Cyprus is a favourable jurisdiction for creating international trusts which are governed by the 1992 International Trusts Law which regulates the establishment and administration of International Trusts. The International Trust Law compliments the Trustee Law which is based on the English Trustee Act 1925.
A Cyprus International Trust offers confidentiality and privacy, estate planning and asset protection, tax planning and family wealth preservation.
A trust is established in relation to certain identified assets. The owner of these assets (the settlor) creates a trust by appointing a trustee to hold and manage the trust fund for the benefit of another person (the beneficiaries). The trustee manages the assets in accordance with the instructions of the settler, as expressed in writing in the trust deed.
As per Section 2 of the International Trust Law a trust qualifies as an International Trust when the following are fulfilled:
If a settlor wants to retain full control over the managements of the trust then this is possible by forming a Cyprus company, the shares of which belong entirely to the individual and who can also be the sole Director. The company would then act as the sole trustee of an International Trust to which the assets of the settlor were transferred.
Cyprus International Trusts have many tax advantages and are widely used as international tax planning instruments. According to the international trust legislation Cyprus International Trusts have the following characteristics:
There are many other benefits to using a Cyprus International Trust, some of which are listed below:
As can be seen, there are numerous benefits of a Cyprus International Trust which makes them invaluable in International Tax Planning. By using professional tax advice with regards to the organisation and structuring of investments then tax can be minimised.