprus acquisitions have changed: stamp duty has gone, the corporate tax rate is 15%, and a mandatory foreign direct investment screening regime has been in force since 2 April 2026. This article sets out how a Cyprus share purchase works now, from structure and approvals to completion.
Share purchase or asset purchase
A share purchase is the standard route. The buyer acquires the shares and with them the company as it stands, including its contracts and licences, without having to transfer each asset individually. An asset purchase is more complex, especially where regulated activities, employees or real estate are involved, but it lets the buyer choose what it takes and leave liabilities behind. The tax position for both sides differs between the two routes, so the choice should be modelled before heads of terms are agreed.
Two features of the pricing mechanism need attention. A locked-box structure fixes the price by reference to a past balance sheet date and protects the buyer against value leakage from that date, while completion accounts adjust the price after completion. Each shapes the warranties and the dispute process. Earn-outs and deferred consideration must be drafted with Cyprus law in mind and should not be copied from other jurisdictions without review.
Approvals to identify first
Several approvals can affect whether, when and on what terms a deal can close. They should be identified at the outset, because they usually become conditions precedent to completion.
Foreign direct investment screening. The Screening of Foreign Direct Investments Law of 2025 (Law 194(I)/2025) came into force on 2 April 2026, ending Cyprus's position as a member state without a screening regime. It applies to certain acquisitions by non-EU investors, and by EU vehicles with non-EU beneficial owners, in sectors of strategic importance, where the thresholds of a 25% interest and EUR 2 million in value are met. Where it applies, the transaction cannot complete without clearance: the first review phase is 20 working days, and a second phase of 65 working days can follow. Investments completed after the law took effect can also be called in for review for up to five years, and the penalties for breach include substantial fines and the risk of unwinding. At the time our FDI article was published, the application form and procedural details were still pending, so the position should be confirmed with the Ministry of Finance for any live transaction. We discuss the regime in our article on FDI screening.
Merger control. A concentration is notifiable to the Cyprus Commission for the Protection of Competition if at least two of the undertakings each have worldwide turnover above EUR 3.5 million, at least two have turnover in Cyprus, and their combined Cyprus turnover is at least EUR 3.5 million. Control is read broadly, and a minority holding that gives negative control can be caught. A notifiable deal is normally notified after signing and before completion, and clearance is made a condition. The filing fee is EUR 1,000 and the first phase takes one month from a complete notification. Implementing a notifiable concentration before clearance can lead to a fine of up to 10% of turnover and an order to unwind it.
Sector regulators. A change of control of a regulated target usually needs prior approval. The Cyprus Securities and Exchange Commission must approve qualifying holdings in investment firms, funds and similar entities, and the Central Bank of Cyprus has equivalent powers for credit institutions. Completing before approval risks sanctions and the loss of the licence.
Contractual consents. Change of control clauses in key contracts, financing agreements and leases can give counterparties a right to terminate or renegotiate. Pre-emption rights and consent requirements in the Articles of Association must also be complied with or waived before the transfer can be registered.
Legal due diligence
Due diligence is where a Cyprus acquisition is won or lost, because the buyer inherits everything the company has done up to completion. The usual workstreams are:
Corporate records. The Memorandum and Articles, statutory registers under the Companies Law (Cap. 113), the share register, filings with the Registrar of Companies, charges registered under section 90, and good standing. Ownership of the shares should be traced to the beneficial owners where nominees are used.
Contracts. Customer, supplier, agency, financing and joint venture agreements, with attention to change of control, exclusivity and termination rights.
Regulatory. Licences, authorisations and compliance with data protection, anti-corruption and competition rules.
Employment. Contracts and compliance with the Termination of Employment Law. Cyprus has no at-will employment, and redundancy has a statutory cost that should be modelled before any post-completion restructuring.
Real estate. Title and encumbrances at the Department of Lands and Surveys, permits, and lease terms. Companies with significant Cyprus real estate are affected by the lower "property-rich" threshold, discussed below.
Litigation and contingent liabilities. Disputes, regulatory investigations and tax enquiries. Given court timetables, unresolved matters are usually dealt with through price, indemnities or escrow.
