Trust law in Cyprus and abroad

Trust law in Cyprus and abroadFine Life Limassol offers trust and trustee services covering an extensive range of corporate trust services, and our professionals are well positioned to deliver tailor-made requests specific to your trust needs.

Cyprus is a reputable financial centre, offering unique opportunities for setting up and operating trusts that will suit the most complex situations and demands. Cyprus International Trusts (CITs) and Foundation Trusts are considered tax transparent, hence not subject to any form of Cyprus taxation, and are thus very effective for estate and tax planning, as well as wealth management purposes.

The International Trusts Law of Cyprus:

International Trusts law was initially enacted in Cyprus in 1992 in order to attract foreign investors to Cyprus. It was subsequently reformed in 2012, allowing trustees extended investment powers and abolishing all restrictions on the duration of trusts – regulations which constitute the present trusts legal framework in Cyprus.

It should be noted that as of 5/9/13, in accordance with Law No. 109(I)/2013 (‘Trust Registry Law’), an amendment from the Law Regulating Companies Providing Administrative Services and Related Matters of 2012 (Law 196(I)/2012), any Cyprus resident trustee of a Trust governed by Cyprus Law is obliged to notify the Competent Authority (Cysec, Cyprus Bar Association and the Institute of Certified Public Accountants of Cyprus) within 15 days from the creation of the Trust.

Cyprus has one of the most attractive trusts legal frameworks in the world, enjoying many advantages that cannot be found in other trusts jurisdictions:

  • The settlor and the beneficiaries must not be tax residents in Cyprus during the year preceding the year in which the trust was formed.
  • Succession, heirship or other laws applicable in foreign jurisdictions or court judgments do not affect the validity of a CIT.
  • The Settlor has the right to reserve many powers including, the powers to revoke or amend the trust, to instruct, appoint, or remove trustees, to change the law regulating the CIT.
  • The income of a CIT may be accumulated without limitations.
  • The trustees of a CIT are bound by confidentiality and cannot disclose information or documents unless they are required by law in certain circumstances.
  • According to section 8 of the 2012 Law, trustees have extensive investment powers, including holding, maintaining or investing in movable and immovable property in Cyprus and abroad, including shares in companies incorporated in Cyprus.
  • An international trust which was established during or after the entry into force of the 2012 Law has no limit on the period over which an international trust may continue to be valid and enforceable.

The uses and advantages of trusts:

  • Offshore profit – an individual or company earning profit outside of Cyprus, which doesn’t wish to spend income in the country of registration, can transfer the money to a Cypriot trust.
  • Offshore investments – an individual or company wishing to invest abroad, but not interested in any trading income, dividends, interest and capital gains earned from this investment to be transferred to the country of registration, can move the amount to a tax-free trust.
  • Asset protection – an individual or company that wants to transfer their assets for financial or personal reasons, regarding inheritance planning, for example, can transfer that amount to a Cypriot trust and be exempt from estate duty or inheritance tax.
  • Investment holding – a trust in one country can be used for ownership purposes by a holding company in another country. This kind of tax plan and asset protection strategy carries many advantages for securing the interests of donors and beneficiaries.
  • Estate planning – an individual or company interested in establishing a fund for the benefit of family members according to future needs, and/or hold property for minors or successive generations, could use a trust.

How we can help:

  • We provide custom-made trustee, administration and management services to our clients, advising them about every aspect of the creation of a trust, including proposing structure ideas, supporting all types of transactions and drafting the necessary legal documents.
  • We advise clients about issues relating to trustee powers, beneficiary rights, interpretation of trust deeds and other trust related documentation.
  • We represent clients and trustees in contentious or non-contentious court proceedings.

 

Name of service Price (€)
Establishment of a Cyprus International Trust 3,500 + VAT
Annual fee for the administration of the Trust 1,000 + VAT
Annual fee for the Trustee 500 + VAT

 

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