Establish a Cyprus International Trust
Establish a Cyprus international trust
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The creation of trusts is based on the rules of equity as they have been invented by the English courts and subsequently reinforced by statutes. The legal framework governing trusts in Cyprus consists of the common law and the equity principles, along with the Trustees Law, Cap. 193, which is largely based on the English Trustee Act of 1925; and on The International Trusts Law 69(I)/92, enacted in July 1992 and amended with the International Trusts (Amending) Law 20(I)/2012.
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 below three certainties must apply for the creation of a valid trust:
Type of Trust
The Settlor may create a fixed or a discretionary trust. The fixed trust, as created by the Settlor, specifies the share and interest of the Beneficiaries in the trust property, whereas the discretionary trust allows the Trustees to exercise their discretion, based on the instructions of the Settlor, as to how the trust property will be distributed to the Beneficiaries.
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 be a resident of Cyprus during the calendar year, which precedes the year of creation of the trust; AND
(ii) The Beneficiaries, either physical or legal persons, with the exception of a charitable institution, must not be resident of Cyprus during the calendar year, which precedes the year of creation of the trust; AND
(iii) At least one of the Trustees is, throughout the validity period of the trust, resident of Cyprus.
The term resident of Cyprus has the meaning given to it by the Income Tax Laws of Cyprus. As provided in the Income Tax Laws, a physical person is considered tax resident of Cyprus if he/she resides in Cyprus for a period which exceeds in aggregate 183 days in a tax year. A company is considered tax resident of Cyprus if its management and control is exercised in / from Cyprus.
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