One of the vehicle more interesting for many entrepreneurs, wealthy families or high profile individuals is the use of Cyprus trusts and settlements.
We assist you during the process of founding and administrate your Cyprus International Trust with the objective to protect your assets.
Establishing an International Cyprus Trust
Cyprus International Trusts are regulated by the International Trusts Law. Following this Law, Cyprus International Trusts are:
- The settlor must not be a permanent resident in the Cyprus.
- At least one of the trustees during the whole duration of the trust is a permanent resident in Cyprus.
- If the beneficiary is a permanent resident of Cyprus, then it must be a charitable institution.
- The trust property cannot include any immovable property situated in Cyprus.
The main parts forming the Trust are the Settlor, the Beneficiaries, the Trustees and the Protector.
The Settlor is an individual or even a company who by law is allowed to transfer assets to the trustee.
The Trustee is an individual who is an adult and of sound mind, (or a corporate body, if authorized by its constitution), may be a trustee.
The Beneficiaries can be any individual(s), including unborn persons, minors, and persons of unsound mind, or a corporate body can be the beneficiary. A settler creating a trust may also be a beneficiary of that trust. A trustee can also be the beneficiary of a trust provided that he or she is not the sole trustee nor beneficiary as in that instance no trust would effectively exist.
The Protector may stipulate that the trustees consult a nominated independent third party before exercising any power of discretion, in order that this third party, or protector, can be satisfied that the assets of the trust and the duties of the trustees are being attended to in a satisfactory manner.
TAX Advantages of Cyprus International Trusts
The main advantage are that the income and profits of an International Trust are completely exempted from any tax imposed in Cyprus, such as capital gains or special contribution for defense.
- Any trust income received by the trustee from a business company abroad such as interest or dividends is therefore exempt from income tax.
- The Cyprus International Trust is a good way of overcoming ‘forced heirship’ and allows to the individual to distribute and decide for himself the proportions in which his assets will pass.
- Dividends, interest or other income received by a Trust from a Cyprus international business company are also neither taxable nor subject to withholding tax.
- Gains on the disposals of the assets of an International Trust are not subject to capital gains tax in Cyprus.
- A foreigner who creates an International Trust in Cyprus and retires in Cyprus is still exempt from tax if all the property settled and the income earned is abroad.
- An international Trust created for estate duty planning purposes would no be subject to estate duty in Cyprus.
- Although there is no specific provision in statute which relates to the appointment of a protector, the usage of a protector into the trust instrument or/and the letter of wishes is something which is commonly used. The Trust’s Protector’s role is to add an additional layer of protection and is usually a person which is familiar with the settlor’s long term financial and personal goals.
One of the major points of the Cyprus International Trust is Confidentiality. Actually as it is indicated by the Law the trustee or any other person including officers of the government and officials of the Central Bank of Cyprus cannot disclose to any person who has no right by law to know any documents or information which relates to the International Trust.
Confidentiality is also safeguarded from the mere fact that International Trusts are exempt from any obligation of registration (section 15 of the Law). There is also no obligation to submit tax declarations or financial statements.
In fact, Cyprus International Trusts are not subject to exchange control. Bank deposits with Cyprus banks, either local or international, or with any other international bank, are also not subject to exchange control. The absence of exchange control restrictions and the availability of excellent telecommunications and international banking services, make Cyprus a very attractive place to receive and transfer funds.