Cyprus Bookkeeping Requirements: What Every Company Must Maintain

Keeping proper accounting records is a statutory obligation for all Cyprus companies — not just good practice. The Cyprus Companies Law (Cap. 113) and the Income Tax Law both impose requirements. This guide explains what must be maintained, how, and for how long.

The Statutory Obligation

Section 141 of the Cyprus Companies Law requires every company to keep proper books of account:

“Every company shall cause to be kept proper books of account with respect to: (a) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place; (b) all sales and purchases of goods by the company; (c) the assets and liabilities of the company.”

“Proper” means: sufficient to give a true and fair view of the company’s state of affairs, and to explain its transactions. It does not specify a particular software or format.

The Income Tax Law additionally requires that records support the tax return. The Tax Department can request supporting documentation for any item in the tax return.

What Records Must Be Kept

Income Records

Sales invoices (issued by the company)
Other income evidence (bank interest, dividend notices, licence fee statements)
Contracts or agreements for recurring revenue

Expenditure Records

Purchase invoices and receipts for all business expenses
Expense claims (for employee expenses)
Payroll records (salary calculations, payslips)
Rent agreements and payment records
Bank charges and financial costs

Bank Records

Bank statements for all Cyprus and foreign bank accounts
Reconciliation of bank statements to accounting records (monthly)
Bank mandates showing authorised signatories

Asset Records

Fixed asset register (listing all assets: computers, furniture, IP, vehicles)
Acquisition cost and date
Depreciation schedule
Disposal records

Loan and Intercompany Records

Loan agreements (for any loans made to or received by the company)
Intercompany account statements (if the company transacts with related parties)
Transfer pricing documentation (if required — see below)

Payroll Records (if employees)

Employment contracts
Payroll calculations (monthly)
Payslips
Social insurance contribution records
PAYE withholding calculations

Corporate Records

Board meeting minutes and resolutions
Share certificates and share transfer forms
Directors’ register, members’ register

Accounting Method: Accruals Basis

Cyprus companies must use the accruals basis of accounting (also called the matching principle) — income and expenses are recognised when earned/incurred, not when cash is received/paid. This is the standard under both IFRS and Cyprus GAAP.

The cash basis is not acceptable for statutory accounts purposes.

Format: No Prescribed Software

There is no prescribed format or software. Records can be maintained:

In cloud accounting software (Xero, QuickBooks, Sage — most common for international companies)
In local Cyprus accounting software (Singular Logic, Pylon, SoftOne)
In spreadsheets (acceptable for very simple companies; not scalable)
In paper ledgers (theoretically acceptable, but impractical and not recommended)

Most reputable Cyprus accounting firms use cloud-based systems, which allow the client to have real-time visibility into accounts without waiting for end-of-year reports.

Record Retention Period

Cyprus Companies Law: Accounting records must be kept for at least 6 years after the end of the accounting period to which they relate.

Cyprus Tax Law: Tax records supporting filed returns must be kept for 6 years after the assessment year.

AML requirements: Records relating to customer due diligence, transactions, and business relationships must be kept for 5 years after the relationship ends.

Practical standard: Retain all business records for 7 years to be safe (covers all statutory requirements with a buffer).

What “kept” means: Records can be kept in digital form. Physical storage is not required. However, digital records must be:

Accurately reproduced from originals
Stored in a format that can be retrieved and read
Not subject to alteration without leaving an audit trail

Scanned copies of paper invoices are generally acceptable, provided they are complete and legible.

What the Tax Department Can Request

The Cyprus Tax Department has broad powers to inspect records in support of tax returns. They can request:

Full accounting records for any year under assessment
Bank statements
Contracts and invoices for specific transactions
Evidence supporting specific deductions
Transfer pricing documentation (for intercompany transactions)

The standard period within which the Tax Department can raise an assessment or open an enquiry is 6 years from the end of the tax year. For cases involving fraud or wilful default, there is no time limit.

Being unable to produce records = a problem. If you cannot substantiate a deduction or income item with records, the Tax Department can disallow it or raise an assessment. Maintaining complete records is both a legal obligation and practical protection.

Transfer Pricing Documentation

From 1 January 2023, Cyprus introduced formal transfer pricing rules and documentation requirements. If the company has transactions with related parties (parent companies, subsidiaries, sister companies, related individuals):

Transactions above €750,000/year with related parties must be documented in a Local File (a technical document explaining the pricing of each transaction type and why it is arm’s-length)
Groups above a certain size must also prepare a Master File (group-level overview)

Transfer pricing documentation is prepared by your accountant or tax adviser and must be ready before the tax return is filed. It is not filed with the return — but it must be producible if the Tax Department requests it.

Practical Bookkeeping for Remote Founders

If you are managing a Cyprus company from abroad, here is the most efficient approach:

Use cloud accounting software. Xero or QuickBooks allow your Cyprus accountant and you to access the same data simultaneously. Bank feeds automatically import transactions — no manual data entry.
Set up a dedicated company email for invoices. Forward all purchase invoices and receipts to a single email address that your accountant monitors. This eliminates the problem of lost receipts.
Reconcile monthly, not annually. Reviewing accounts monthly means problems are caught early. Waiting until April of the following year to start bookkeeping is the most common cause of delays and higher accounting costs.
Maintain a contracts folder. Keep digital copies of all contracts (customer agreements, supplier agreements, intercompany loans, lease agreements) in a shared folder your accountant can access.
Use electronic invoicing. Issue invoices from the accounting software directly. This creates an automatic record with no manual filing required.