What Are the Advantages of Setting Up a Trust in Cyprus?
The Republic of Cyprus, an island country in the Mediterranean, has become an attractive jurisdiction for international investors and individuals seeking to establish a trust. Trusts are flexible and versatile legal structures that can provide several benefits for asset protection, tax optimization, and estate planning. Cyprus offers a unique and appealing environment for trust creation due to its favorable legal framework, attractive tax regime, and its strategic location between Europe, Asia, and Africa. In this article, we will explore the key advantages of setting up a Cypriot trust and how it can benefit individuals and companies alike.
1. Flexible and Modern Legal Framework
Cyprus has adopted and continuously modernized its trust legislation in line with international best practices, making it a competitive jurisdiction for trust creation.
The primary legal framework regulating Cyprus trusts encompasses both English Law, namely the Principles of Equity, and Statute Law, and is legislated under the Cyprus Trustees Law (Cap 193), which is based on the English Trustee Act of 1925, and the amended International Trusts Law of Cyprus (Law 69(I) of 1992 and Law 20(I)/2012).
The Cyprus International Trusts Law builds upon the established English equity and trust principles, forming one of the most appealing global trust legal frameworks. For eligible individuals, this law provides the opportunity to establish a Cyprus International Trust (CIT) tailored to intricate situations and requirements. A CIT offers numerous advantages not commonly found in other trust jurisdictions.
The framework in Cyprus allows for the establishment of Cyprus International Trusts (CITs), which can be formed by non-residents and can hold assets anywhere in the world. The law provides extensive flexibility in terms of trust duration, asset protection, and other key provisions, making it an attractive option for those seeking a tailored trust solution.
2. Robust Asset Protection
Asset protection is a primary concern for individuals and companies looking to safeguard their wealth against potential risks and liabilities. Trusts offer strong asset protection features, ensuring that your assets are secure from potential creditors, litigants, and other adverse claimants. The Cyprus International Trusts Law includes provisions to deter fraudulent transfers and to protect trust assets from being seized or claimed by creditors, as long as the transfer of assets to the trust was not intended to defraud existing creditors.
3. Attractive Tax Regime
One of the key benefits of setting up a Cypriot trust is its favorable tax environment. Cyprus International Trusts enjoy a range of tax advantages, including exemption from income tax, capital gains tax, and inheritance tax for non-residents. Additionally, Cyprus has an extensive network of double tax treaties with over 60 countries, providing further opportunities for tax optimization and the avoidance of double taxation.
4. Confidentiality and Privacy
In an age where privacy is increasingly important, trusts offer a high level of confidentiality. The trust deed and the identity of the settlor, beneficiaries, and trustees are not publicly available, ensuring that sensitive information remains private. Moreover, the Cyprus International Trusts Law imposes strict confidentiality obligations on trustees, who are prohibited from disclosing information about the trust without the express consent of the settlor or a court order.
5. Strategic Location and Professional Infrastructure
Cyprus’s strategic location at the crossroads of Europe, Asia, and Africa offers easy access to key markets and jurisdictions. This, combined with its well-developed professional infrastructure, including a pool of skilled lawyers, accountants, and financial service providers, makes Cyprus a convenient and efficient location for trust administration. Furthermore, Cyprus is a member of the European Union, which enhances its credibility as a reputable jurisdiction for trust establishment.
Conclusion
Setting up a Cyprus trust offers a host of advantages for individuals and businesses seeking to protect their assets, optimize taxes, and ensure confidentiality. With its flexible legal framework, robust asset protection, attractive tax regime, and strategic location, Cyprus presents a compelling option for those considering trust formation.
