Why you need a Cyprus International Trust?
A Cyprus International Trust (CIT) is often used by individuals and businesses to protect assets, reduce taxes, and ensure wealth transfer across generations. Here are the key reasons why someone may choose to establish a Cyprus International Trust:
- Asset Protection: A CIT provides a strong shield against creditors, lawsuits, or political instability in the settlor’s home country. Since the trust is governed by Cyprus law, it can help preserve assets even in challenging circumstances.
- Tax Efficiency: CITs offer tax advantages, including exemptions from income tax, capital gains tax, and withholding tax for non-resident beneficiaries, while resident beneficiaries are taxed on worldwide income. There is no estate duty or inheritance tax, making CITs ideal for wealth and estate planning. Cyprus has an extensive network of double tax treaties (DTTs) that can help minimize withholding taxes on income received from treaty countries.
- Confidentiality: Cyprus law ensures confidentiality for the settlor and beneficiaries. There is no public registry of trusts, allowing individuals to keep their financial affairs private.
- Estate Planning and Wealth Transfer: A CIT ensures the smooth and efficient transfer of assets to beneficiaries upon the settlor’s death, often without the need for probate. This is particularly important for individuals with complex international assets.
- Flexible Structure: Cyprus trusts are highly flexible, allowing the settlor to set specific terms and conditions on the distribution of assets, protect vulnerable beneficiaries, and ensure that the trust is managed according to their wishes.
Who can establisha CIT?
Individuals and legal entities that were not Cyprus residents, under the definition of Cyprus tax law, during the year preceding the establishment of the CIT.
Who can benefit from the CIT?
Individuals (including persons that have not yet been born) such as family members and specific group of people, legal entities such as businesses holding shares, intellectual property and other assets and charitable institutions supporting various causes.
Apart from a charitable institution, none of the beneficiaries (individuals or legal persons) can be Cyprus residents, under the definition of Cyprus tax law, during the year preceding the establishment of the CIT.
Who manages the CIT?
The CIT is managed by the Trustee which has fiduciary duty to act in the best interest of the beneficiaries. Trustees’ responsibilities include, amongst others, the day-to day management of the trusts assets, handling the distribution of income or capital from the trust to the beneficiaries, maintaining detailed records of all trust transactions and ensuring compliance with the legal obligations of the CIT in Cyprus and abroad.
At least one of the Trustees of a CIT must be a Cyprus resident, under the definition of Cyprus tax law.
What are the most common types of a CIT?
Fixed Trusts: these trusts define clearly the beneficiaries and their respective entitlements. Their main advantage is that they provide clarity and certainty regarding the distribution of the assets; and
Discretionary Trusts: in these trusts the Trustees have the discretion over to how to distribute the trust assets among a class of beneficiaries. The reason, usually, this type of CIT is chosen by the settlor is that it offers the flexibility to adapt in changing circumstances or needs of the beneficiaries.
Consulco Law possesses extensive experience in providing comprehensive support for the establishment, management, and administration of Cyprus International Trusts. Our team of legal professionals provides personalized guidance on all aspects of trust creation, including drafting trust deeds, selecting trustees and managing the ongoing administration of the trust. With our assistance and guidance, our clients can confidently establish and maintain a Cyprus International Trust that effectively safeguards their assets and fulfills their long-term financial and personal goals.