Trusts are useful tools for estate and succession planning. Families use trusts to preserve and manage their wealth. Across a huge number of jurisdictions, trusts have a wide number of benefits for individuals who seeking complete confidentiality; asset protection; or low cost of establishment and administration; amongst other benefits.
The world over, one of the most attractive jurisdictions for setting up trusts is Cyprus. There are a number of reasons why Cyprus maintains a high position globally. These benefits include but are not limited to transparent tax legislation; low corporate tax rates; and non-taxation of dividends. One of the key attractiveness in Cyprus is a possibility to form an international trust. Cyprus International Trusts may be used as a vehicle for:
|-Management of funds
||-Investing in business overseas
|– Holding property which cannot be personally held, for example, by a minor
|-Establishing collective investment
||-Promoting causes and charities
|-Managing profit sharing and pension schemes
The Cypriot trust legislation consists of:
- The Trustees Law (Cap 193) which largely adopts the English Trustee Act of 1925;
- Doctrines of equity and case law in England;
- The International Trusts Law,as amended in 2002.
Under the Cyprus International Trusts Law;
- A ‘trust’ is a fiduciary relationship between a settlor and a trustee. The settlor gives the trustee the right to hold title to a trust asset for the beneficiaries’ benefit.
- An ‘international trust’ is a trust created by a non-resident settlor for the benefit of non-resident beneficiaries.
- ‘Trustees’ have the legal title to the trust assets, while ‘beneficiaries’ (commonly known as ‘beneficial owners’) have beneficial or equitable title to the trust assets.
- ‘Protectors’ can restrict key powers of trustees (eg, adding beneficiaries to the trust). Appointing protectors is optional.
Benefits of Cyprus international trust regime;
- Asset protection – These trusts can be used to protect assets against future claims.
- Tax benefits – All the trust’s interest, dividends and royalties are not taxable or subject to withholding tax. Nor are they subject to inheritance tax.
- Unlimited duration – These trusts can be established for a lifetime plus 21 years. Where no natural person is involved in the agreement, trusts can exist for 21 years.
- Confidentiality – These trusts are strictly confidential. Any information or documentation relating to a trust may be divulged by court order only.
- Reporting – Cyprus trusts have no reporting requirements.
- Reservation of powers – Settlors have the power to revoke, vary or modify the terms of a trust.
The Cyprus international trust regime is an effective tax planning and asset management instrument.
For more information please visit our Valsen Fiduciaries’ Cyprus offering
, or contact us.