Cyprus International Trusts (CIT)
In simple terms, a trust is an arrangement whereby money, property or other assets
are owned and managed by a person or a company for the benefit of another.
A CIT can be used as an extremely versatile and highly efficient tax planning vehicle.
It can be used to minimize tax exposure, cover the risk of disability, manage
probate risk, simplify asset management, gift planning and many more.
There are numerous benefits in establishing a CIT. It enjoys complete confidentiality,
it is tax exempted, does not necessitate any kind of registration, carries a very low cost
of establishment and administration and offers tremendous flexibility in adopting foreign
The most common uses of a CIT are estate planning and asset protection:
- Estate Planning – Under a CIT, a foreign individual can ensure that his next-of-kin who are, for example, minors or mentally handicapped persons are well provided for, even after the individual’s death.
- Asset Protection – Certain assets can be placed into a CIT to safeguard them for future generations and to protect the interests of the beneficiaries. The position under Cyprus Law that only Cyprus court decisions are recognized in Cyprus on the matters concerned with Cyprus International Trusts adds to the protection of assets settled in a CIT.
In order to form a CIT, the following formalities must be complied with:
- A Trust Deed must be executed in which the Settlor expresses its intentions as regards the settlement of the property into a CIT and entitlement of the beneficiaries to the property so settled.
- The stamp duty of € 500 must be paid on the Trust Deed creating the Trust.
- The property must be transferred to the Trustees
Basic Structure of a CIT
- Settlor – He may be an individual or a legal entity that is not permanently resident of Cyprus.
- Beneficiaries – They may be individuals or legal entities that are not permanently residing in Cyprus.
- Trustees – At least one trustee must be a permanent resident of Cyprus. As a rule, Cyprus companies operate as trustees of CIT.
- Property – Any property or assets other than immovable property situated in Cyprus.
- Protector – If the settlor wishes, he may appoint a protector in the CIT who would have the power to veto certain decisions of the trustees.
Taxation of a CIT
- Any income of a CIT, whether trading or otherwise, is not taxable in Cyprus
- Dividends, interest or other income received by a CIT from a Cyprus International Business Company are tax free.
- Capital Gains- Gains on the disposal of the assets of a CIT are tax free in Cyprus.
- Estate Duty – A CIT is not subject to estate duty in Cyprus.
A quote of our fees for all of the above services can be provided on request.