This law is based on its English counterpart and on the English principles of equity which also form part of the legal system of Cyprus.
There are currently three forms of trusts which can be set up in Cyprus, namely:
(a) a Local Trust
The settlor, the trustees and the beneficiaries are Cypriots and the trust property may include immovable property in Cyprus.
(b) an Offshore Trust
The settlor and the beneficiaries must be non-resident in Cyprus. The majority of the trustees, whether individuals or trust companies (including offshore Cyprus trust companies) must be Cypriot. The trust must be located in Cyprus so that Cypriot law is applicable and the Cypriot courts have at least concurrent jurisdiction. The trust income must be generated from foreign sources, not from business or other origins in Cyprus, but the trustees may hold immovable property in Cyprus subject to obtaining the required permit from the Council of Ministers. The trust deed must be executed in Cyprus.
(c) an International Trust
It is regulated by the International Trusts Law, No. 69/92, which extended and modernised the existing legislation on trusts. This law reflects the policy of the Government to increase the attraction of Cyprus as an offshore jurisdiction, by offering incentives to foreigners for the establishment of trusts in Cyprus with certain features which were not available within the existing domestic law. The law defines an International Trust as being a trust in respect of which:
(i) the settlor is not a permanent resident in Cyprus
(ii) no beneficiary (other than a charity) is a permanent resident in Cyprus
(iii) the trust property does not include any real property situated in Cyprus
(iv) at all times there is at least one trustee resident in Cyprus.
A trust will still qualify as an International Trust even if the settlor, the local trustee or a beneficiary (or any combination of these) is a Cyprus offshore company or partnership. A trust which fails to qualify as an International Trust because it does not comply with one of the requirements of the International Trusts Law falls within the category of Offshore Trust.
The International Trust is more popular with non-resident individuals and entities, due to the role which it plays in international tax planning exercises. This factor, together with the flexibility, confidentiality and perpetuity and the diverse attractions of the island, makes international trusts extremely attractive to all settlors in the business and commercial sector.
For more detailed information, the reader is referred to our publications on international and other trusts.
Click Contact Link to visit the Andreas Neocleous
You may also be interested in the following sites:
