Cyprus Trusts
The legal foundation of trusts in Cyprus is based on English common law and is primarily governed by the Trusts Law, Cap. 193, which mirrors the UK Trustee Act of 1925. This framework was significantly enhanced by the International Trusts Law of 1992, further amended in 2012, to meet the needs of international clients. These reforms modernized the trust regime in Cyprus, strengthening asset protection, increasing flexibility, and ensuring confidentiality.
Several types of trusts exist under Cyprus law. Express private trusts are the most common and are established voluntarily by a settlor for the benefit of specific individuals or groups. Charitable trusts serve purposes considered charitable under Cyprus law, such as education or poverty relief.
Resulting trusts arise when it is presumed that a trust was intended, though not explicitly created, while constructive trusts are imposed by courts to address instances of fraud or unjust enrichment. The most significant development, however, is the Cyprus International Trust (CIT), designed specifically for non-residents seeking to manage wealth globally with favorable legal and tax treatment.
Cyprus trusts, especially CITs, offer strong asset protection, shielding assets from future creditors, with a two-year limitation period on challenges to transfers made into the trust. They are particularly attractive for estate planning and succession, allowing individuals to avoid forced heirship rules and transfer wealth smoothly across generations. Tax advantages are also significant; trusts created by and for non-residents enjoy tax neutrality, with no Cyprus income tax or capital gains tax on foreign assets.
Trusts also provide a high degree of confidentiality. While trusts must be registered under the Cyprus Trust Registry for compliance purposes, the registry is not publicly accessible. Additionally, Cyprus trusts allow for broad investment powers and can hold diverse assets such as shares, real estate, intellectual property, and offshore interests, making them suitable for both personal and commercial uses.
In summary, Cyprus offers a stable and well-regulated environment for trust creation. The Cyprus International Trust, in particular, is a powerful tool for international clients seeking asset protection, tax efficiency, estate planning, and confidentiality within a reputable EU jurisdiction.