Thanks to its modern and flexible legal framework, advantageous tax system, and robust regulatory environment, Cyprus has become an increasingly popular destination for setting up trusts. Whether for asset protection, estate planning, or wealth management, trusts in Cyprus offer a wide range of benefits to individuals and businesses worldwide. Here, we explore the process of establishing a trust in Cyprus and the key advantages it provides.
What Is a Trust?
A trust is a legal arrangement where a person (the settlor) transfers assets to a trustee, who manages them to benefit specified beneficiaries or a particular purpose. Trusts are commonly used for:
- Asset protection
- Succession planning
- Tax optimization
- Safeguarding family wealth
Why Choose Cyprus for Setting Up a Trust?
Cyprus offers a robust framework under the Cyprus International Trusts Law of 1992, amended in 2012 to provide enhanced flexibility and attractiveness. Key reasons to choose Cyprus include:
- A reputable and well-regulated jurisdiction.
- Alignment with EU regulations.
- Comprehensive legal and professional services.
- Strict confidentiality and asset protection provisions.
Steps to Set Up a Trust in Cyprus
- Define the Purpose and Structure Determine the objectives of the Trust, identify the settlor, trustee, and beneficiaries, and outline the type of Trust.
- Engage Professional Advisors Collaborate with legal and financial experts to draft the trust deed, which outlines the terms, conditions, and powers of the trustee.
- Appoint a Trustee Choose a qualified and reliable trustee who will manage the trust assets in accordance with the trust deed and applicable laws.
- Transfer Assets to the Trust The settlor transfers ownership of specified assets (e.g., real estate, shares, cash) to the Trust.
- Register the Trust (if applicable) While Cyprus International Trusts do not require mandatory registration, certain trusts may benefit from voluntary registration for added legitimacy.
Advantages of Setting Up a Trust in Cyprus
1. Strong Asset Protection
Cyprus International Trusts are designed to protect assets from creditors, lawsuits, and other claims. Once the assets are transferred to the Trust, they are shielded from third-party interference, provided the Trust was not established with fraudulent intent.
2. Tax Benefits
Cyprus trusts offer significant tax advantages, including:
- No income tax, capital gains tax, or inheritance tax on assets held in the Trust for non-residents.
- Tax exemptions for beneficiaries residing outside Cyprus.
- Access to Cyprus’s network of double taxation treaties.
3. Flexibility
The Cyprus International Trusts Law allows for a high degree of customization, enabling settlors to tailor the Trust to their needs. Trustees have broad powers to manage assets effectively and adapt to changing circumstances.
4. Confidentiality
Cyprus upholds strict confidentiality for trusts. Information about the settlor, beneficiaries, and assets is not publicly disclosed, ensuring privacy and discretion.
5. Succession and Estate Planning
Trusts in Cyprus provide an efficient way to manage and transfer wealth across generations. They allow for clear instructions on distributing assets, minimizing disputes among heirs.
Common Uses of Cyprus Trusts
- Wealth Management: Protecting and growing family assets.
- Business Succession: Ensuring seamless transition of business ownership.
- Tax Planning: Optimizing global tax liabilities.
- Charitable Giving: Supporting charitable organizations and causes.
Why Work with Dedalos Corporate?
At Dedalos Corporate, we specialize in guiding clients through setting up and managing trusts in Cyprus. Our team of experts provides comprehensive services, including:
- Drafting and reviewing trust deeds.
- Advising on trust structures and compliance.
- Acting as professional trustees.
- Ensuring adherence to all legal and tax requirements.
Setting up a trust in Cyprus is a strategic decision for anyone looking to safeguard their wealth, optimize their tax position, or plan for the future. With its favorable legal environment, tax advantages, and robust asset protection mechanisms, Cyprus is an ideal jurisdiction for establishing a trust.
Contact Dedalos Corporate today to learn more about how we can help you create a tailored trust solution to meet your unique needs.
