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The legal subject of international trusts in Cyprus is governed by the International Trusts, Law 69(I)/1992 as amended by the relatively new Law 20(I)/2012 (collectively referred to as the “Law”), which allows Cyprus to pride for its favorable regime amongst the most famous offshore jurisdictions in the area of trusts.
The Law, as has been amended, recognizes and considers as legal and valid the perpetual character of a trust settlement. The new Law has also abolished the legal restriction which prevented the inclusion in the trust property of immovable properties situated in Cyprus.
For high net worth individuals, asset planning is paramount; hence, the Cyprus International Trust is an effective legal way to place the assets of such individuals beyond the reach of creditors, or for any other personal reason. A trust may also be created for confidentiality or charity purposes, for estate planning or investment purposes.
Briefly, under the Law, a “Cyprus International Trust” is determined as being the trust in respect of which:
The settlor is not a permanent resident of Cyprus.
At least one of the trustees resides permanently in Cyprus for the whole period of the Trust.
No Beneficiary, other than a charitable institution, is a permanent resident of Cyprus during the year preceding the creation of the trust settlement.
Either of the aforementioned persons can be an individual or a corporation.
The Law is very liberal on the powers and authorities that may be conferred to the Trustee(s) and gives wide discretion on the Settlor to decide whether to retain some or any of them, to entrust them to, or to ensure their application and enforcement by appointing, a Protector or Enforcer of the trust settlement.
The propitious legal system concerning trusts coupled with the advantageous geographic position of the island, makes Cyprus a distinctly attractive trust location for persons who want to invest overseas, safeguarding that all the financial benefits received, including dividends, are remitted to another country in the most tax-effective way: