Cyprus International Trusts
In 1992 Cyprus enacted legislation to create a legal framework for the formation of international trusts. The International Trusts Law 1992 complements the Trustee Law 1955, which is based on the English Trustee Act 1925.
International Trusts are the normal form of Cyprus Trust used by foreign settlors. Cyprus International Trusts have the following key characteristics:
- The settlor must be non-resident
- The beneficiaries must also be non-resident (except for local charities)
- One of the Trustees must be Cypriot (individual or corporate)
- The trust period may be up to 100 years (longer for charitable trusts)
- Confidentiality is protected in the law, and foreign judgements are specifically non-recognized
- There is no registration requirement
- Trust documents are in English
- Trust assets may not include immovable property in Cyprus
- Creditors have to prove intent and must claim within two years
- There is Stamp Duty of CY£250
- Broadly speaking, the income and assets of International Trusts are not taxable in Cyprus
Uses of Cyprus trusts
Cyprus trusts, as indeed all trusts, have such a wide variety of applications that it is impossible to categorise their every use but it is possible to identify some general areas of application.
- Avoidance of probate procedures and fixed heirship regimes
- Provision of tax-efficient employee benefits
- Accumulation of a tax-free gross fund for the benefit of wealthy families
- Consolidation of assets
- Succession and tax planning
- Protection of assets from illegitimate seizure or sequestration
- Strengthening the claims of offshore residence status for companies through offshore trust ownership of company shares
- There are no special formalities required for the creation of a trust in Cyprus and the trust deed (the document creating the trust) can contain such powers and administrative provisions as the settlor may wish
- The trust must, however, satisfy the classic requirements of the three “certainties”: certainty of intention, certainty of subject matter and certainty of objects. In other words, the trust deed must demonstrate an intention to create
- a trust, the trust fund must be specified with reasonable certainty and the beneficiaries must be ascertainable
The Cyprus International Trusts Law permits the appointment of trustees outside Cyprus and the transfer of the administration of a Cyprus International Trust to them and permits the appointment of trustees in Cyprus to a trust originally established elsewhere. The following conditions must be met;
- There must be a clause in the trust deed allowing such a change of jurisdiction
- When a trust moves to another jurisdiction from Cyprus, Cyprus law requires that the new jurisdiction recognise the validity of the trust and the rights of the beneficiaries
- When a trust is to be moved to Cyprus from another jurisdiction, the law of the jurisdiction from which it is to be transferred must permit the transfer
Click on offshore trusts for more information or call us on +353 1 431 9663.
