Inheriting shares in a Cypriot company is a process that requires a detailed understanding not only of Cypriot national law, but also of international regulations, as Cyprus is one of the most popular offshore jurisdictions, attracting foreign capital due to its low taxation and convenient corporate structures. However, in the case of share inheritance, factors such as legal restrictions, corporate by-laws, disclosure requirements and international tax implications can significantly complicate the procedure. This study examines key aspects of share succession in Cypriot companies, a comparative analysis with other jurisdictions, problems encountered in practice, and court cases illustrating the actual application of the law.

Legislative regulation of inheritance of shares in a Cypriot company

The process of inheriting shares in a Cypriot company is regulated by several pieces of legislation:

1. Wills and Succession Law (Wills and Succession Law, Cap. 195)
   • Defines the rules of inheritance of property (including shares), the specifics of a will, the procedure for recognizing heirs and court proceedings.
   • This law establishes the principle of forced heirship, according to which Cypriot citizens cannot dispose of more than 75% of their estate in a will if they have first line heirs (children, spouse, parents).
   • However, this principle does not apply to non-residents, which gives foreign owners of Cypriot companies more freedom to transfer shares.
2. Companies Law (Cap. 113)
   • Defines the procedure for the ownership and transfer of shares, as well as the role of the Registrar of Cyprus Companies in the succession process.
   • This law stipulates that changes in the shareholding structure must be registered in the official company registry.
   • The company’s articles of association may contain restrictions on the transfer of shares, such as requiring approval from the board of directors.
3. Estate Duty Law
   • Until 2000, Cyprus had an inheritance tax, but this has been completely abolished.
   • This makes Cyprus one of the most favorable jurisdictions in terms of tax planning for the transfer of corporate assets.
4. Rome Regulation (EU Succession Regulation No 650/2012)
   • Cyprus is a member of the EU but is not a signatory to this regulation, which means that inheritance affairs of Cypriot companies are governed by domestic law.

Thus, the legal regulation in Cyprus is characterized by high flexibility for foreign owners, but requires careful study of corporate documents, as the company can independently establish restrictions on the transfer of shares.

The process of inheriting shares in a Cyprus company: a step-by-step breakdown

Step 1: Recognizing the death of the share owner

The first step is to officially recognize the death of the shareholder. For this purpose, it is necessary to provide the Cypriot authorities with a certified translation of the death certificate issued in the owner’s country of residence.

Step 2: Determining whether there is a will

• If a will has been made, it must be legalized in the Cyprus court (probate process).
• If there is no will, inheritance is by law, according to the established order of distribution of the estate.

Step 3: Appointment of an executor (executor)

• If the will names an executor, the executor is authorized to administer the shares.
• If no executor is named, the court appoints an administrator of the estate.

Step 4: Debt settlement

Before transferring the shares, it must be ensured that the deceased shareholder has no debts to tax authorities or creditors.

• In Cyprus it is allowed to sell part of the inherited assets to cover debts.

Step 5: Re-registration of shares

• The re-registration of shares requires the submission of documents to the Registrar of Companies in Cyprus.
• The new shareholder is entered in the register, after which he/she receives all rights to own and manage the shares.

Comparative analysis with other jurisdictions

Comparative analysis with other jurisdictions

1. United Kingdom

• England has an Inheritance Tax of 40% on amounts over £325,000.
• The transfer of shares requires an assessment of their market value.
• There may be tax relief if the shares are owned by a company engaged in trading (Business Property Relief).

2. USA

• The US has a federal inheritance tax, which can be as high as 40%.
• If the shares are owned by a US company, the heir may face capital gains tax on their sale.

3. Germany

• German law provides for a progressive inheritance tax (up to 50%), depending on the degree of kinship and the value of the assets.
• Corporate structures may contain restrictions on the transfer of shares.

4. Russia

• In Russia, inheritance tax is abolished, but personal income tax (13%) must be paid on the sale of inherited assets.
• The transfer of shares may be complicated by corporate agreements and requirements of consent of other shareholders.

Thus, Cyprus offers the most favorable conditions for inheriting corporate assets, as there is no inheritance tax and the transfer of shares is possible without significant restrictions.

Court practice and real examples of share inheritance

Case 1. Dispute over rights to shares between heirs

In a high-profile case in the Cypriot courts, the heirs challenged the distribution of shares as one of them claimed that the will had been signed under duress.
Court’s decision: the will was recognized as valid as it complied with Cypriot law and was notarized.

Case 2: Problems with corporate statutes

A company had a rule that shares could not be transferred to third parties without the approval of the board of directors.
Result: the court recognized the company’s right to reject the transfer of shares, which resulted in the need to sell the business.

Practical advice on inheriting shares in a Cyprus company

1. Make a will – this will avoid litigation.
2. Check the company’s articles of association – some companies restrict the transfer of shares.
3. Use trusts – they allow you to transfer shares bypassing complicated court procedures.
4. Consult with lawyers – Cypriot legal regulations can change, which affects the inheritance procedure.

Conclusion

Cyprus provides favorable conditions for inheriting company shares, especially for non-residents, as there is no inheritance tax and minimal bureaucratic barriers. However, the complexity of the procedure requires careful planning, consideration of corporate restrictions and possible international tax implications. Conducting inheritance planning with the involvement of professional lawyers allows you to avoid problems and protect the interests of heirs.

AlmanovaLaw specialists have many years of experience in inheritance law, corporate law and international tax planning. They are ready to assist clients in resolving all issues related to the inheritance of shares in a Cyprus company, including:

• Legal audit of the inheritance case – verification of the existence of the will, corporate documents and the rights of the heirs.
• Legal support – representation of interests in Cyprus courts in case of disputes between heirs.
• Document preparation – preparation and submission of all necessary documents to the Registrar of Companies (Registrar of Companies).
• Tax planning – minimizing tax risks in the transfer of shares and subsequent management of assets.
• Trusts and Foundations – assistance in setting up trust structures for efficient asset management.
• International law advice – analyzing the implications of inheritance in different jurisdictions, including Russia, the UK, Germany and the USA.

AlmanovaLaw lawyers provide full legal protection and develop personalized inheritance planning strategies, helping clients avoid bureaucratic complexities and litigation. By contacting AlmanovaLaw, you are guaranteed to receive a professional approach, reliability and confidentiality in all matters related to the inheritance of corporate assets.