A Cyprus International Trust is characterized by the following:
- The Settlor and beneficiaries can relocate to Cyprus and become tax residents of Cyprus on the condition that both of them were not residents of Cyprus during the calendar year which proceeds the year of the establishment of the trust.
- At least one of the Trustees of the Trust must be a permanent resident in Cyprus during the duration of the Trust.
- The Trust property can include any movable and immovable property in Cyprus and/or abroad as well as shares of companies registered in Cyprus.
Tax Features of a Cyprus International Trust
Cyprus International Trusts offer numerous tax advantages and provide significant tax planning opportunities.
Amongst other reasons, a Trust can be used for protection of assets, inheritance planning, or by employers for setting up benefit schemes for the benefit of employees.
All income received by an International Trust is not taxed in Cyprus.
Dividends, interest or other income received from a Cyprus company by an International Trust is not taxed and it is not subject to withholding tax.
Gains from the disposal of assets of an International Trust are not subject to Capital Gains Tax in Cyprus.
An International Trust created for the purpose of Estate Duty planning would not be subject to estate duty in Cyprus.
International Trusts and Other Aspects
International Trusts offer many other advantages other than tax benefits.
With the creation of a Cyprus International Trust, the Settlor can safeguard the interests of minors and mentally handicapped individuals and can protect the Beneficiaries from individuals that cannot be trusted with the management of an estate. This way, the Settlor can ensure that these people will be well provided for, even after the Settlor has deceased.
A Cyprus International Trust can also be used for cases where a Settlor wishes for a person to benefit from inheritance in the cases where due to the legislation of the individual’s country, they would otherwise be excluded from inheritance.
Anyone who wishes to dissociate himself from personal assets for any reason can do so by transferring the assets, movable or immovable, to a Cyprus International Trust.
A person who wishes to keep his ownership in a company anonymous and confidential can do so by setting up a Discretionary Cyprus International Trust and transferring the shares of the company to the Trust.
Maintaining Funds Overseas
If an individual has income arising from abroad which he/she does not want to remit to his country of residence, then he/she can use a Discretionary Trust to hold this income which will be managed by the Trustees of a Cyprus Settlement as per his/her wishes.
A person who has assets outside his country of residence in which country may in the future extend its exchange control restrictions to include the remittance of overseas funds can transfer the assets to a Discretionary Trust.
Favourable Legal System
Cyprus has a particularly attractive and favorable legal system governing Trusts. This, together with the strategic geographic location of the island, makes Cyprus a convenient location for the formation and operation of a Trust.
No Exchange Control
Cyprus has been a full member of the European Union and Eurozone since 1 May 2004. Since then, Exchange Controls have been abolished. Deposits of Cyprus International Trusts with Cyprus Banks or any Bank in the world are also not subject to exchange controls.
The absence of exchange control restrictions and the excellent quality of international banking services in Cyprus, make Cyprus a suitable base for the remittance and transfer of funds.
Cyprus benefits from a high degree of professionals in the legal and accounting industries as well as from numerous reputable international fund management companies who can ensure that the Trust will be properly operated and management in a professional and competent manner.
Amendments made in 2012 stipulate that no information and/or documents can be disclosed by the Trustee or Protector of a Trust or the trust enforcement supervisor relating to the accounts of the Trust, the terms of the Trust Deed or the identity of the beneficiaries or trustees without a Court Order.
Flexibility in the Cyprus law allows for the removal of a Trust from one jurisdiction and vice versa.
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