This page is under development due to the recent amendments to the relevant law.

 

Download Circular C.2/2012: Amendment to the Cyprus International Trusts Law.

 


The Law

 

Cyprus Trust Law is based on the English Trustee Act 1925; in general Cyprus applies the English equitable principals on Trusts. The International Trust Law of 1992 aims to increase the reputation of Cyprus as an International Financial Centre by creating the necessary infrastructure

 

Characteristics

 

  • The settler is not a permanent resident of Cyprus
  • At least one of the Trustees is resident in Cyprus at all times
  • No beneficiary other than Charitable Institutions are permanent residents in Cyprus
  • The Trust property does not include any immovable property situated in Cyprus

 

Benefits from the use of a Cyprus International Trust

 

  • No formal registration is required
  • No Taxation on any Income or Profits or capital gains of the Trust
  • Complete freedom of the Trustees to invest the Trust funds subject only to the provisions of the Trust deed
  • The Trust profit is not subject to Estate Duty
  • Absolute confidentiality
  • Non-disclosure of information
  • The settler may, through a Cyprus offshore company controlled by his trust, become a Trustee or it's sole Trustee thus effectively managing it

 

Validity of a Cyprus International Trust

 

No foreign Law relating to inheritance or succession will invalidate a Cyprus International Trust
The validity of a Cyprus International Trust is not affected by the settler's bankruptcy or legal action by creditors unless it can be proved that the Trust was made to defraud the creditors and an action is brought by them within two (2) years from the transfer of the Trust assets to the Trustees.

 

Confidentiality

 

Confidentiality is the cornerstone of the New International Trust Law of Cyprus which ensures that the Trustee or any other person, including officers of the Government and of the Central Bank of Cyprus, may not disclose to any person any information or document in relation to the name of the settler or any of the beneficiaries, the consultations of the Trustee regarding the exercise of his power, discretion of duties, the reasoning of such specific exercise of power, discretion or duties or the elements supporting the aforesaid reasoning, the exercise of the power, discretion or the performance of the duties of the Trustee and the accounts of the International Trust. The above non-disclosure provisions of the New Cyprus International Trusts Law are very important because there are many jurisdictions where such confidentiality cannot be guaranteed and indeed where registration requirements necessitate the disclosure of settler's and/or beneficiaries.

 

Trust Advantages and ways to be used

 

Individuals who have income arising outside the Country of residence which they do not wish to remit to that country can arrange for such income to be remitted to the Trustees of a Settlement in another jurisdiction to be held in accordance with the Trust Deed and Letter of Wishes.

Individuals with substantial assets outside their country of residence, which country may in the future extend or change its control restrictions to include the remittance of overseas funds, may wish to retain the flexibility of overseas funds by transferring these to the Trustees of a Settlement.

Individuals who may wish to divest themselves of personal liability for pro-fiscal reasons can arrange those assets to be transferred to the Trustees of a Settlement and to be in accordance with the Trust Deed and Letter of Wishes.

Persons expecting to leave one country to take up residence in another may obtain much more financial advantage so far as the new country of residence is concerned, by placing the assets in a suitable Settlement
Persons who wish to invest in businesses overseas, but do not wish profits and dividends to be remitted to their country of residence, may set up a settlement to undertake the investment in the Overseas business

 

Protection of assets

 

Assets may be placed in a Cyprus International Trust to safeguard the interests of a beneficiary, e.g. sheltering the inheritance of a daughter from claims in case of divorce. Professional partnerships may also find that a trust assists in providing custody for personal assets and safeguarding them from loss through litigation.

 

Management, Profit sharing and Pension scheme

 

Companies may provide pension schemes, benefit plans and profit sharing arrangements by using a trust with their employees forming the class of beneficiaries. The trust provides a most effective method for grouping and sharing benefits and has the added advantage of being able to accommodate a rule book designed to suit each specific and individual circumstance


Power to Transfer jurisdictions

 

The Law applicable to a Cyprus International Trust can be expressly changed to a foreign Law provided that the new Law recognises the validity of the trust and the respective interests of the beneficiaries. Conversely, a trust established in a foreign jurisdiction may, by it's term, select Cyprus Law provided that the foreign Law itself recognises such a change. This provision ensures flexibility which may be important in the event of a change in Government, fiscal or other policy which makes it beneficial to change a trust's location.

Areti Charidemou & Associates LLC Law Firm