Cyprus enacted the International Trusts Law in July, 1992. The International Trusts Law provides for the constitution and administration of the International Trusts, offering considerable incentives for the establishment of such trusts in Cyprus.

The specific provisions of the Cyprus International Trusts Law may be summarised as follows:

  • A Cyprus International Trust will be qualified as Cyprus International Trust, even though the local trustee or the beneficiary (or any combination of those) is a Cyprus offshore enterprise.
  • No foreign law relating to inheritance or succession will invalidate a Cyprus International Trust.
  • Trusts for a purpose or “purpose” trusts can be set up under the provisions of the International Trusts Law.
  • A Cyprus International Trust may remain in force for up to one hundred years, notwithstanding any statutory provision in Cyprus or any other country to the contrary.
  • The law applicable to a Cyprus International Trust can be expressly changed to a foreign law provided that the new law recognizes the validity of the trust and the respective interests of the beneficiaries. Conversely, a trust established in a foreign jurisdiction may, by its terms, select Cyprus law provided that the foreign law itself recognises such a change. This provision ensures flexibility, which might be important in the event of a change in Government, fiscal or other policy which makes it beneficial to change a trust’s location.

Features & Advantages

Compared to similar legislation of Competitive EU Jurisdictions, the Cyprus International Trusts Law has the following advantages:

  • Asset Protection. The power of the creditors is limited with the aim to set aside transfers of assets into a trust. This advantage makes almost impossible to liquidate the trust even in situation of an owner’s bankruptcy, unless fraudulent intention was behind the formation of the Trust.
  • Confidentiality. The Cyprus International Trusts Law ensures that the trustee may not make public any information or documents in relation to the identity of the trust’s owner(s) or its beneficiaries.
  • The profits derived from a source outside Cyprus are exempt from income tax or any other tax imposed in Cyprus.
  • The conjunction of a Cyprus Offshore Company with a Cyprus International Trust form an advantageous business scheme, since, at present, Cyprus concluded 45 Double Tax Treaties and the most such treaties provide that a Cyprus Offshore Company may benefit, while being subject to only 4,25% Corporate Income Tax. Royalties, interests and dividends received from an Offshore-Company (trust’s income) are tax exempt.
  • Furthermore, the trustees’ income is tax exempt and the beneficiaries of a Cyprus International Trust are also exempt from the payment of income tax in respect of any moneys they receive from the trustees.