Trusts are widely used for the protection of assets. Cyprus introduced a competitive international
trusts regime back in 1992 which was further amended in 2012.
Qualifications for Cyprus International Trusts (CITs)
• Minimum of the trustee who must be a Cyprus tax resident for the whole duration of the trust
• Settlor must not be a tax resident of Cyprus during the year preceding the year in which the
trust is formed
• Beneficiaries must not be tax residents of Cyprus during the year preceding the year in which
the trust is formed
• Trust property can include all kinds of assets situated anywhere in the world and it can
comprise of real estate property located in Cyprus
• Certain powers may be reserved for the Settlor
Tax treatment of Cyprus International Trusts (CITs):
• Income, gains, and profits deriving from non-Cyprus sources are exempt from income tax, capital gains tax,
special defense contribution or any other taxes in Cyprus
• Worldwide income, profit, and gains are taxable in Cyprus only where the beneficiary is a Cyprus tax resident;
beneficiaries who are non-residents of Cyprus are taxed only on Cyprus sourced income in accordance with
the Cyprus income tax laws
• Dividends, interest, or royalties received from a Cyprus International business company are not taxable and
not subject to any holding tax
• Trust capital received in Cyprus by a foreign resident is not taxable to the trustee
• No estate duty in case a CIT was formed for the purpose of estate duty planning
• No inheritance tax in Cyprus
• The CIT may be used to distribute untaxed income in Cyprus to the beneficiaries, that is to say, family
members
• CITs may last for an indefinite period and income may be accumulated without limitations
• Trustee is not assessed on the income or gains of the trust and is responsible for discharging the tax liabilities
of the beneficiaries on their behalf
• Capital gains are applicable only from the disposal of real estate situated in Cyprus or shares of a company
holding property situated only in CyprusAdvantages and benefits of CITs
Asset Protection
• CITs may be used to protect assets from risks arising in relation to transactions of the Settlor. CITs or a
transfer of trust assets may only be set aside by the settlor’s creditors to the extent that it is proven to the
satisfaction of the court that the CITs were made with the intent to defraud creditors.
Confidentially and reporting
• Registration of CITs is optional and therefore confidentiality is safeguarded.
• There are no reporting requirements in Cyprus for the CITs
• Nominee structures are possible
Management of family wealth/estate planning
• The CITs are ideal for high net-worth individuals with somehow complicated family structures eg. divorced
spouses and children from different weddings
• CITs duration can be indefinite
• The Cyprus law is the proper law of the CITs
• In case the chosen law of the CITs is the law of Cyprus, then Cyprus is under an obligation to protect that
trust. All questions relating to CITs are to be determined in accordance with the laws of Cyprus without
reference to the law of any other jurisdiction, protecting against the application of foreign laws such as forced
heirship laws
Banking solutions
• A bank account may be operated in the name of the trustee for and on behalf of the Trust
• Trustees, Settlor, and Beneficiaries need to be clearly identified
• Beneficiaries may easily be amended, removed, or appointed
Taxation clarity
• Tax residence test applicable for determining the taxation of CITs. Beneficiaries’ tax residence determines the tax treatment as local or International trust.
• Majority tests applicable to determine tax treatment were having both resident and non-resident beneficiaries.
Our Services
We may assist in:
– The establishment of a Cyprus International Trust, advising on potential structures and drafting of all necessary legal documentation
– The establishment of trustee companies and corporate protectors
– The review, interpretation of existing trust deeds, and the re-domiciliation of foreign trust structures to Cyprus
– The provision of trustee, administration, management, and other related services
Disclaimer: This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the
accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Highworth (Cyprus) Ltd, its members, employees, and agents do not accept or assume any liability, responsibility, or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
