International Trusts

What is a trust

A trust is being established by an individual called the "settlor", and is a way by which a "person "either an individual or a company ("the trustee") agrees to hold property ("the trust property") for the benefit of another or others ("the beneficiaries") on certain terms and with certain powers as outlined in the "trust deed".
In other words the trustee has legal title to the trust assets and the beneficiary has beneficial title.

Governing law

International trusts are governed by the International Trusts law of Cyprus.

Necessary conditions in order to set up a trust:

  • the settlor is not a permanent resident in Cyprus
  • the trust property does not include any immovable property situated in Cyprus
  • at least one of the trustees is resident in Cyprus
    (It is important to point out for a tax planning point of view that a trustee can be a Cyprus International business company and even a partnership.)

Benefits relating to Cyprus International Trusts:

  • Exemption from income tax, capital gains tax or any other tax in Cyprus (provided that the property is located and income is derived outside Cyprus)
  • No reporting requirements in Cyprus
  • An International Trust may form a Cyprus International Business company and obtain the benefits available to them
  • A favorable legal system relating to International Trusts together with Cyprus key geographical location.
  • Dividends, interest, or royalties received by an international trust from a Cyprus International Business company are not taxable and not subject to withholding tax.
  • No inheritance tax in Cyprus
  • No exchange control restrictions
  • Gains on the disposal of assets of an International Trust are exempt from Capital Gains tax in Cyprus.
  • No estate duty on the assets
  • A foreigner creating a Cyprus International Trust when he retires to Cyprus will pay no taxes provided that the property is settled and the income earned is abroad, irrespective if he/she is even a beneficiary

Confidentiality and non-disclosure

Confidentiality is of the up most importance in setting up a trust and a Cyprus International Trust is advantageous in this respect as no information or documents will be disclosed by the Cyprus government or the Central Bank of Cyprus with respect to:

  • Settlor
  • Beneficiaries
  • Trustees
  • Accounts or property of the trust

However, the courts can order the disclosure of information or documents in criminal or civil cases if they are considered to be important for the legal case.