A Cyprus International Trust stands out as a highly appealing option for safeguarding assets and wealth. It draws its strength from the firmly established principles of equity and trusts rooted in English law, contributing to the creation of one of the world’s most attractive legal frameworks for trusts. 

The establishment of international trusts and their accompanying legal structures offers individuals a strategic means to plan for the orderly transfer of their accumulated wealth to other family members or affiliated companies, all while providing clear and specific instructions. 

What is a Trust? 

A trust is a legal arrangement designed for the orderly transfer of accumulated wealth and it involves three main parties: 

  1. The Settlor: The individual or entity establishing the trust and contributing assets to it. Once contributed, these assets become part of the trust. 
  1. The Trustee: The person or entity responsible for managing and holding the trust’s assets in accordance with specific terms and conditions for the benefit of the beneficiaries. 
  1. The Beneficiary(ies): The individual(s) or entity(ies) designated to receive the benefits and assets held within the trust. 

Sometimes, a fourth role, known as the Protector, may be involved. The Protector is appointed by the Settlor to oversee the Trustee’s actions and protect the trust’s interests, though this appointment is not obligatory. 

A legal document called a Deed of Trust is created by the Settlor and the Trustee, outlining which assets will be transferred to the trust, who will manage the trust, who the beneficiaries are, and the rules governing the trust’s operation. 

Cyprus adopted a trust legal framework based on the English system. The 1925 English Trustees Act served as the foundation for Cyprus’ 1955 Trustee Law, Chapter 193, regulating Cyprus International Trusts. In 1992, the International Trusts Law was enacted to modernize trust laws and establish Cyprus as a reputable financial center for trusts. 

Establishing Cyprus International Trust 

Cyprus, with its Common law legal system, became a favored European Union jurisdiction for high-net-worth individuals (HNWIs) seeking to establish trusts. To create a Cyprus international trust, certain conditions must be met: 

  1. The Settlor, whether an individual or a legal entity, must not be a resident of Cyprus during the calendar year preceding the trust’s creation. 
  1. The beneficiaries, except charitable institutions, must not be residents of Cyprus during the calendar year preceding the trust’s creation. 
  1. At least one of the trustees must be a resident of Cyprus throughout the trust’s existence. 

“Resident of Cyprus” is defined by the Cyprus Income Tax Law, with physical persons considered tax residents if they reside in Cyprus for more than 183 days in a tax year and companies if they exercise management and control from Cyprus. 

The Merits of a Cyprus International Trust 

A Cyprus International Trust offers several advantages, including: 

  • Exclusively governed by Cyprus laws, eliminating foreign law applications. 
  • Strong asset protection capabilities. 
  • The potential for trusts to exist indefinitely. 
  • Settlors can retain certain powers. 
  • Trustees have wide-ranging investment authority. 
  • Maintains confidentiality, with trust registers only containing limited information. 
  • Settlors can relocate to Cyprus after trust establishment, benefiting from the Cyprus Non-Domicile Scheme. 
  • Overcomes “forced heirship” rules in some jurisdictions. 
  • Cyprus is a reputable jurisdiction with a legal system based on English common law and equity. 
  • Stable tax regime. 
  • Wealth preservation and asset segregation. 

How We Can Assist 

Our law firm in Cyprus specializes in providing tailored trust services with a focus on client confidentiality. Our services encompass trust creation, administration, trustee, and protector roles, estate planning, wills, succession, probate, trust re-domiciliation, and comprehensive advisory services through our international network of trusted associates. 

For comprehensive details about our services, please reach out to our dedicated team either via email at [email protected] or by calling us at +357 22 023000.