International Cyprus Trusts – Formation and AdvantagesChristos Paraskevas
A Cyprus International Trust can be defined as a settlement whereby the settlor transfers the property to the trustee in accordance with the trust instrument or the trust settlement. Even though the trustee has legal ownership of the trust property, it does not belong to him. Beneficial ownership of it belongs to the beneficiaries.
The Cyprus International Trust Law has undergone major reform and in the 23rd of March 2013 the long awaited reform of the Cyprus International Trusts (Amending) Law of 2012 was enacted by the House of Representatives embracing and responding to the market evolvement. The said Law has transformed the Cyprus Trust regime into one of the most modern and favourable Trust regimes in Europe. The amending legislation aimed to make CITs more practical, accessible and effective as it is founded on much greater certainty, clarity and stability.
What are the formal requirements to create a Cyprus International Trust?
- All the requirements provided by the Law, with respect to a residency of all the trust participants shall be satisfied:
-The Settlor, must not be a resident of Cyprus in the year preceding the year of creation of the Trust;
-The Beneficiary (ies), must not be resident of Cyprus during the calendar year which precedes the year of creation of the Trust; and
-At least one of the Trustees must be Cyprus tax resident person at all times, during the existence of the Trust.
- The Settlor must be of full age and capacity (sound mind);
- It is required to provide the information about the Trustees to the relevant competent authorities.
- Payment of stamp duty of €430;
- The trust must satisfy the basic requirements of the three “certainties”
-Certainty of Intention = evidence of Settlor’s express intention to create the trust;
-Certainty of Subject Matter = the assets which will form the trust property must be readily identifiable and tangible otherwise the Trust is void for uncertainty;
-Certainty of Objects = the identity of the beneficiaries must be clearly stated and ascertained.
Advantages of Trust formation in Cyprus
- A trust helps to protect assets from the possible claims and thus to protect the interests of ultimate beneficiaries as the assets of a trust are segregated from the settlor’s funds (including in case of bankruptcy or liquidation of settlor).
- The Trustee is able to invest Trust funds in any kind of investment trust property may include all kinds of assets and property anywhere in the world
- Any international trust settled in Cyprus may use tax benefits of current taxation system of the country.
- The Law imposes a duty of confidentiality on the Trustee. A Trust Deed is not a public document. Any information or documentation of a trust may only be disclosed subject to an order of a court.
- A Cypriot trust may be redomiciled into another jurisdiction.
- Holding Trust Assets in secure custody;
- There is no estate duty or inheritance tax in Cyprus;
- No exchange control regulations;
- Succession laws do not affect the validity of the transfer made to the CIT, as the transfer takes place during the life time of the Settlor;
- A Cyprus International trust may use tax benefits of current taxation system of the country. Non-resident beneficiaries are subject to tax in Cyprus an income and profits of the trust derived only from sources within Cyprus. Resident beneficiaries are subject to tax in Cyprus an income and profits of the trust derived from sources within and outside Cyprus
How Christos Paraskevas LLC may assist you
Christos Paraskevas’ lawyers as a leading provider of Trustee services in Cyprus, provides professional services, tailored to the specific business and personal needs of our client.
Please visit our webpage for more details in relation to International Cyprus Trusts
Please contact Mr. Christos Paraskevas on email@example.com or call us at +357 22 432800 to discuss how we can be of assistance to you.