Establish a Cyprus International Trust
Setup a Trust in Cyprus
Cyprus Trust Legal Framework
The creation of trusts in Cyprus is based on the rules of equity established by English courts and reinforced by statutes. The legal framework governing trusts in Cyprus includes common law and equity principles, the Trustees Law, Cap. 193 (based largely on the English Trustee Act of 1925), and the Cyprus International Trust Law, specifically the International Trusts Law 69(I)/92, enacted in July 1992 and amended by the International Trusts (Amending) Law 20(I)/2012.
Cyprus Trust Formation
A trust is created when the Settlor appoints a Trustee to hold specific assets (movable or immovable) and any profit that may arise therefrom, for the benefit of the Beneficiaries, under specific terms and authorities that are usually included in a written instrument, the trust deed.
The three certainties
The following three certainties must apply for the creation of a valid trust in Cyprus:
- Certainty of Intention: The Settlor must intend to create a trust.
- Certainty of Subject Matter: There must be certainty about what property will be held in the trust.
- Certainty of Objects: The Beneficiaries under a trust should be clearly defined, or a formula should enable the Trustees to ascertain them.
Types of Trusts
The Settlor may create a fixed or discretionary trust. A fixed trust specifies the share and interest of the Beneficiaries in the trust property. In contrast, a discretionary trust allows the Trustees to exercise their discretion, based on the instructions of the Settlor, regarding how the trust property will be distributed to the Beneficiaries.
International Trust
The following conditions must be met for the creation of a valid Cyprus international trust:
(i) The Settlor, whether a physical or legal person, must not have been a resident of Cyprus during the calendar year preceding the year the trust was created.
(ii) Beneficiaries, either physical or legal persons (except charitable institutions), must not have been residents of Cyprus during the calendar year preceding the year the trust was created.
(iii) At least one of the Trustees must be a resident of Cyprus throughout the validity period of the trust.
The term “resident of Cyprus” is defined by the Income Tax Laws of Cyprus. As per these laws, a physical person is considered a tax resident of Cyprus if they reside in Cyprus for an aggregate period exceeding 183 days in a tax year. A company is regarded as a tax resident of Cyprus if its management and control are exercised in or from Cyprus.
Establishing a trust in Cyprus can be a strategic asset protection and estate planning decision. Our firm specializes in navigating the complexities of Cyprus international trust law to help you effectively set up a trust in Cyprus. Contact us to learn more about how Cyprus Trust companies can assist you.
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