Cyprus to abolish heavy fines for the late submission of data on the final beneficiaries of companies' assets

In 2024, many Cypriot companies were fined tens of thousands of euros for late submission of final beneficiary information.

However, for some of them the fines were unaffordable, while others had difficulties with the payment process. As a result, not all of them were able to pay their debts to the state on time.

Fortunately, the Cypriot government and parliament recently agreed to cancel old fines imposed on individuals and companies. As expected, the amount of these fines was recently revised downwards. According to the changes, a maximum fine of up to €5,000 will now be imposed for late submission of information on the final beneficiaries. It should be noted that earlier the amounts exceeded 20 thousand euros. It is expected that the abolition of huge fines will be a lifeline for companies that failed to meet the requirements set by the island state in time.

It is worth remembering that from 1 April 2024, fines will be imposed on legal entities that have not submitted data on the final beneficiaries. The first "deadline" for submitting data on the ultimate beneficiaries of companies expired on 31 July 2022. However, on 5 August of the same year, the Ministry announced that it would introduce a transitional period until 30 September 2023, during which companies that were late in submitting data would not be fined. This was subsequently extended for a further six months.

The creation and launch of the UBO electronic register was handled by a private company that won the government tender.

The money for the digital version of the register of beneficial owners was provided by EU funds under the Cyprus Recovery and Development Programme. Note that a beneficial owner or Ultimate Beneficial Owner (UBO) is an individual who ultimately owns or controls a company.

The following types of ownership or control can be distinguished:

1. Direct - the beneficial owner directly owns more than 25% (25% + 1 share) of the shares or has an interest in more than 25% of the shares of the company;
2. Indirect - the beneficial owner owns shares/interests in the company in the above amounts through a legal entity;
3. mixed - the beneficiary's direct and indirect shareholdings total more than 25%.

The beneficial owner of a company can be an individual, a trust, a foundation or a listed company. If the beneficial owner of a company is a partnership, the individuals behind the partnership who control the company must be disclosed.

What details of beneficial owners are recorded in the register?

About individuals:

1. Full name, date of birth, nationality, current place of residence;
2. Passport details, country of issue;
3. Level of ownership (direct or indirect);
4. Date of entry of the individual's data in the Register as a UBO;
5. the date on which the individual's details were changed or the date on which the individual ceased to be the company's UBO.

About trusts, foundations:

1. Name, registration number (not applicable to trusts outside Cyprus), country of jurisdiction;
2. Legal address (not applicable to trusts);
3. Nature and amount of beneficial interest;
4. Date of registration of the legal entity as a UBO in the register;
5. the date of the change of the legal entity or the date on which the legal entity ceased to be a UBO of the company.