establishing a cyprus trust

How to establish Cyprus Trust

Establishing a Cyprus International Trust varies in complexity and purpose; but the purpose of any Trust is to keep assets for a specific beneficiary such as family, charities, public workers or even just hold funds for retirement.

History of Trusts:

Trusts emerged from England and the times of the crusades, when the knights would go off and fight in foreign lands and they would leave their assets in the care of trusted stewards (Trustees).  (this we could also put in on social media Did You Know ?)

The person creating the trust is called the Settlor, and the Settlor then gifts the assets to the Trust and as per the wishes of the Settlor the Trustee takes responsibility to manage it on behalf of the creator and beneficiaries.

Structure and operation

3 main criteria to create a Trust;

  1. Grantor/Settlor: The party that creates and gifts assets in the Trust.
  2. Beneficiary: The person/party who receives the assets and or income from the Trust.
  3. Trustee: The party who manages the Trust as per the wishes of the Settlor.

A Cyprus International Trust can hold assets all over the world. The basic structure of any Cyprus International Trust is that Companies are usually below the Trust directly holding the assets. We often use the expressions “trust” and “trust fund” synonymously, even though they technically have different meanings.

Trust – A legal arrangement evidenced in a written agreement transferring property from a “Settlor” to a “Trustee” for specified purposes. The Trustee has the fiduciary responsibility to hold and manage the property in accordance with the directions and wishes in the agreement having always the best interests of the Trust’s beneficiaries in mind.

Trust fund refers to any property (financial assets, real estate, art, patents, etc.) that is assigned from the Settlor to the Trustee.

Establishing a Cyprus Trust

Why should you consider establishing a Cyprus Trust?

  • Any International Trust founded in Cyprus may use the tax benefits of the current taxation system, in place at the time.
  • Any confidential information relevant to the Cyprus International Trust are strictly confidential.
  • A Cyprus International Trust may be redomiciled, in another jurisdiction and vice versa.
  • What happens within the Cyprus International Trust is not limited to Cyprus. The Trust Deed clearly identifies where the Trust is allowed to invest and that is all over the world except sanctioned countries.
  • Any property or assets, wherever in the world, may be included in a Trust created in Cyprus.
  • The Trust beneficiary or Settlor could become a tax resident of Cyprus.
  • Establishing a Cyprus trust, ensures maximum safeguarding of assets from possible legal claims against the Settlor and/or the Beneficiaries. In other words, protecting the ultimate beneficiaries as the Trust is segregated from the Settlor’s funds (which could be useful in the case of bankruptcy or liquidation of Settlor)
  • Cyprus International Trusts are registered (name of Trust and Trustee) with the Cyprus Bar Association
establishing a cyprus trust
  • Recoverable/living Trust

Beneficiaries can be changed as long as they’re physically and mentally able to do so.

  • Irrecoverable Trust

With this type of Trust, once you put assets in a Trusts name, and add a beneficiary, it is permanent. The assets then belong to the Trust, not the Settlor once this is completed.

There are no requirements in regards to registration or publication of constitutional documents and financial statements concerning the Trust.

What is to be disclosed?

  1. Name of the Trust.
  2. Date of its settlement.
  3. Trustee’s name.

Such information will remain in the Trust Register for a term not exceeding 5 years after the termination of a Trust.

(They are disclosed to the supervisory authorities of Cyprus, such as the Cyprus Securities and Exchange Commission or to the Cyprus Bar Association or to the Cyprus Association of Certified Accountants). 

How to establish a Cyprus Trust

  1. You can choose any name you wish for the Trust/Fund in Cyprus.
  2. The Trust will receive a registration certificate, once it is registered with the Cyprus Bar Association.
  3. When the Cyprus Trust Deed has been finalized, it is stamped at the tax office.
  4. MARICORP is a licensed and insured service provider in Cyprus.
  5. The Trustee manages the bank account on behalf of the Trust in Cyprus as per the instructions of the Settlor/Beneficiary.
  6. The Trust can be created in Cyprus for as little as 1 euro gift, by the Settlor.
  7. The Trust can hold any kind of assets such as shares of Companies, Cash at bank and properties directly on the name of the Trustee.
  8. The whole procedure of the Trust registration takes approximately 2-3 weeks.
Establishing a Cyprus Trust
Establishing a Cyprus Trust

Residency requirements for Trust participants:

In the year coming up to the Trust settlement, the Settlor must not be a resident of Cyprus, however after the settlement goes through there is nothing stopping the settlor from living here, this does not apply when the Trust is purely a charitable Trust. At least one Trustee must be a resident in Cyprus at all times.

In our article, ‘Why choosing Cyprus for International Trusts (CIT)‘, you may find more information about Trusts in Cyprus and how they can benefit you.

Cyprus Company FAQ

Why choose Cyprus for International Trusts

Кипрский режим международного траста позволяет лицам, не являющимся налоговыми резидентами Кипра, создать траст на Кипре и воспользоваться максимально возможной степенью защиты активов и создать планирование недвижимости на международном уровне наряду с налоговыми льготами и строгой конфиденциальностью.

Why should you consider establishing a Cyprus Trust?

  • Any international Cyprus trust settled in the Republic may use tax benefits of the current taxation system, in place at the time.
  • Anything concerning the trust can only be disclosed by a court order, because it is strictly confidential.
  • A Cypriot trust may be redomiciled, in another jurisdiction.
  • Within two years of the trusts date of settlement, if the set up can be proven to be fraudulent, any revocation can be brought up.

What types of Trusts are there?

  1. Education Trust
  2. Spendthrift Trust
  3. Charitable Trust
  4. Functional-needs Trust
  5. Qualified personal residence Trust
  6. Generation-skipping Trusts

How can you establish a Cyprus Trust?

  1. A Trust can be registered for as low as 1 euro, by the Settlor and hold and assets; For example, Shares of companies, money, etc. The registration process takes about 2 weeks.
  2. The Trust is registered with the Cyprus Bar Association and then a Registration Certificate is obtained.
  3. Then the Trust Deed is finalized, after being stamped at the tax office.
  4. MARICORP is a licensed and insured service provider in Cyprus, and can help you with your Trust.
  5. The bank account is managed by the Trustee on the behalf of the Trust, according to the instructions of the Settlor/Beneficiary.

What is the Cyprus International Tax Regime?

Кипрский режим международного траста позволяет лицам, не являющимся налоговыми резидентами Кипра, создать траст на Кипре и воспользоваться максимально возможной степенью защиты активов и создать планирование недвижимости на международном уровне наряду с налоговыми льготами и строгой конфиденциальностью.

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