Accounting or audit: what your Cyprus company needs

Accounting and audit are two jobs. Your accountant keeps the books through the year, files VAT and payroll returns and prepares the annual financial statements. An independent statutory auditor then checks those statements and gives an opinion. Every Cyprus company needs both kinds of work, with one exception: a small private company with turnover up to €300,000 and a balance sheet total up to €500,000 for at least two years in a row may have a statutory review instead of a full audit, under section 152A of the Companies Law. Groups and companies supervised by the Central Bank, CySEC or the Superintendent of Insurance cannot use the review. The audited or reviewed accounts go with the annual return (HE32) to the Registrar and are the basis of the corporate tax return, due by 31 January of the second year after the tax year. Independence rules mean the auditor should not also keep your books.

The accountant works through the year, monthly or quarterly:

• Bookkeeping: recording sales, purchases, bank movements and payroll.
• VAT returns every quarter if the company is VAT registered, due by the 10th day of the second month after the quarter, and VIES returns for intra-EU supplies by day 15 of the following month.
• Payroll: monthly PAYE and social insurance for staff, and the employer's annual return.
• Provisional tax estimates, paid by 31 July and 31 December.
• Annual financial statements under IFRS and the Companies Law, ready for the auditor.
• Tax computation and the corporate tax return, once the accounts are audited or reviewed.

An auditor examines the financial statements and gives an opinion on whether they show a true and fair view. The auditor tests balances, asks for bank confirmations and reviews contracts and the main transactions. The auditor does not prepare your books.

Independence rules limit what else the auditor may do for you, so bookkeeping is usually done by a different firm. Plan two to six weeks for the audit once the accounts are ready.

Yes, if it meets the conditions in section 152A of the Companies Law, Cap. 113. A private company may submit its financial statements to a statutory review when, for at least two consecutive years:

• its turnover does not exceed €300,000; and
• its balance sheet total does not exceed €500,000.

The review is lighter than an audit: the reviewer gives limited assurance rather than a full audit opinion. It is not available to groups, or to companies supervised by the Central Bank of Cyprus, CySEC or the Superintendent of Insurance. A new company does not yet have two years of figures, so the auditor checks which engagement is required. The Assessment and Collection of Taxes Law accepts a tax return based on audited or reviewed accounts.

• Annual return (HE32): filed with the Registrar within 28 days of the annual return date, the first one 18 months after incorporation, with the financial statements attached. Fee €20.
• Corporate tax return: for tax years from 2026, by 31 January of the second year after the tax year. The 2026 return is due by 31 January 2028.
• Provisional tax: two equal instalments by 31 July and 31 December of the tax year itself.

1. During the year: the accountant books transactions monthly or quarterly, files VAT and VIES returns and runs payroll.
2. By 31 July and 31 December: provisional tax instalments, based on the expected profit.
3. After the year end: the accountant closes the books and prepares the financial statements.
4. Audit or review: usually two to six weeks once the statements are ready.
5. Annual return: filed within 28 days of the annual return date, with the statements attached.
6. Tax return: by 31 January of the second year after the tax year, with any tax still due.

• Bank statements for every company account, including e-money accounts.
• Sales invoices issued and purchase invoices received.
• Contracts with clients, suppliers and lenders, and any changes to them.
• Payroll changes: new hires, leavers, salary changes, bonuses.
• Loans between the company and its owners or directors.

Sending these every month keeps VAT returns on time and makes the year-end audit shorter. Missing documents are the main reason an audit takes longer than planned.

• Leaving bookkeeping to the year end: the audit then waits for months of catch-up work.
• Asking the auditor to keep the books as well, which independence rules restrict.
• Assuming a small company needs nothing checked. Even a company that qualifies for a review needs one.
• Missing the annual return because the audit is late: the return needs the accounts attached.
• Comparing a cheap bookkeeping quote with a full package that includes audit and tax return.

Ask for both quotes on the same profile:

• Number of transactions and bank accounts a year.
• Whether the company is VAT registered and trades with other EU countries.
• Number of staff on payroll.
• Countries you trade with and any group companies.
• Whether the company qualifies for a statutory review instead of an audit.

Ask each provider which filings are included: VAT, VIES, payroll, annual return and tax return. Keep Registrar and Tax Department fees separate from service fees.