Cyprus International Trusts
CYPRUS INTERNATIONAL TRUST AND TRUSTEE SERVICES
Cyprus is a well-established and reputable international financial centre with very attractive opportunities and benefits for setting up and operating a Cyprus International trust. Cyprus International Trusts (CIT’s) have long provided a high threshold of protection and flexibility for non-residents, and today attract high-net-worth individuals (HNWIs) from around the world.
The law governing the Cyprus International Trusts has undergone some significant reforms and the amending law (Law 20(I)/2012) which was introduced in early 2012 is said to have transformed the regime into the most attractive and favourable trust regime in Europe providing maximum protection, confidentiality and flexibility to tax structures.
BENEFITS OF CYPRUS INTERNATIONAL TRUSTS:
- Income, profits and gains from non-Cyprus sources are discharged from taxes in Cyprus including the exemption from Income Tax, Capital gains Tax, the Special Defence Contribution and any other tax at the time of writing.
- The international profits and earnings are taxable in Cyprus only if the beneficiary is a tax resident in Cyprus.
- Royalties, interest or dividends received through a CIT from a Cyprus company are not taxable and not subject to any withholding tax.
- Non-tax residents of Cyprus who are also beneficiaries are only taxed on Cyprus sourced income in accordance to the income tax laws of Cyprus.
- There is no inheritance tax or estate duty.
- The extensive network of Double Tax Treaties in which Cyprus has entered into, is a powerful tool in planning for the legitimate avoidance of taxation, and provides a considerable number of advantages to natural and legal person of HNWIs who have chosen to form their legal entities in the beautiful island of the Republic of Cyprus.
Applicate tax law:
If the beneficiary is resident in Cyprus the earnings of a Cyprus International Trust that are either gained or expected to be gained from sources in and out of Cyprus are liable of taxation imposed in Cyprus.
- A Cyprus International Trust can be used to protect the clients’ assets against expropriation or claims brought against by governments or potential claimants.
- CIT’s can be a means for high net worth individuals to shield their property from their spouses or former spouses.
- A CIT can also be used to protect assets against claims in violation of tort law or contract law as a result of transactions entered into by the previous owner/settlor of the Trust.
- A CIT can be used for the protection against the nationalisation or seizure of assets.
- The Trustees owe a duty of confidentiality to both the settlor and the beneficiaries. They cannot reveal or disclose any information or documents except where they are instructed by a specific court order.
- Registration of the CIT in the Trusts Registry is essential. The enrolment does not require the submission of the relative Trust Deed and more importantly the exposure of the settlor, the beneficiaries and information is not publicly accessible to everybody. They are only available to the Competent Authorities in cases of inspection.
- There are no reporting obligations for CIT’s.
- A trust provides a confidential and flexible way in which an individual can decide how their assets are to pass on death. Many countries have what is called “forced heirship” laws which govern how assets pass on to relatives upon death. These laws may be circumvented, if an individual wishes to decide for himself the proportions in which his assets will pass on, or the special provisions he will make for a needy or a disabled relative, or a gift he may wish to pass to a friend or a charitable institution. A trust is a good way of overcoming forced heirship laws.
- While a trust is being created the Settlor might reserve powers to himself drafted into the trust instrument. These powers can revoke, diversify or modify the terms of a trust, to appoint or remove any trustee, enforcer, protector, beneficiary, and investment adviser or to direct the trustee accordingly.
- Trusts may exist for the duration of a lifetime plus 21 years or in the case where no natural person is involved it can exist for a period of 21 years.
- Re-domiciliation of a Trust registered in a foreign jurisdiction is feasible and very cost effective.
There are no control regulations for the exchange of information.
A trust is a legal arrangement that can be defined as the obligation which is placed upon an individual (i.e. the Trustee) to whom property is transferred by the owner of the property and most often the creator of the Trust (i.e. the Settlor), to hold and manage the trust property for a certain period of time, based on the expressed wishes of the Settlor as set forth in a Deed of Trust. These can be either written or oral, for the benefit of a specified person or persons or class of persons (i.e. the Beneficiaries).
- The Settlor is the natural or legal person who creates the trust, he is considered the owner of the Trust property and he shall be of sound mind and of the right age. The settlor(s) shall not be a resident(s) of Cyprus at the time when a CIT (Cyprus International Trust) is established.
- The Trustee is the legal or natural person who accepts to hold the trust property in his name for the benefit of the Beneficiary, under the terms of the Trust. The Trustee is responsible for the management of the Trust. At least one of the trustees must be resident of Cyprus during the whole duration of the trust.
- The Beneficiary is an individual, a company or any other entity which receives the benefits of the Trust property. In the case of discretionary Trust, the Settlor can define classes of beneficiaries instead of specifying certain persons or entities. The beneficiaries shall not be residents of Cyprus at the time when a CIT (Cyprus International Trust) is established.
- The Protector in an individual or a company which is appointed by the Settlor to protect the Trust property/assets. The protector is entitled to control the Trustee but not to intervene in his obligations and undertakings. He also has the power to veto the decisions of the Trustee and also to appoint or cancel the appointment of the Trustee. Appointing of a protector is not compulsory.
REQUIREMENTS FOR A VALID TRUST
The Settlor shall be of sound mind and of full age;
- The Settlor shall not be a resident of Cyprus at the time when a CIT (Cyprus International Trust) is established but the settlor may become resident of Cyprus once a trust has been established.
- The beneficiaries shall not be residents of Cyprus during the calendar year which preceded the year of creation of the trust. They may become resident of Cyprus once a trust has been established.
- At least one of the trustees must be a tax resident person during the whole duration of the trust.
- There must be three positive assurances:
Assurance of intention: proof of the settlor’s express intentions to form the Trust
Assurance of subject matter: the Trust Assets must be readily recognisable otherwise the trust may run the risk of being void or a sham.
Assurance of objects: the identity of the beneficiaries must be clearly stated and sufficiently defined in cases where there is a group of people or a class of beneficiaries to be ascertained.
USES OF CYPRUS INTERNATIONAL TRUSTS
- To invest overseas and ensure the protection and safety of the investments;
- To provide for minors and/or successive generations (for inheritance planning purposes);
- To divest personal assets;
- To provide for a couple’s marriage whilst securing a property in case the marriage fails;
- To use as a tax planning vehicle in order to minimize excessive tax burdens for high net worth individuals;
- To protect personal assets from domestic inflation rates, possible expropriation laws and other similar regulations;
- To give encouragement to the workforce: e.g. via employee trusts of various kinds;
- To plan for abstract intentions that are not charitable (‘the purpose trust’);
- For charitable purposes
Elias Christofi & Co. Ltd is one of the top providers of Cyprus International Trusts having registered and administered more than 60+ Trusts in its agenda.
Our team of professionals take care of even the slightest details aiming to support you as much as possible:
- Provide customised Trust Deeds that meet each customer’s needs and objectives;
- Collection and distribution of interest and dividend earnings in accordance with the Letter of wishes of the Settlor;
- Maintenance of books and records to account for the trust’s income;
- Maintenance of all statutory records and clients KYC
- Provision of trusteeship services;
- Provision of Administrative Office;
- Preparation of annual financial statements;
- Complying with tax laws and regulations by filing returns and providing tax information to grantors, beneficiaries and others;
- We are responsive to the beneficiaries needs;
- Complying with all bank and government regulations whilst informing you of any changes or updates to the law;
HOW CAN WE
Contact us at the Elias Christofi & Co. Limited office or submit a business inquiry online.