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International Cyprus Trust

Cyprus is a serious trusts jurisdiction. The management and registration of International Cyprus Trust is a core area of Taxways Limited’s practice.

An international Cyprus trust may be described as a trust created by a non-resident settlor for the benefit of non-resident beneficiaries. A trust can still qualify as an international trust for the purposes of law even if the settlor, trustee or the beneficiaries are international business companies or international partnerships.

Trusts formed in Cyprus are governed by the Trustees Law, Cap. 193, which is based on the English law of trusts. The English common-law and equity rules are also applicable.

In order to establish an international trust:

• a) The settlor must not be a permanent resident of Cyprus.
• b) No beneficiary other than a charity is a permanent resident in Cyprus.
• c) The trust property does not include any immovable property situated in Cyprus.
• d) At least one of the trustees during the whole duration of the trust must be a permanent resident in Cyprus

International trusts may exist for a period of 100 years from the date of their creation. The trust period for charitable and purpose trust is unlimited.

Advantages of Cyprus International Trusts:

• The same person can be the settlor, the trustee (through Cyprus IBC (offshore company), in which he can be the sole director and he can be the only beneficial owner of the shares) and also a beneficiary i.e. an individual could have directly absolute control and ownership of the trust fund.
• There are no registration or reporting requirements for trusts established in Cyprus , nor are the names of the trust or of the persons referred to in the trust deed disclosed. No government or Central Bank of Cyprus official may disclose to anybody any information or documents in connection with settlor,beneficiaries, trustees and their duties, accounts or property of the trust.
• Income, gains and profits are exempt from income tax, capital gains tax, special contribution or any other taxes in Cyprus. There are no estate duty or inheritance tax in Cyprus.
• An International Trust may form a Cyprus IBC company, partnership or branch and obtain the benefits available to them.
• Cyprus offshore trusts are not subject to exchange control. Bank deposits with Cyprus banks, either onshore or offshore, are also not subject to exchange control.
• An international trust shall not be void or voidable in the event of the settlor’s bankruptcy or liquidation or in any action or proceedings against the settlor or at the suit of his creditors notwithstanding any provision of the law of Cyprus or of any other country.
• Cyprus law allows the removal of a trust from its jurisdiction and vice versa. In this way it provides the necessary flexibility if such transfer is advantageous for fiscal or other reasons.
• The nature of the Cyprus international trust could be "discretionary". As the name suggests the discretionary trust allows the trustee to exercise a large element of discretion with regard to distribution of income and assets, and to choose from a large"pool" of potential beneficiaries.
• Trust capital received in Cyprus by a foreigner resident or retired in Cyprus from trusts not resident in Cyprus is not taxable on the trustee.
• Dividends, interest or royalties received by an International Trust from a Cyprus international business company are not taxable and not subject to any withholding tax.

Above advantages of Cyprus International Trusts may be useful:

• To an individual who wishes to divert his overseas income to a discretionary trust instead of remitting it to his country of residence.
• To an individual who wishes to divest himself of personal assets for fiscal or other reasons
• To an individual who wishes to keep the ownership of his trading company anonymous and confidential. The shares may be held by a discretionary trust and the company may carry out trading and financial activities without disclosing the beneficial owners of the company.
• To any foreign trust company or trust in order to avail themselves of the unique Cyprus tax advantages.

Therefore, considering the location of Cyprus, being in the cross-roads of Europe, Asia and Africa coupled with the abovementioned advantages, one may conclude that Cyprus is an ideal trust jurisdiction.

The above is intended to provide a short general information only. If you want to obtain more information or register the Cyprus Intermational Trust please do not hesitate to contact us.