Establishing international trusts in the Republic of Cyprus has a number of advantages to it. So, let’s see what requirements potential investors will have to comply with to set up such an entity in this jurisdiction.
Setting up international trusts in Cyprus requires drawing up a trust deed which includes information on:
- property & proceeds;
- founders’ additional powers;
- applicable laws;
- amendments to trust deeds;
- trustees’ liabilities, resignation. compensation & appointment;
Establishing charitable trusts in the Republic of Cyprus requires paying particular attention to the purpose of establishing trusts (especially when it comes to blind trusts & their beneficiaries). Because it’s easy to conceal ultimate beneficiaries in blind trusts, they can be easily invalidated in settlors and trustees’ jurisdictions.
Founders’ Additional Powers
Granting additional powers to trusts’ founders includes:
- revoking or changing terms of creating trusts;
- paying or distributing trusts’ income/capital;
- exercising officers or directors’ powers;
- instructing trustees on managing trusts;
- appointing/removing trustees;
- appointing/removing investment managers or advisors.
Amending Terms of Agreements on Trust Management
Trust agreements can be amended as per particular provisions contained in these agreements. Courts have the right to endorse any amendments that change/cancel terms of agreements or expand trustees’ powers. Under Cypriot legislation, amended agreements must be judicially approved.
Those contemplating engaging in trust activities in the Republic of Cyprus should keep in mind the fact they'll have to pay a stamp duty of four hundred thirty euros. They should also remember that proceeds of international trusts gained from sources outside the Republic of Cyprus aren’t subject to taxation (unless trusts’ beneficiaries have a Cypriot citizenship). It’s also worth noting that international trusts are required to pay income tax.
Licensing of international trusts in the Republic of Cyprus is necessary for:
- protecting assets;
- protecting beneficiaries;
- controlling beneficiaries/assets;
- paying less taxes;
- achieving commercial, family or charitable goals;
- pursuing specific goals;
Cyprus: Obtaining a Permit for Trust Activities
The following information is required for creating international trusts in the Republic of Cyprus:
- trusts’ names;
- information on founder & beneficiaries;
- information on trusts’ property;
- founders’ powers;
- amendments to trust agreements;
- appointment of trustees;
- trustees’ compensation;
- particular provisions to be kept in mind when drafting trust agreements.
Those interested in obtaining an international trust manager license in the Republic of Cyprus should keep in mind it allows trustees to manage trusts’ property & transfer beneficial rights to other individuals.
Those contemplating registering an international trust in the Republic of Cyprus should keep in mind that they’ll be guaranteed strict confidentiality. That is precisely why Cyprus is the number one jurisdiction for setting up international trusts in the world.
Are interested in getting more information on the topic of the article? Do you want to set up a trust in the Republic of Cyprus? Why not reach out to IQ Decision UK? Our legal assistants will be happy to give you a hand with any legal issue you’re facing in this regard.