Free Zone

🆓What is a Free Trade Zone Company (FTZC) in Northern Cyprus

A Free Trade Zone Company (or Free Zone Company) in Northern Cyprus operates under the legal framework of the Free Port and Zone Law (Law No. 26/1983), together with Chapter 113 of the Companies Law.

Companies registered in the Free Trade Zone are typically exempt from many of the taxes and duties that apply outside the zone — especially for operations connected with foreign trade (exports, imports, transit, etc.). The zone (notably the Famagusta Free Zone) is specifically designed to encourage international business activity, logistics, manufacturing, certain services, etc.
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📌Key Benefits

📌Tax Exemptions - Exemption from corporate tax, income tax, customs duty, VAT (on applicable foreign/zone-oriented activities).

📌Profit Repatriation - You can transfer profits or retained earnings abroad freely, without facing local restrictions.

📌Foreign Ownership & Labor - Foreign nationals can own 100% of the company. Also, you can employ foreign staff, including specialists, engineers etc.

📌Flexibility in Physical Presence - In many cases, service-type companies (e.g. consulting, IT, online services) can operate with minimal physical presence (even via P.O. Box or mailbox) rather than full office/facility.

📌Strategic Location - Located in the Eastern Mediterranean, with access to Europe, Middle East, Asia; the Famagusta Port offers logistical advantages.
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📝What You Need — Requirements & Steps

If you’re considering setting up an FTZ company in Northern Cyprus, here are the typical requirements and the process, based on current regulations:

1. ⚖️Legal basis & law compliance
Comply with Free Port & Zone Law No. 26/1983 and the Companies Law (Cap. 113).

2. 🏢Company structure
o Usually a Limited Company.
o Minimum of 2 shareholders required.
o Need a Director and a Secretary. These may be non-citizens

3. 💸Minimum share / paid-up capital
o If any shareholder is a non-TRNC citizen, there is a minimum paid-up share capital requirement.
o Many sources say €25,000 for foreign shareholders.
o Some sources put it at €50,000 for certain configurations.

4. 📚Documentation
You’ll typically need:
o Valid ID or passport of shareholders, directors, secretary.
o Proof of address.
o Certificate of clean criminal record (especially for non-citizens).
o Memorandum & Articles of Association drafted under Cap. 113.

5. 📜Legal incorporation / registration
o Choose a company name and check availability.
o File incorporation documents with the registrar.
o Payment of application/licence fees.

6. 🪪Licence / Free Zone Permit
o Apply for the Free Trade Zone licence for your business activities.
o Pay Free Zone licence fee (once). Some sources mention a licence fee of ~ US$2,500 .

7. 📦Physical or proxy presence
Depending on the type of activity, you may need to lease or rent actual space (warehouse, office)
within the Free Zone, or you might be able to operate via mailbox / P.O. box if services-based.

8. 💵Banking & financial arrangements
o Open a corporate bank account (often requires in-person and identity checks).
o Deposit the minimum capital as required.

9. ✅Compliance & reporting
o Maintain accounting records as required by law.
o File any required returns, social insurance contributions for employees, etc.
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⚠️Potential Limitations / Things to Watch Out For

While the benefits are attractive, there are some caveats to bear in mind:

🤑 Domestic Market Trade
If you sell goods or services into the Domestic TRNC market (outside the Free Zone), you may lose the tax-exempt or duty-free status for those goods or portions of operations. VAT, duties, or tariffs may apply.

👏 Recognition
TRNC (Northern Cyprus) is only recognized by Turkey. This has implications for things like international legal enforceability, recognition of documents, banking, etc. Some partners/customers may ask about jurisdictional risk.

👔 Regulatory / bureaucratic delays
Even with FTZ status, getting all permits, registrations, bank accounts etc., can take time, particularly if you are a foreigner and need to satisfy due diligence or criminal record / verification from non-TRNC / non-EU countries.

💲Minimum capital and fees
The requirement for minimum capital, licence fees, and possible ongoing costs (accounting, auditing, social insurance for employees) should be factored in. Although many tax exemptions apply, you still have some overhead.

🚫 Operational restrictions
Some types of business may require specific licences; certain sectors might have additional regulatory or licensing burdens (e.g. financial services, insurance etc.).
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⏳Steps & Timeline (Estimated)

Here’s a rough timeline for setting up an FTZ company, assuming you have your paperwork in order and no major delays:

📍Preparation of documents (IDs, address proofs, criminal records, MOA/AOA etc.) Collecting all required documents from shareholders/directors etc. - 1–3 weeks (depending on origins, apostilles etc.)

📍Name reservation / checking company name - Submit company name for approval~ a few days to 1 week

📍Incorporation / registration with Registrar & Free Zone authority - Filing documents, paying fees, initial capital deposit 2–4 weeks

📍Obtaining licence / permit, opening bank account, leasing space if needed - Fulfill physical or mailing address requirements; set up operational requirements - 1–3 weeks more depending on bank and real estate availability

📍Full operational readiness - Once banking, licensing, staff hire, facility (if needed) are ready - Up to 1 month after registration (so total maybe 4-8 weeks in realistic cases)
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╰┈➤Practical Examples / Case Studies

To give you a sense of how people are using FTZ companies in Northern Cyprus:

👉 Many online service / tech / consulting companies use FTZ status and minimal physical presence (sometimes just a P.O. box) to enjoy zero VAT / zero corporate tax on foreign income.

👉Import/export businesses and manufacturing use the Free Port (e.g., Famagusta Port) to take advantage of the duty-free imports of raw materials, manufacturing onsite, then re-exporting.
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💰Recent Cost Indicators

Some of the recent cost / fee items people report:

💲Free Zone licence fee: approx US$ 2,500 one-off for many cases.
💲Minimum capital: ≈ €25,000 for foreign shareholders.
💲Some annual fees still exist (for example social insurance / employee contributions).
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❓Is It Right for You?

You’ll want to ask yourself whether:

👉 Your business’s main markets / clients are outside Northern Cyprus

👉 You need to sell into the domestic market and whether that part of the business can be separated

👉 Whether you can manage the documentation / regulatory step-ups as a foreign investor

👉 Whether the cost of physical presence (office / warehousing) matters, or whether operating with minimal infrastructure is acceptable

👉 Whether banking, legal, and contract enforcement in TRNC suits your risk profile
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🏁Conclusion

Opening a Free Trade Zone Company in Northern Cyprus offers strong advantages for businesses engaged in international trade, services aimed at foreign markets, or those wanting significant tax savings. If structured well, it's a powerful tool. But as always, due diligence counts: legal advice, clarity on your business activities, and awareness of any obligations or restrictions are essential.