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Cyprus International Trust

Cyprus is an attractive international financial centre for the creation and administration of trusts with modern trust legislation in regard to:

  • Creditors' claims: A transfer into the trust can only be set aside by existing creditors (not future) and only if it is proved that the Settlor had an intention to defraud. The burden of proof lies with the creditor and there is a limitation period of two years to file a lawsuit.
  • Accumulation of income: Provisions for accumulation of income are valid for the duration of the Trust.
  • Change of the governing law of the Trust is permitted (if the terms of the Trust so provide)
  • Confidentiality.
  • Conflict of laws: All questions regarding the capacity of the Settlor, validity of the trust, validity of any disposition into trust, administration of the trust and validity of powers retained by the Settlor or conferred to the Protector are determined by the governing law of the trust (i.e. Cyprus Law).
  • Forced heirship avoidance provisions: No Trust or disposition to be held on trust is void, voidable, liable to be set aside, nor the capacity of the Settlor is to be questioned, and nor is the trustee or any beneficiary, protector or any other person to be subjected to any liability by reason that the trust or disposition avoids or defeats rights conferred by a foreign law on any person by reason of a personal relationship to a settlor or any beneficiary, or object of a discretionary trust or power of any nature, or by way of right to inheritance.
  • Investment Powers of the Trustee: The trustee may hold, retain or invest in any movable property in the Republic and overseas including shares in companies incorporated in the Republic and in immovable property located in the Republic and overseas.
  • No perpetuity period.
  • Reserved Powers: There is a broad range of powers which may be reserved by the Settlor without incurring the risk that the trust will be set aside as a sham.

A Cyprus international trust shall satisfy the following requirements:

  • The Settlor must not be a permanent resident in Cyprus in the year preceding the year of the creation of the trust.
  • The Beneficiaries must not be permanent residents in Cyprus in the year preceding the year of the creation of the trust.
  • At least one Trustee must be a permanent resident in Cyprus.

Taxation of Trusts

The taxation of a Cyprus international trust depends on whether the Beneficiary is a Cyprus resident or not.

If the Beneficiary is a Cyprus Resident then any income and any profit which derives from a source in Cyprus or abroad are subject to any form of taxation imposed in Cyprus (worldwide income).

If the Beneficiary is not a Cyprus Resident then only the income and profit that derives from a source in Cyprus is taxed in Cyprus (Cyprus source income).