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The Cyprus House of Representatives voted in favour of the Bill for the much anticipated reform of the Cyprus International Trusts Law and the amendments were published in the Official Gazette of the 23rd of March 2012.

The Cyprus International Trusts Law remained unaltered since its enforcement back in 1992.  Realising that Trusts have the potential of being used as the channel for foreign investments in or through Cyprus, legislature examined the concerns and attempted to improve the already existing legal framework in such a way so that to achieve the boosting of such investments.

The amended new Law indeed modernises the legal framework for international trusts and is expected to boost investments in Cyprus.  The new Law has been welcomed by the Cyprus legal and business sector since it is a step forward in rendering Cyprus a more competitive trust jurisdiction and it further upgrades Cyprus as an International Economic Centre.

Major changes to the law

Residency Status of Settlors, Beneficiaries and Trustees

Section 2 of the 1992 Law was amended. The new Law provides that the settlor should not be a Cyprus resident in the year, preceding the year of the establishment of the trust.

Under the old law, it was not clear whether a settlor could reside in Cyprus after forming an International Trust and this uncertainty discouraged the settlors from relocating.  The amendments to Section 2 clarify when a person/s can reside in Cyprus and still be eligible as a settlor under an International Trust. The same applies to beneficiaries; namely the beneficiary should not be a Cyprus resident in the year preceding the year of establishment of the trust. The only exception is that of a charitable trust where the beneficiaries could be Cyprus residents at any given time.

Regarding the trustees, it should be noted that at least one of the trustees should be resident of Cyprus during the whole duration of the Trust.

Validity of International Trust

All matters relating to a Cyprus International Trust shall be determined in accordance with the applicable laws of the Republic of Cyprus.  Anything relating to the validity, interpretation or effect of any trust or transfer shall be governed by the Laws of Cyprus. The same will apply to the fiduciary powers and duties of trustees.

The new Law (Section 3) provides that no International Trust would be considered void or voidable due to the fact that the legal provisions that are in force in any jurisdiction prohibit or do not recognize the substance of the Trust.

The Law clearly states that the inheritance laws of any other country will not be enforced in Cyprus by the Cyprus courts and this provision confirms that the heir-ship provisions in succession laws of foreign countries will not apply to a Cyprus International Trust.

Powers of the Settlor

Section 4A was added to the new Law, extending the powers of the settlor.  Revocation and modification of the terms of the trust by the settlor is now allowed.  Additionally, a settlor may instruct the transfer, distribution, payment or transfer of income or capital from the trust property or the issue of binding instructions and/or directions with regards to the above.  The settlor may also appoint or remove a Trustee, a Beneficiary or a Director of any of the companies that belong to the trust or the settlor can act as a director himself and a settlor may also issue binding instructions to Trustees in relation to the exercise of any power. The most important change however is the fact that the settlor can now choose the applicable law that will govern the Trust and change the governing law or the forum of administration of the Trust.

Duration of Trust

Under the 1992 law, an International Trust could be valid for up to 100 years from the date of its establishment, with the exception of charitable and purpose trusts which were permitted to exist in perpetuity.  The new law abolishes all restrictions on the duration of trusts.

With regards to an International Trust which was established during or after the entry into force of this new Law, it is provided that there is no limit in the period over which a trust may continue to be valid and enforceable.

Notwithstanding anything to the contrary contained in the terms and conditions of the trust, no concession, distribution, payment, holding or disposal of the income or capital of the trust to another trust is invalidated solely on the ground that the other trust continues to be valid and enforceable after the date on which the former trust must come to an end.

Definition of Charitable Institutions

The new Law redefines charitable institutions. According to Section 7, International Trusts are considered as charitable institutions where the trust has as a main objective to achieve one or more of the following purposes:

1. Prevention or alleviation of poverty;
2. Promotion of education;
3. Promotion of religion;
4. Promotion of health or salvation of life;
5. Promotion for the development of citizens and of the community;
6. Promotion of art, culture, heritage or science;
7. Promotion of amateur sports;
8. Promotion of human rights, dispute settlement or reconciliation or the promotion of religious or national harmony or equality and individuality;
9. Promotion of the protection or development of the environment;
10. Relief needs arising from young or advanced age, ill health, disability, economic hardship or other disadvantage;
11. Promotion of the welfare and protection of animals; and
12. For any other reason for the benefit of the general public or which is consistent with paragraphs (a) – (k) above.

Power of Trustee to invest in movable & immovable property

Section 8 of the 1992 Law has been amended.  The Trustee may now hold, maintain or invest in movable property in Cyprus and abroad, including investments in shares in companies registered in Cyprus and in immovable property located in Cyprus or abroad.

