Cyprus: Law of Offshore
Cyprus trust law began with the Cyprus Trustee Law Chapter 193, based on the English Trustee Act 1925, but the island's trust regime was brought into line with normal international practice with the International Trusts Law 69(I) of 1992. The result is that there are three types of trust available, of which only the last will normally be of interest to the international settlor:
Local Trusts are governed by English common law and the original Trustee Law. The settlor and beneficiaries are normally residents of Cyprus, and the trust and its property are subject to exchange controls.
Offshore Trusts are equally outside the International Trusts legislation, and are the same as Local Trusts except that their beneficiaries must be non-resident and all the trust's activities must be outside Cyprus.
International Trusts are the normal form of Cyprus Trust used by foreign settlors. International Trusts have the following key characteristics:
- the settlor must be non-resident
- the beneficiaries must also be non-resident (except for local charities)
- one of the Trustees must be Cypriot (individual or corporate)
- the trust period may be up to 100 years (longer for charitable trusts)
- confidentiality is protected in the law, and foreign judgements are specifically non-recognized
- there is no registration requirement
- trust documents are in English
- trust assets may not include immovable property in Cyprus
- creditors have to prove intent and must claim within two years
- there is Stamp Duty of CY£250
- broadly speaking, the income and assets of International Trusts are not taxable in Cyprus
It is often possible to combine Cyprus International Trusts with the island's network of double-tax treaties to create very advantageous results.