Cyprus International Trust Services

A trust is established by an individual (the Settlor) and is a means whereby assets (the Trust Assets) are held by one or more persons (the Trustees) for the benefit of another or others (the Beneficiaries) or for specified purposes. A Protector who can be the Settlor may be appointed to oversee the work of the Trustee.

According to the law, the Trustees are the owners of the trust assets, although they may not deal with it as absolute owners but rather in accordance with the provisions of the law relating to trusts and the rights of the beneficiaries as set out in the trust documents. In other words, the trustees are under a binding obligation to deal with the trust property in accordance with the law and the directions set out in the trust document.

The latest amendments to the International Trust Law have enhanced the efficiency of Cyprus International Trusts (CITs) as follows:

Conditions to Set Up A Trust in Cyprus:

• The settlor, being either a natural or legal person, is not a Cyprus tax resident during the calendar year immediately preceding the creation of the trust and
• No beneficiary, whether natural or legal person, other than a charity, is a Cyprus tax resident during the calendar year immediately preceding the creation of the trust and
• At least one trustee is a Cyprus tax resident during the lifetime of the trust.

Powers of the Settlor

The settlor of a trust has the power:

• to revoke or amend the terms of the trust
• to act as a director or officer of a company wholly or partly owned by the trust
• to appoint or remove any trustee, protector or beneficiary
• to limit the power of the trustee by requiring the consent of a protector

Asset Protection

Notwithstanding the provisions of any bankruptcy or liquidation laws in Cyprus or in any other country, unless it is proven to the court that the trust was made with intent to defraud the creditors of the settlor at the time of the transfer of assets to the trust, the trust shall not be void or voidable. The burden of proof lies with the creditors and such an action must be instituted by the creditors within two years from the date of transfer of the assets into the trust (settlement).

Tax Advantages

CITs enjoy important tax advantages:

• all income, whether trading or otherwise, of a CIT (ie a trust whose property is located and income is derived from outside Cyprus) is not taxable in Cyprus
• dividends, interest or other income received by a trust from a Cyprus company are also neither taxable nor subject to withholding tax provided that the beneficiaries are not tax residents in Cyprus. No tax is imposed on the distributions made to the trust if the beneficiaries are not residents of Cyprus.
• gains on the disposal of the assets of a CIT are not subject to capital gains tax in Cyprus
• a Cyprus non-resident who creates a CIT in Cyprus and retires in Cyprus is exempt from tax if all the property settled and the income earned is abroad, even if he is a beneficiary
• a CIT created for estate duty planning purposes is not subject to estate duty in Cyprus

Setting up a Cyprus International Trust

Cyprus International Trusts are normally created by a trust deed which is liable to a fixed stamp duty, irrespective of the amount of the trust fund, which is payable upon creation of the trust.

Trust Register

A trust register is kept by the Cyprus Securities and Exchange Commission (CySec) and any trust must be registered therein. The said register is
accessible by:

• The Cyprus Tax Department, the Cyprus Customs Department and the Cyprus Police with no restrictions
• Any liable entity, in the context of due diligence and identification measures for their client
• Any natural or legal person who can demonstrate a legitimate interest
• Any natural or legal person who has a controlling interest in a company or other legal entity

If access is granted, any natural or legal person will have access to the name, month and year of birth, the country of residence and the nationality of the people involved in the trust and the type and extent of the rights they hold in the trust.

Our corporate services professionals will assist you to set up your International Trust in accordance with Cyprus international Trust Law and provide assistance concerning the management of trust companies and offer trustee services and trust tax planning.