Cypriot International Trust – Asset Protection

If you have significant assets, a profitable private business, an investment portfolio that generates profits, income from interest and dividends, or real estate anywhere in the world, and you naturally want to transfer these before or after your death, avoiding painful and costly procedures through a will and court validation; or if you have a high-risk profession; or if you have a vibrant personal life with multiple divorces, children, and marriages, then the appropriate solution is to create a trust.
A trust is not a company. A trust is a legal arrangement-agreement. Over the past twenty years, Cyprus has evolved into one of the most favorable places for international businesses and investors. Within this context, the Cyprus International Trusts Law was enacted, which provides for the creation and management of Cypriot international trusts.
A Cypriot trust can be defined as an agreement that carries the obligation under which a person to whom property is transferred (i.e., the trustee) is bound to deal with the beneficial interest of the property in a specific manner for the benefit of a specific person or persons or class of persons (i.e., the beneficiaries). The creator of the trust is the Settlor. A trust is an agreement and therefore does not constitute a separate legal entity.
Trusts are commonly used by high-net-worth individuals to protect their assets from inheritance or capital gains taxes in their home country. They can also be used by expatriates who establish a trust before repatriating assets acquired while working abroad, to protect these assets from the tax regime of their home country.
In July 1992, Cyprus enacted the International Trusts Law – The International Trusts Law of 1992 (L. 69(I)/1992), which provides for the creation and management of Cypriot international trusts.
A Cypriot International Trust defines a settlor, a trustee, and a beneficiary.

• The settlor who establishes the Cypriot trust.
• The trustee, who does not benefit from the Cypriot trust, will hold property of which they are the legal owners for the benefit of other persons, known as “the beneficiaries.”
• The beneficiaries, those who will ultimately benefit from the Cypriot trust.

It is necessary that the settlors and beneficiaries are not residents of Cyprus in the year preceding the creation of the trust and that at least one of the trustees is a resident of Cyprus. The term “resident of Cyprus” will be determined in accordance with the Cyprus Tax Laws. Therefore, the settlors or beneficiaries can reside in Cyprus.
A trust can still be classified as an international trust for the purposes of Cypriot law, even if the settlor, trustee, or beneficiaries are international business companies or international partnerships.
A distinctive feature of an international Cypriot trust is that the settlor, the trustee, or any one or more of the beneficiaries can be a Cypriot Company. This facility can offer unique opportunities to investors. If, for example, the settlor wants to maintain full control over the management of the trust, they can form a Cypriot Company with themselves as the shareholder.