Cyprus International Trusts are governed by the International Trusts Law of 1992 which regulates the establishment and administration of International Trusts. It has been completed by new amendments on 8 March 2012.

According to the amendments of the Law, a Cyprus International Trust is defined as a trust in respect of which:

  • The Settlor is not a tax resident in Cyprus during the calendar year which precedes the year of creation of the trust
  • At least one of the Trustees is a tax resident in Cyprus during the trust period
  • None of the Beneficiaries are tax resident in Cyprus during the trust period

A trust is established by an individual and is a means whereby property is held by one or more persons for the benefit of another or others for a defined period. A trust is not a separate legal entity. Trusts are considered to be very important from the tax perspective.

Cyprus International Trusts enjoy very important tax advantages, providing significant tax planning possibilities to interested parties such as follows:

  • All income whether trading or otherwise of an International Trust, is not taxable in Cyprus.
  • Dividends, interest or other income received by an International Trust from a Cyprus Company are neither taxable nor subject to withholding tax.
  • Gains on the disposal of the assets of an International Trust are not subject to capital gains tax in Cyprus.
  • An International Trust created for estate duty planning purposes would not be subject to estate duty in Cyprus. Trusts may be used by individuals for the purpose of protecting their assets, for inheritance purposes or by employers to set up employment benefit scheme trusts for their employees.
  • No information and/or documentation can be disclosed by the trustee, protector or trust enforcement supervisor in relation to the accounts of the Trust, the terms of the Trust Deed or the identity of the beneficiaries or trustees, unless a Court order is issued.

The above should be used as a source of general information only. It is not intended to give a definitive statement of the Law and is subject to the Disclaimer.

For further details on these issues, please do not hesitate to contact us.