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The amended Cyprus International Trusts of 1992 in March 2012, provides a firm legislation for “planning of asset protection” stating Cyprus as one of the most attractive countries for asset protection.
The main parts of a trust is the founder (Settlor), who provides the assets for the benefit of a third party (the Beneficiary(ies)) under the control of another person (the Trustee).
A trust to be considered as a Cyprus International Trust, the following requirements must be met:
- The Settlor is not a permanent Cyprus Tax Resident during the calendar year which precedes the year of creation of the Trust. They can either be a physical person, or a Cypriot or an international entity;
- At least one of the Trustees is a Cyprus Tax Resident and has a license;
- None of the Beneficiaries, whether physical or legal person(s), are a Cyprus Tax Resident during the calendar year which precedes the year of creation of the Trust; and
- Property that is the subject of Trust can include any movable or immovable property abroad and/ or in the Republic of Cyprus, as well as shares of Companies based in Cyprus.
CYPRUS INTERNATIONAL TRUSTS ARE WIDELY USED FOR AND AS AN EFFICIENT TAX PLANNING VEHICLE
Main Benefits of a Cyprus International Trust
Tax benefits of Trust are many and certainly an efficient tax planning vehicle.
A Cyprus International Trust (CIT) offers sound asset protection to the highest degree due to the transparency and alignment with all EU and local anti-money laundering laws and regulations, combined with the certainty of its operation by Cyprus law and the simplicity of its formation.
- No formal registration is required.
- An international trust is irrevocable unless a specific provision to the contrary in practice during the creation of the trust.
- There is no restriction on the type of investments and assets to put on the international trust.
- The income is accumulated for the entire period with no forced distributions;
- Avoidance of forced heirship rules: Trusts are valid and enforced either by the Settlor, their authorised representative (the Trustee), or the person designated in the Trust with the right to impose (this may be the Owner);
- If warranted by the terms of the Trust, the CIT can be transferred to another jurisdiction;
- Asset protection: the CIT is not affected if its Settlor goes bankrupt, except if the purpose of the transfer of assets to the Trust was to mislead the creditors of the Settlor;
- Confidentiality: a CIT affords a high threshold of protection in the matters governed by the Trust Deed, including the identity of the Beneficiary/ies. Anonymity of ownership of a Company can be accomplished if its shares are transferred to a discretionary Trust. There is no disclosure of the Trust’s financial information;
- A person, through a Trust, may designate the persons who will inherit him, which otherwise due to the law of the country may not be able to inherit.
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