Cyprus International Trusts
Cyprus Tax Facts
Cyprus International Trusts are governed by the International Trusts Law of 1992 which regulates establishment and administration of Trusts. It has been completed by new amendments in March 2012.
A Cyprus International Trust is characterized by the following:
- The Settler 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 Cypriot International Trust
- A Cypriot International Trusts offer numerous tax advantages and provides 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 their employees.
Income and profits of a Cyprus International Trust which are acquired or deemed to be to be derived from sources inside or outside Cyprus are taxable in Cyprus provided that the Beneficiary is a Cyprus tax resident.
However, income or profits which are acquired or deemed to be derived from local sources is taxable in Cyprus if the beneficiary is not a Cyprus tax resident. Income or profits which are acquired or deemed to be derived from outside sources in Cyprus are not taxable if the Beneficiary is not tax resident in Cyprus.
Dividends, Interest Or Other Income
Dividends, interest or other income received from a Cypriot company by an International Trust is not taxed and it is not subject to withholding tax.
Gains From The Disposal
Gains from the disposal of assets of an International Trust are not subject to Capital Gains Tax in Cyprus.
Estate Duty Planning
An International Trust created for the purpose of Estate Duty planning would not be subject to estate duty in Cyprus.
Estate Planning With International Trusts
With the creation of a Cypriot International Trust, the Settler 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 Settler can ensure that these people will be well provided for, even after the Settler has deceased.
A Cypriot International Trust can also be used for cases where a Settler 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 the 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 Cypriot International Trust.
Anonymity Of Company
A person who wishes to keep his ownership in a company anonymous and confidential can do so by setting up a Discretionary Cypriot International Trust and transferring the shares of the company to the Trust.
Maintaining Funds Overseas
If an individual has income arising from abroad which they do not want to remit to their country of residence, then they can use a Discretionary Trust to hold this income which will be managed by the Trustees of a Cypriot Settlement as per their 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 favourable 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 1st May 2004. Since then, Exchange Controls have been abolished. Deposits of Cypriot International Trusts with Cypriot 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, makes 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 that can ensure the Trust will be properly operated and managed 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 Of Cyprus Law
Flexibility in the Cyprus law allows for the removal of a Trust from one jurisdiction and vice versa.