A Cyprus IBC or Cyprus International Business Company is a private limited liability company limited by shares. These shares are the capital or stock of the IBC. At the time of the Cyprus IBC incorporation you have to declare the capital of the company in the Memorandum of the Company to the Company Registrar. On this capital you will pay tax at the same time by 0.6%. This tax you will pay only once. If you increase the capital later, you will pay the same tax on the new capital. For full info on the Cyprus Company Registration or Cyprus Company Formation, click on this link. A Cyprus IBC company has the great advantage of very low Cyprus Corporate Tax Rate. Follow this link for more reading.
Types of Capital of a Cyprus IBC
When incorporating a Cyprus IBC you have to declare in the Memorandum the Nominal Capital of the Company. This is the total capital of the company. You must divide the capital into shares of some value each. There is no limit to the value of the shares. If the capital is 1000 Euros, you can be divide it into 2000 shares of €0.50 each or 1 000 000 shares of €0.01 each.
You can divide the capital of a Cyprus IBC company into various categories of shares with different rights, obligations, or privileges. For example they can be only ordinary shares without any other qualification. That means that the shareholders will vote at the general meetings and also take dividends from the profits of the company. Or you can divide them into A Class Shares with voting powers and dividend benefits and B Class Shares without voting rights and only 50% dividend right of that of the A Class Shares. There are no limitations to the types of shares you can declare in your company.
Issued Capital if the Cyprus IBC
You have also to declare the Issued Capital of your Cyprus IBC Company. These are the shares that you grant to the subscribers of the Memorandum. So if the capital of the company is 1 000 000 Euro, divided into one million shares of one Euro each and the company grants 50 000 shares to each of five shareholders, that means that 250 000 Euro is the issued capital of the company. 750 000 Euro is the unissued or Nominal Capital, or undisposed capital.
A Cyprus Holding Company can hold capital in any other company in any country of the world. It does not pay tax on the dividends earned on those shares!
Payment of the Shares by the Shareholders
The subscribers to the Memorandum when getting shares of the company they don`t have to pay for them right away. The value of their shares will be considered as a debt to the company. The company of course can call on them to pay for the shares at any time. If the shares are not paid by the Shareholders and the company goes bust, they have to paid the value of their shares to the liquidator of the company.
For more information on the matter of the Cyprus IBC, or other issues email us here: [email protected]