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International Business Company
International Business Company, it is usually means a limited liability company, the shares of which are held by non-residents and its activities are usually outside Cyprus. An IBC can either be resident in Cyprus, if its management and control is in Cyprus or non-resident if its management and control is outside Cyprus. Management and control suggests, among other things, that the majority of the members of the Board of Directors are resident in Cyprus and that the important decisions by the Board is taken in the Republic.
Characteristics of IBCs
- The registered address of the company must be in Cyprus;
- The number of shareholders in such a company may be from 1 to 50 and in case there is only one shareholder, it should be specified in the Memorandum and Articles of Association of the company;
- Shareholders may either be Cypriot or foreign natural or legal persons;
- There is no minimum authorized share capital but, as a matter of course, such share capital is usually EUR1,000 and the minimum issued share capital is EUR1,00;
- There should be at least one Director and one Secretary;
- Cyprus Companies are taxed at least 10% on their profits, provided that their management and control is exercised within Cyprus. In such case, these companies may be able to take advantage of the Double Tax Treaty Network available in Cyprus. If the management and control is outside Cyprus, then the company would not be subject to taxation in Cyprus;
- An IBC should submit accounts to the Tax Authorities and the Registrar of Companies;
- Anonymity, if required, is secured by having the shares held by nominees or trustees.
Advantages that an IBC may have:
- Gains from buying and selling shares and/or other securities are exempt from tax;
- No capital gains tax on profits made by the disposal of assets exists, except for immovable property situated in Cyprus;
- Dividends received from abroad are completely exempt from income tax;
- Lower withholding tax rates in other countries on remittances of income resulting from dividends, royalties, or interest due to the applicability of Double Taxation Treaties;
- Dividends (including payments of interest or royalties) paid to non-resident shareholders are not subject to any withholding taxes;
- Its profits are taxed at the corporation tax rate of 10%, provided its management and control is in Cyprus.