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Cyprus International Trusts, similarly to the Cyprus companies, enjoy all and even more tax advantages, providing significant tax planning possibilities to international investors.
The following tax-related advantages are what such Cypriot Trusts can offer, at a summary:
- the income of a Cyprus International Trust (also referred to as “Offshore” Trust whose assets are, and income derives, outside Cyprus) is wholly exempt of taxation as far as its’ profit is not accrued or derived in Cyprus.
- Cyprus Income Tax laws exempt Cyprus International trusts from any income tax, capital gains tax and estate duty tax, making such Trusts a very attractive tax planning vehicle for the non-resident investor.
- A foreign settlor of a Cyprus International Trust who also retires in Cyprus is still exempt from tax if all the property settled and the income earned is abroad, even if he is a Beneficiary as well.
- A Trust is not subject to tax on its own as an entity.
The essential elements of an International Trusts are:
- The settlor/investor may not be a Cyprus tax resident in the calendar year proceeding the year of creation of the trust (a Cyprus company will qualify as a settlor which may also belong to the same person);
- The beneficiary(ies) may be Cyprus residents, and the term “beneficiary” includes unborn beneficiaries as well;
- The trust property can be any immovable property in Cyprus or abroad, including shares in Companies;
- A minimum of one trustee is resident in Cyprus (a Cyprus company will qualify as a resident trustee which may also belong to the settlor/investor).
For more details about the new Cyprus International Trusts regime, as amended in 2012 please read our article “Update – Cyprus International Trusts Law“.