Cyprus provides a competitive edge to a legal or natural person as Settlor that wants to create an efficient and effective vehicle by transferring property to another as Trustee. Cyprus trusts are formed by a Settlor for various purposes, including family succession and heirship planning, estate and asset protection, commercial transactions, employee incentive schemes, investment and charitable purposes.
Trusts are based on principles of equity and, in particular, that ownership of property may be separated into legal and beneficial ownership. Hence, a Trustee undertakes the role of the registered owner of the relevant property. Whereas, the beneficial interest of such property lies with a specified person(s) as Beneficiary(ies), who may also be the Settlor. Furthermore, a Protector of the trust may be appointed to whom authority is granted subject to the trust instrument, including to advise the Trustee as regards exercise of its authorities.
The Cyprus legal system is largely based on English common law principles. This provides comfort through familiarity to international executives who conduct local or cross-border business through Cyprus. Cyprus law and regulations are formula ted to facilitate compliant transactions of businesses smoothly.
The national tax framework and incentives as well as international or bilateral treaties with countries worldwide remain useful business structuring tools. Cyprus has 12.5% corporate tax rate, limitless tax structuring opportunities and contemporary banking infrastructure.
As a member of the European Union since 2004 and the Eurozone in 2008, Cyprus enhanced its role as robust and reliable destination for key players in various industries and sectors. The professional services industry evolved to cater for businesses of local and international clients, in line with the risks of the Digital Age and the challenges of globalisation. Cyprus is rapidly growing and enhancing its reputation as a reliable financial and capital management centre.
The Cyprus trust statutory framework consists of the Trustees Law CAP. 193 which is mainly based on the English Trustees Act of 1925 and the International Trusts Law of 1992, as amended. The Law defines an international trust as a trust of which (a) the Settlor is not a resident of Cyprus during the year preceding the year of creation of the trust; (b) one of the trustees throughout the duration of the trust is a resident of Cyprus; and (c) none of the beneficiaries, subject to certain exceptions, is a resident of Cyprus during the year preceding the year of creation of the trust.
Moreover, to establish a valid Cyprus trust the three certainties of (i) intention; (ii) subject matter; and (iii) objects must be fulfilled. The applicable procedure to create a Cyprus trust is relatively swift and straightforward, subject always to the particular circumstances of each case.
Importantly, Cyprus trusts have proven their strength as formidable tools in foreign, high-profile litigation proceedings, whereby the relevant rulings recognised the validity of the Cyprus trust.
Disclaimer: This article is intended for informational purposes only and should not be construed as legal advice. For specific legal guidance on Cyprus legal matters, it is advisable to consult with a qualified legal professional. If you have any questions or require any legal advice or assistance, please do not hesitate to contact us at firstname.lastname@example.org.