The concept of trusts in Cyprus is based on English legal principles and all the legislation in force follows the English Trustees Act of 1925. Offshore trusts are governed by The Trustee Law Chap. 193 and The International Trusts Law No. 69(I)/92.

The most common types of trust used in Cyprus are Fixed trusts, Discretionary trusts, Accumulation and maintenance trusts and Trading trusts.

For a trust to qualify as an international trust, the following requirements must be fulfilled:

1. The settlor must not be a permanent resident of Cyprus;
2. No beneficiary, other than a charitable institution can be a permanent resident of Cyprus;
3. The trust property cannot include any immovable property situated in Cyprus;
4. At least one of the trustees must be a permanent resident of Cyprus.
5. The duration of an international trust may be up to 100 years except in cases of charitable or "purpose" trusts where there is no limit.

Confidentiality
The Law contains provisions for confidentiality. Such duty is imposed by the Law on trustees, who may not disclose information about the trust to outside parties. There is no registration or reporting requirements for Trusts established in Cyprus nor are the names of the Trust or of the persons referred to in the Trust Deed disclosed. The only authority to be informed of the creation of an Offshore Trust is the Central Bank and only in cases where the Offshore Trust owns shares in a Cyprus offshore company.

Offshore Trusts are not taxed in Cyprus. In fact, Cyprus Offshore Trusts enjoy important tax advantages, providing significant tax planning possibilities to interested parties. Although taxation considerations relating to Trusts are fairly complicated, the following advantages are indicative of the possible options for tax minimisation.

Income
All income whether trading or otherwise of an Offshore Trust, (i.e. a Trust whose property is located and income is derived from outside Cyprus) is not taxable in Cyprus.

Dividends
Dividends, interest or other income received by a Trust from a Cyprus offshore company are also neither taxable nor subject to withholding tax.

Capital gains
Gains on the disposal of the assets of an Offshore Trust are not subject to capital gains tax in Cyprus.

Retired in Cyprus
An alien who creates an Offshore Trust in Cyprus and 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.

Estate duty
An Offshore Trust created for estate duty planning purposes would not be subject to estate duty in Cyprus.

Other tax protections
Trusts are usually used by wealthy individuals for the purpose of protecting their estate from inheritance or capital gain taxes in their home country. They can also be used by expatriates settling into a trust before repatriating assets acquired while working abroad, to protect such assets from the tax net of their home country.

Offshore trusts and other aspects
There are many situations other than saving in taxes where Cyprus Trusts can prove advantageous. These include the following:

Estate planning
An individual, through the use of a Cyprus Trust, can ensure that minors, mentally handicapped persons or persons that cannot be trusted with the management of the individual’s estate are well provided for, even after the individual's death.

An individual, through the use of a Cyprus Trust, can arrange to be inherited by persons, who due to the legislation of the individual's country, would otherwise be excluded from the inheritance. An individual who wishes to divest himself of personal assets for fiscal or other reasons can achieve that by transferring them to a Cypriot Offshore Trust.

Anonymity
An individual, who wishes to keep the ownership of a company anonymous and confidential, can do this by setting up a Discretionary Cyprus Trust to own the shares in the company.

Maintaining funds overseas
An individual who has or may have income arising overseas, which he does not wish to remit to his country of residence, can arrange for such income to be directed to the Trustees of a Cyprus Settlement to be held on Discretionary Trusts in accordance with his wishes.

An individual with assets outside his country of residence, which country may in future extend its exchange control restrictions to include remittance of overseas funds, may wish to retain the flexibility of overseas funds by transferring them to a Discretionary Trust.

Other advantages
In addition to the tax and other aspects set out above there are other favourable factors for creating a trust in Cyprus.

Favourable legal system
The favourable legal system relating to Trusts together with the advantageous geographic position of the island make Cyprus a particularly attractive Trust location.

No exchange control
Cyprus Offshore Trusts are not subject to exchange control. Bank deposits with Cyprus banks, either onshore or offshore, or with any bank around the world, are also not subject to exchange control. The absence of exchange control restrictions and the availability of excellent telecommunications and international banking services, make Cyprus a convenient base for the remittance and transfer of funds.

Management services
The presence of a number of reputable international fund management companies on the island and the high standing of the legal and accounting professions ensure the availability of expert advice as well as the competent management services required for the proper operation of a Trust.

Flexibility
Cyprus law is flexible in that it allows the removal of a Trust from its jurisdiction and vice versa. This could be important in cases where a change in circumstances may render such a transfer advantageous for fiscal or other reasons.

Costs
The approximate cost for setting up a trust in Cyprus is in the order of €900, which includes stamp duty of €427,15. Professional charges for trustee services provided by our company, Robchar Nominees Limited are calculated strictly on a time basis at rates, which compare very favourably with most parts of the world. The charges are not calculated as a percentage of the trust property. Experience has shown that for the administration of a trust with approximately 25 transactions annually, the charges involved would not exceed €450.

Establishing an offshore trust
In order to establish a discretionary offshore trust in Cyprus we need you to complete the enclosed trust information sheet and return it to us. This will provide us with all the information necessary to finalise the trust documents.

A form is also available regarding "Instructions for the formation of a trust".