Cyprus is a well-established and reputable international financial centre offering attractive benefits for setting up and operating an international Trust. Cyprus International Trusts (CITs), have long provided a high threshold of protection and flexibility for non-residents, and today attract high-net-worth individuals (HNWIs) from around the world. The Cyprus Trust regime is the most modern and favourable Trust regime in Europe. CITs are practical, accessible and effective as they are founded on much greater certainty, clarity and stability.
Coupled with a high level of professional services and comparatively low costs, Cyprus is becoming the preferred EU Trust jurisdiction for HNWIs and their families.
This memo is intended to provide an outline on CITs and the Cyprus International Trust Law. The memo is, therefore, designed as a starting point for further detailed and comprehensive discussion on the issues and advantages.
The precise benefits of a Trust will depend on the residence and domicile of the Settlor and the Beneficiaries. Common advantages of placing assets into a Cyprus International Trust include:
Anonymity: A Trust Deed is not a public document. With the establishment of the UBO register in Europe and as a result in Cyprus, CITs are not included in the database of the Registrar of Companies (as they are not considered to be legal entities), and therefore information about the beneficiaries is not publicly available. Information about the settlor and the beneficiaries is kept with the Cyprus Securities and Exchange Commission (CySec). However, such information may only be provided, by CySec, if there is a legitimate interest (supported by relevant documentation). Furthermore, neither the Settlor nor the Beneficiaries will be the registered owner of any Trust Assets, enabling HNWIs to protect their wealth with the strictest anonymity and confidentiality and as a result, a Trust arrangement can be regarded as highly confidential.
Asset protection: A Trust is an effective way to protect assets from creditors and potential claimants, as the Settlor ceases to own the settled assets, but also from any claims based on a lack of recognition of the Trust, infringement of forced heirship rules (see below), and a personal relationship with the Settlor, such as husband and wife.
Taxation – as CITs are tax transparent, Trust may be a powerful tool in tax planning, particularly for those with international wealth.
Estate planning: A Trust is a flexible way to provide for the succession of family wealth and, unlike a Will, is not a public document.
Freedom of choice – a Trust can provide for the transmission of wealth in a manner which may not be otherwise permissible, and to persons in some countries who may not be otherwise entitled.
Reduced political risk – if the Trustee and the assets are in a stable jurisdiction, a Trust can provide protection against the nationalisation or seizure of assets.
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