International Trusts

In Cyprus International Trusts are governed by the International Trusts Law 1992, which regulates the establishment and administration of International Trusts. Under this law, Cyprus International Trusts are defined as those where:

  • The settlor is not a permanent resident in the Republic of Cyprus;
  • At least one of the trustees during the whole duration of the trust is a permanent resident in the Republic of Cyprus;
  • No beneficiary other than a charitable institution is a permanent resident of the Republic of Cyprus; and
  • The trust property does not include any immovable property situated in the Republic of Cyprus

A trust is established by an individual (the Settlor) and is a means whereby property (the Trust Property) is held by one or more persons (the Trustees) for the benefit of another or others (the Beneficiaries) or for specified purposes. The Settlor can be a Trustee and the Settlor and the Trustees or any of them can be Beneficiaries.

In law, the Trustees are the owners of the trust property, 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 direction set out in the trust document.

The trust property can include all kinds of assets situated anywhere in the world.

The most common types of Cypriot international trusts include:

  • Discretionary Trusts
  • Fixed Trusts
  • Charitable Trusts
  • Purpose Trusts
  • Protective Trusts

International Trusts are not taxed in Cyprus. In fact, Cyprus International Trusts enjoy important tax advantages, providing significant tax planning possibilities. The following advantages are indicative of the possible options for tax minimization.

  • All income, whether trading or otherwise, of an International Trust (i.e. 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 international business company are neither taxable nor subject to withholding tax.
  • Gains on the disposal of the assets of an international Trust are not subject to capital gains tax in Cyprus.
  • An alien 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, even if he is a beneficiary. So what will be our plan
  • The assets of an international trust are not subject to estate duty in Cyprus.
  • Trusts are usually used by wealthy individuals for the purpose of protecting their inheritance or capital gains taxes in their home country. They can also be used by expatriates settling into a trust before repatriating, assets acquired while working abroad, to protect such assets from the tax net of their home country.
  • No inheritance tax in Cyprus

Other advantages of Cyprus international trusts include:

  • no registration or reporting requirements. The names of the Settlor and the beneficiaries are not disclosed to any third party,
  • Cyprus law allows a trust to relocate its jurisdiction providing flexibility to respond to changes in personal circumstances or fiscal law,
  • allow a family to retain ownership of property;
  • permit the control and enjoyment of assets to be maintained, despite giving or selling the assets to others;
  • benefit certain groups of people, for example, the mentally disabled, while control of the property is withheld from them;
  • act as a management vehicle. Investment Trust Funds, banks, etc. through a structure of a trust and an offshore company that acts as a trustee manage funds for their clients,
  • No exchange control restrictions