An international trust law was introduced in 1992 making the creation of a Cyprus international trust a very attractive option to non-residents. The new law created a more flexible legal framework for international trusts.
For a trust to qualify as an international trust, the following requirements must be fulfilled:
- the settlor must not be a permanent resident of Cyprus;
- no beneficiary, other than a charitable institution, can be a permanent resident of Cyprus;
- the trust property cannot include any immovable property in Cyprus;
- at least one trustee must be permanently resident in Cyprus. Cyprus companies that are not resident are able to set up international trusts.
Reasons For Creating A Cyprus International Trust
- Trusts and beneficiaries of trusts are not taxed in Cyprus provided both the settlor and the beneficiaries are non-resident and the trust property is not in Cyprus.
- No capital gains tax is paid by international trusts.
- Credit interest on a foreign currency account held at any bank in Cyprus is not taxed.
- A Cyprus international trust may be a shareholder in a Cyprus company and thereby enjoy the tax and other benefits of such companies. Its liability is limited to the original capital paid and confidentiality is ensured by the use of nominees.
- There are no registration or reporting requirements for trusts established in Cyprus and the names of the trustees, and others named in the trust document, are not disclosed.
- The Law applicable to a Cyprus international trust can be expressly changed to a foreign law and an existing foreign trust can select Cyprus Law, if the foreign law itself recognises such a change.
- No estate duty is paid by international trusts.