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Cyprus International Trust

The Cyprus International Trusts Law is based on the English Trustee Act of 1925. Cyprus are very focused on attracting foreign business and as such have developed the Trust law to include various beneficial features.

Two important reasons for setting up trusts are usually Asset Protection or Confidentiality. 

Asset Protection

The assets are usually held for family members known to the trust as the beneficiaries. Assets in the trust are normally safeguarded from dangers such as inheritance tax or creditors. 

Cyprus International trusts are considered void and therefore the assets are accessible by creditors normally only when it is proven to the satisfaction of the Court that the Trust was made with the intent to defraud creditors of the Settlor at the time when the payment or transfer of assets was made to the trust. If the Settlor had sufficient assets to meet all his liabilities and was not aware of any bankruptcy this may be a factor taken into account. The creditor seeking to annul the trust would need to establish this intention to defraud to the Court. In addition in general circumstances any action by creditors must be initiated within two years following the transfer or disposal of assets to the Trust, once this time frame has lapsed action is severely limited. 

The Cyprus International Trust law states that no foreign law relating to inheritance or succession shall invalidate the trust. This is particularly useful as many countries have forced heirship laws which govern how an individual’s assets shall be contributed to their relatives upon their death or in cases where family members such as spouses appeal to the court claiming a right to the assets. Cyprus International Trusts allow an individual to distribute and decide for themselves how their assets will pass and then protect that decision.

Confidentiality

No Trustee or other person including officers of the government and officials of the Central Bank of Cyprus can disclose any documents or information relating to the trust unless presented with a court order obtained where disclosure is required for civil or criminal proceedings. There is no obligation to register Cyprus International Trusts, thus further safeguarding confidentiality.

Other of the more favorable aspects of Cyprus International Trusts are listed below;

  • Income, Gains and profits are exempted from income tax, capital gains tax, special contribution or any other taxes in Cyprus
  • There is no estate duty or inheritance tax in Cyprus
  • No exchange control regulations
  • An International Trust may carry out business in Cyprus
  • There are no reporting requirements in Cyprus for the International Trusts
  • Trusts may benefit from the numerous double tax treaties that Cyprus has in place
  • Flexibility – Cyprus law allows the removal of a trust from its jurisdiction and vice versa. This allows for a large degree of flexibility in case of changes in circumstances.

A trust only qualifies for a Cyprus International Trust where;

  • The Settlor is not a permanent resident in Cyprus 
  • At least one trustee is a permanent resident in Cyprus
  • No beneficiaries are permanent residents in Cyprus

Chesterfield are highly experienced at establishing and administering Cyprus trusts. For further information regarding Cyprus International Trusts or Trusts in any other jurisdiction please follow the link below or call us on our offices Telephone Number: 44 20 7097 1385

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