Tax. Filings, VAT, correspondence with the Tax Department, the use of reliefs such as the notional interest deduction, and related-party and transfer pricing positions.
AML and beneficial ownership. Compliance with the Prevention and Suppression of Money Laundering and Terrorist Financing Law (Law 188(I)/2007) and the beneficial ownership register. Advisers and banks are obliged entities and will run their own checks on the buyer.
The share purchase agreement
The agreement allocates risk. Key terms include:
Conditions precedent for the approvals above, with a longstop date and the consequences if they are not met.
Warranties matched to the diligence findings, with the usual limits on time, value and disclosure. A seller will resist unlimited exposure, and the buyer's remedy depends on disclosure, so the quality of the disclosure process matters.
Specific indemnities for known risks, such as a tax exposure or dispute, which sit outside the warranty limits and give full recovery for the identified risk.
Tax covenant. A seller's undertaking to cover pre-completion tax liabilities, usually with a longer time limit than ordinary warranties.
Restrictive covenants. Non-compete and non-solicitation obligations on the seller must be reasonable in scope, duration and geography to be enforceable under Cyprus law.
Governing law and disputes. Cyprus law is the natural choice for a Cyprus target. Where the parties are in different jurisdictions, international arbitration is often preferred to the Cyprus courts, and recognition of the award in Cyprus is covered in our article on enforcing foreign judgments and arbitral awards.
What changed in 2026
Stamp duty has been abolished for instruments signed from 1 January 2026, which removes a cost and a filing step from share purchase and financing documents. Agreements signed on or before 31 December 2025 remain under the old regime. The abolition does not change the requirements for transfer and registration, or the AML and Registrar filings. See our article on the end of stamp duty.
The corporate tax rate is 15%, which affects valuation models and the price paid for the target's cash flows. Losses can now be carried forward for seven years. If the target has carried-forward losses, the buyer should check whether they will remain usable.
Deemed dividend distribution has been abolished for profits from 1 January 2026, and dividends to domiciled individual shareholders now carry a 5% Special Defence Contribution on profits from 2026, which changes the economics of extracting cash after completion.
Property-rich companies. The threshold at which shares are treated as deriving their value from Cyprus real estate, and so as subject to capital gains tax on sale, has been lowered to 20% of value. Gains on the sale of other shares generally remain outside Cyprus tax. Where the target holds property, the seller's tax and the buyer's pricing are both affected.
AML rules are changing. The EU Anti-Money Laundering Regulation applies from 10 July 2027, with a 25% beneficial ownership threshold that includes holders of exactly 25%, and stricter evidence requirements. The annual beneficial ownership confirmation window for 2026 runs from 1 October to 31 December.
Completion and after
Under the Companies Law, a transfer of shares requires an instrument of transfer signed by the transferor and transferee, and the transfer takes effect against the company when the buyer is entered in the register of members. A board resolution of the target approves the registration, and a new share certificate is issued to the buyer. Payment alone does not make the buyer a shareholder in law. After completion the buyer should:
update the statutory registers;
notify the Registrar of new directors and the resignation of former ones;
update the beneficial ownership register;
notify regulators where the target carries on regulated activity;
file any required tax and VAT updates; and
plan tax integration, including how the company's tax residence is maintained, since that depends on management and control being exercised in Cyprus.
Practical checklist
Fix the structure (shares or assets) and model the tax before agreeing terms.
Screen early for FDI, merger control and sector approvals.
Run legal, financial and tax due diligence together.
Draft conditions precedent, indemnities and a tax covenant around the findings.
Use a clear completion checklist and make the Registrar and register updates the same day where possible.
Prepare for the beneficial ownership and AML requirements that will apply from 2027.
Conclusion
A Cyprus share purchase is straightforward in form and demanding in substance. The mechanics of transfer are simple, but the approvals, the liabilities inherited with the company and the tax consequences decide whether the deal works. In 2026, with stamp duty gone, a higher tax rate and a new screening regime, the sequence of approvals and the allocation of risk in the agreement deserve more attention than before.
This article is provided for general informational purposes only and does not constitute legal advice. Specific legal advice should be sought before taking any action in reliance on the contents of this article.
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