Investors who want to open a Cypriot trust must observe the provisions of the Cyprus International Trusts Law of 1992. There are no major restrictions regarding who can open a Cyprus International Trust other than the requirements for having the minimum legal age and complete mental capacities.
The settler of the trust must also pay a stamp duty. Our experts in company formation in Cyprus can give you more details regarding the requirements for creating a Cyprus International Trust.
| Quick Facts | |
|---|---|
| Specific law applicable to trusts (YES/NO) | Yes, the Trustee Act. |
Participants in a Cypriot trust | – the settlor, – the beneficiary(ies), – the trustee. |
Types of trusts available for creation in Cyprus | Charity, protective (trading), fixed, discretionary trusts. |
| Documents required for establishment | Trusts in Cyprus are created through trust deeds. |
| Assets to be held in a trust | – real estate (including land), – company shares and other assets, – money, – jewelry, – paintings, etc. |
| Requirements to create a trust | The settlor must declare the intent to establish the trust, the beneficiaries must be identifiable, and its assets must be specified. |
| Possibility to hold assets in other countries than Cyprus | Yes, it is possible for a Cyprus-based trust to hold assets in other countries. |
| Taxation of trusts | The trust is not taxed in Cyprus. |
| Recognition of foreign trusts in Cyprus | Yes, foreign trusts are recognized in Cyprus. |
| Possibility to create international trusts (YES/NO) | Yes, in accordance with the 1992 International Trusts Act. |
| Other means to create trusts (if available) | In Cyprus, trusts can also be created through wills. |
| Lifespan | Trusts can be created to fixed or unlimited terms. |
| Advantages of opening a Cypriot trust | – asset protection, – tax minimization, – it can be used as an inheritance tool. |
| Trustee services availability (YES/NO) | Yes, our Cypriot company formation agents can provide trustee services. |
| Trust creation services availability (YES/NO) | Yes. |
| Role of the settlor in a trust | The settlor is the person creating the trust and disposing of his/her assets through it. |
Role of the trustee in a trust | The trustee is the person/organization in charge of administering the trust and its assets. |
Who can offer trustee services in Cyprus? | Natural persons, as well as specialized organizations recognized by the Trustees Act of 1955. |
| Estate planning through the possibility of creating a trust (YES/NO) | Yes, the trust can be used as an estate planning tool. |
| Requirements for compliance with international laws (if any) | Yes, with the Anti-money laundering regulations. |
| Availability of a professional association of trust companies (YES/NO | Yes, the Cypriot Fiduciary Association. |
| Regulatory requirements for Cypriot trustees (YES/NO) | Trustees have the obligation to act in accordance with the settlor’s wishes. |
| Taxation of settlers in Cyprus | Settlors are not taxed in Cyprus. |
| Taxation of beneficiaries in Cyprus | Beneficiaries are taxed only if they are Cypriot residents. |
| Time frame to set up a trust (approx.) | 30 to 40 days. |
| Requirement to register an international trust in Cyprus (YES/NO) | Yes, with the Cyprus Bar Association. |
| Possibility to personalize the trust agreement (YES/NO) | Yes. |
| Characteristics of charity trusts | Charity trusts are created with the purpose of serving various social causes. |
| Features of discretionary trusts | The discretionary trust allows the trustee to decide the means through which the beneficiaries will receive their estate. |
| Characteristics of fixed trusts | Fixed trusts provide for the exact way in which the trust property is distributed among the beneficiaries. |
Table of Contents
Types of trusts in Cyprus
The type of trust depends largely on the purpose of the settler and the objectives he is trying to achieve by using the trust. The types of trusts that can be set up in Cyprus are:
- charity trusts: it has certain purposes that are defined as charitable including but not limited to: poverty relief, educational or religious purposes, the advancement of health care, arts or sports, etc.;
- fixed trusts: with clearly specified trust property to which the beneficiary is entitled;
- discretionary trusts: the trustee can decide the manner in which the beneficiaries received their entitlements;
- fixed and discretionary trust: a combination trust that includes the particularities of the two other types;
- protective trusts or trading trusts.
Characteristics of Cypriot trusts
Given the fact that a trust is not a corporate form, it must have specific characteristics that give it legitimacy. According to the law:
- the trust is independent of its creator;
- the trust has no expiration date, not even after the death of the founder, beneficiaries, or trustee.
In the case of international trusts, it is also worth noting that the settlers must appoint a Cypriot trustee. Most founders use specialized services provided by trust management companies. This way, they obtain various advantages.
You can rely on our local agents if you want to open a company in Cyprus for the purpose of establishing a trust management entity.
Requirements to create a trust in Cyprus
According to the Cypriot Trust Law, there are several elements to be met in order to create a trust. They are:
- the trust deed must contain the identification data of the founder, beneficiaries, and trustee;
- the trustee must know who the beneficiaries are (including the ultimate beneficiaries);
- the assets to be held in trust must also be specified in the creation document.
In the case of an international trust, the assets can be located in any part of the world. The settler of the trust, the individual setting up the trust in Cyprus can be either a natural person or a legal person. The condition that must be observed by the settler is that the person or legal entity must not be a Cypriot resident during the year immediately after the trust is created. The same rule regarding residency also applies to the beneficiary of the trust.
As mentioned above, the creation of a Cypriot trust is subject to drafting a legal document, also known as a trust deed, through which the settlor transfers the administration rights to the trustee.
If you want to set up a trust and need support, you can also rely on our company formation agents in Cyprus who can help you create the legal document. This is possible, as in Cyprus it is also allowed to appoint corporate trustees for assets administration purposes.
Here is also an infographic on this subject:
Possibility to create a trust through will
Cypriot citizens or residents who do not want to create international trusts can also set up such structures by drafting wills. This way, the testament is the document that must contain similar elements as the trust deed.
When established by will, the founder is the creator of the testament, the beneficiaries are the heirs, and the trustee can be a Cypriot public notary.
Considering the non-corporate form of a trust, it is not required to register it with the Companies Register. However, its existence can be recorded with the Cyprus Securities and Exchange Commission or with the Cyprus Bar Association.
Our Cypriot company formation agents present details about the taxation of a trust
The taxation of a trust in Cyprus depends on the residency of the Beneficiary and whether or not he derived income from outside the country. The beneficiary is exempt from taxation in Cyprus because he is not a Cypriot resident and he received income from outside of Cyprus. Dividends received from a Cypriot trust are not subject to tax. Also, a trust is not affected by the existence or lack of a double tax treaty between Cyprus and other countries.
Here is our video on Cypriot trusts:
Cypriot trusts in numbers
Here are a few interesting facts about the creation of local and international trusts in Cyprus:
- the establishment takes around 30 to 40 days;
- international trusts are not subject to taxation, but to a stamp duty which is currently set at 430 euros;
- Cyprus has introduced the EU Anti-Money Laundering Directive 2018/843 in its national legislation which has led to the creation of the Register of Beneficial Owners for express trusts.
You can also buy a shelf company in Cyprus if you want to set up a trust management company to administer its assets.
Our consultants can help you with advice and personalized counseling regarding the best trust type for your needs. Do not hesitate to contact us for other issues regarding Cypriot company formation.