The Cyprus International Trust

Date of last update: 1 September 2013

Introduction

Cyprus International Trusts are set up under the provisions of the International Trust Law of 69/92.

Cyprus International Trust is a trust which meets the following:

  • The settlor is not a permanent resident in the Republic of Cyprus;
  • The beneficiary is not a permanent resident in Cyprus (except charitable institutions);
  • The trust property does not include immovable property in Cyprus;
  • At least one trustee is resident in Cyprus (A Cyprus resident company is considered as a resident trustee).

Trusts may be used by individuals to protect their assets as well as for inheritance purposes or by employers to set up employment benefit scheme trusts for their employees.

There are various types of trusts with different complexity but all have one common fundamental feature.  The ‘trustee’ (either an individual or a legal entity) who agrees to hold the ‘trust fund’ (certain assets) in its name for the benefit of the ‘beneficiary’ (actual owner) on certain terms, maintains certain powers which are usually set out in the ‘trust deed’. 

The trustee has legal title over the assets comprising the trust fund, being the registered owner thereof. However, the trustee is under a duty that may be enforced by a Court, to hold those assets and the income arising therefrom for the benefit of the beneficiary.

On the other hand, the beneficiary has the beneficial or equitable title over the assets comprising the trust fund.

Tax Aspects of Cyprus International Trusts

  • All income of an International Trust whether trading or otherwise including dividends and interest is neither taxable nor subject to withholding tax;
  • Gains on disposal of the assets of an International Trust are not subject to capital gains tax in Cyprus;
  • An International Trust created for estate duty purposes would not be subject to estate duty in Cyprus;

Other Aspects of Cyprus International Trusts

In addition to tax purposes, someone may use the Cyprus International Trusts for many purposes such as estate planning, anonymity or even for maintaining funds overseas. 

 

Legal Disclaimer
The information in this report is for information purposes only. It is not intended to constitute tax, legal or other professional advice, and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances. We accept no responsibility for any errors, omissions or misleading statements in this report, or for any loss which may arise from reliance on materials contained in this report.

 

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