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Cyprus
Cyprus is the third largest island in the Mediterranean. It has a population of approximately 900,000 of mainly Greek origin, with a smaller Turkish community and some other minorities.
The capital is Nicosia and local time is 1 hour ahead of Central European Time. Official languages are Greek and Turkish but Greek and English are more widely spoken.
Cyprus has been a member of the European Union since 1 May 2004 and adopted the Euro as its currency on 1 January 2008. The legal system is based on English Common Law.
Cyprus International Trust
Governing legislation
The Trustees Law of 1955 in conjunction with the International Trusts Law of 1992, as amended.
In the event of any conflict in the provisions of the above two laws or with any other Cyprus law or with Common Law or the Principles of Equity, then the provisions of the International Trusts Law will prevail.
Trust conditions
In order for a trust to qualify as a Cyprus international trust, three conditions must be met:
- the settlor, whether this is a physical person or legal entity, must have not been resident in Cyprus at any time during the calendar year prior to the creation of the trust;
- at least one of the trustees must be a resident of Cyprus for the entire duration of the trust; and
- none of the beneficiaries may have been resident in Cyprus during the calendar year prior to the creation of the trust;
A natural person is considered resident in Cyprus if he/she spends more than 183 days in a calendar year on the island.
A company is tax resident if it is incorporated in Cyprus or if its management and control are exercised from within the jurisdiction.
It is possible for both the settlor and the beneficiaries to become residents of Cyprus after the trust has been created. This would not affect the validity of the trust as a Cyprus international trust.
Maximum trust duration
A Cyprus international trust may continue in perpetuity. The equitable rule against perpetuities does not apply.
Maximum accumulation period
The trust’s income may be accumulated for a maximum period of 100 years.
Revocability
A Cyprus international trust is considered to be irrevocable unless the trust deed specifically provides for the trust to be revocable.
Powers of the trustees
The powers of the trustees are determined in the trust deed. Any other powers granted to the trustees under the International Trusts Law shall be additional to those granted in the trust deed.
There are many local folklore stories about the chameleon in Cyprus.
Protector
It is possible for a protector to be appointed, whose powers will be defined in the trust deed.
These may include advising the trustees on exercising their powers and consenting to or exercising a veto against decisions of the trustees.
A protector can also be granted powers to amend the terms of the trust, to appoint or to remove a trustee, protector, beneficiary or investment manager and to change the applicable law of the trust.
It is also possible for the protector to exercise the powers of a director of any company which is wholly or partly owned by the trust.
Registration requirements
Details of the trust and all parties involved in the trust arrangement are submitted to the Cyprus Securities and Exchange Commission (CySEC).
This information is not accessible to the public. It may only be accessed by competent authorities or by court order.
Taxation
A Cyprus international trust is exempt of income tax, capital gains tax, estate taxes and all other forms of tax in Cyprus.
Trust distributions to non-resident beneficiaries are not subject to any form of tax in Cyprus.
Financial statements
The trust deed will normally provide for financial statements to be distributed to certain of the beneficiaries and/or the settlor. These may be audited, at the settlor’s request but they are not filed with any statutory authority.
Owning immovable property
The trust is allowed to own immovable property in Cyprus, subject to the provisions of The Immovable Property Law being met.
Enforcement of foreign judgements
The Cyprus courts will not recognise or give effect to certain judgements of foreign courts in relation to Cyprus international trusts, provided that it is stated in the trust deed that the applicable law of the trust is Cyprus law.
Any matter relating to the validity or administration of the trust will be determined in accordance with Cyprus law without reference to the law of any other jurisdiction.
Foreign inheritance laws
The validity of a Cyprus international trust will not be affected by any foreign inheritance or succession laws.
Asset protection considerations
Under the provisions of the International Trusts Law, the validity of a Cyprus international trust will not be affected by the settlor’s subsequent bankruptcy or liquidation, provided that the disposition of assets was not intended to defraud the settlor’s creditors.
In any event, any action against the trustee must take place within two years of the date of transfer of the assets.
Any action after this period will not be considered.
The Cyprus mouflon is a species of wild sheep. It is protected and lives in the island's mountain ranges.
Change of applicable law
It is possible to change the applicable law of a Cyprus international trust to a foreign law, provided this is allowed by the trust deed and the change will be recognised by the new jurisdiction. Similarly, it is possible to change the applicable law of a foreign trust to Cyprus law.