Trust formation in Cyprus
Investors who want to open a Cypriot trust must observe the provisions of the Cyprus International Trusts Law of 1992. There are no major restrictions regarding who can open a Cyprus International Trust other than the requirements for having the minimum legal age and complete mental capacities.
The settler of the trust, the individual setting up the trust in Cyprus can be either a natural person or a legal person. The condition that must be observed by the settler is that the person or legal entity
must not be a Cypriot resident during the year immediately after the trust is created. The same rule regarding residency also applies for the beneficiary of the trust. At least one of the trustees must be a Cypriot resident.
The settler of the trust must also pay a stamp duty. Our company registration experts in Cyprus
can give you more details regarding the requirements for creating a Cyprus International Trust
Types of trusts in Cyprus
The type of trust depends largely on the purpose of the settler and the objectives he is trying to achieve by using the trust. The types of trusts that can be set up in Cyprus are:
- charity trusts: it has certain purposes that are defined as charitable including but not limited to: poverty relief, educational or religious purposes, the advancement of health care, arts or sports, etc.;
- fixed trusts: with clearly specified trust property to which the beneficiary is entitled to;
- discretionary trusts: the trustee can decide the manner in which the beneficiaries received their entitlements;
- fixed and discretionary trust: a combination trust that includes the particularities of the two other types;
- protective trusts or trading trusts.
Trust taxation in Cyprus
The taxation of a trust in Cyprus
depends on the residency of the Beneficiary and whether or not he derived income from outside the country. The beneficiary is exempt from taxation in Cyprus
of he is not a Cypriot resident and he received income from outside of Cyprus. Dividends received from Cypriot trust are not subject to tax. Also, a trust is not affected by the existence or lack of a double tax treaty
between Cyprus and other countries.
Our consultants can help you with advice and personalized counselling regarding the best trust type for your needs. Do not hesitate to contact us
for other issues regarding Cypriot company formation