The new Law recognises the already existing powers of Trustees; some of the most important powers are:

1. To make capital distribution;
2. To employ;
3. To borrow;
4. To mortgage;
5. To guarantee;
6. To invest/lend money;
7. To make payments for/on behalf of beneficiaries; and
8. To advance money to another trust

Tax Advantages of International Trusts

International Trusts are ideal for asset protection, inheritance and tax planning.  The benefits arising from the use of such trusts distinguish Cyprus as one of the most advantageous trust jurisdictions.

According to Section 12 of the Law, if the beneficiary of such Trust is a resident of Cyprus then the income or profits of such trust which arise in and out of Cyprus will be taxed in Cyprus.

Additionally, in case the beneficiary is not a resident of Cyprus, then the income or profits of such trust that arise within Cyprus are taxed according to the tax laws of Cyprus. In effect any income or profits of such trust that arise outside Cyprus are not taxed in Cyprus.

It should further be noted that the definition of a ‘resident of Cyprus’ has the meaning attributed to the term under the Income Tax Laws.

Confidentiality

Confidentiality and secrecy are still preserved under the new Law and the Trustee, the Protector or any Governmental body is not entitled to disclose information or documents relating to:

a)      The settlor,

b)      The beneficiaries,

c)       The trustees, and

d)      The property of the Trust,

unless the above are ordered by the Courts of Cyprus.

Conclusion

All the above amendments to the International Trust Law of Cyprus will certainly promote Cyprus as one of the most favourable trust jurisdictions and given the island’s beneficial tax regime, the new legislation is expected to be one of the most useful tools in tax planning for foreign investors.

Cyprus Lawyers N. Pirilides & Associates LLC  | Cyprus Corporate Services Multilysis Services Limited

Следующая информация и / или документы будут необходимы для получения разрешения Советом Министров на приобретение недвижимости иностранцами:

1. План местности

2. Копия документа, устанавливающего правовой титул на землю  и  Земельного кадастра, сопровождающего правовой титул собственности, которая будет приобретена.

3. Копия разрешения на строительство для возведения дома или любого другого здания, или разрешение жилищного строительства на земле. За землю, которая находится под разделением такое разрешение должно быть также подано.

4. Копия договора купли-продажи, заверенная печатью.

5. План дома / квартиры. В случае разделения земли, план не требуется. В случае жилищного строительства,  будет необходим план, в котором будет показано точное       местоположение застройки на территории всего земельного участка.

6. Общая площадь в кв.м. приобретаемого имущества.

7. Документы, свидетельствующие о финансовом статусе заявителя.

8. Копия паспорта заявителя и паспорта мужа / жены, включая все страницы, показывающие штампы их прибытия на Кипр и выезда из Кипра должна быть поданы.

9. Копия свидетельства о браке заявителя или соответствующее свидетельство из посольства своей страны  (это относится к случаям, где фамилия жены и мужа различны или если    жена не меняла девичью фамилию ).Свидетельство о браке должно быть официально переведено на греческий или английский языки.

10. Копия разрешения на жительство или разрешения на работу на Кипре.

11 Надлежащим образом заполненное и подписанное заявление Comm 145.

12. В случае, если заявителем является компания или заявитель является акционером оффшорной компании, все соответствующие сертификаты компании (акционеров, директоров и зарегистрированный офис компании) обязательны для предоставления. Кроме того, должны быть поданы копии меморандума и устава компании.

13. Кроме того, акционеры компании-заявителя и их мужья / жены должны предоставить копии паспортов, и подтверждение в случае наличия недвижимого имущества на Кипре.

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The Cyprus House of Representatives voted in favour of the Bill for the much anticipated reform of the Cyprus International Trusts Law and the amendments were published in the Official Gazette of the 23rd of March 2012.

The Cyprus International Trusts Law remained unaltered since its enforcement back in 1992.  Realising that Trusts have the potential of being used as the channel for foreign investments in or through Cyprus, legislature examined the concerns and attempted to improve the already existing legal framework in such a way so that to achieve the boosting of such investments.

The amended new Law indeed modernises the legal framework for international trusts and is expected to boost investments in Cyprus.  The new Law has been welcomed by the Cyprus legal and business sector since it is a step forward in rendering Cyprus a more competitive trust jurisdiction and it further upgrades Cyprus as an International Economic Centre.

Major changes to the law

Residency Status of Settlors, Beneficiaries and Trustees

Section 2 of the 1992 Law was amended. The new Law provides that the settlor should not be a Cyprus resident in the year, preceding the year of the establishment of the trust.

Under the old law, it was not clear whether a settlor could reside in Cyprus after forming an International Trust and this uncertainty discouraged the settlors from relocating.  The amendments to Section 2 clarify when a person/s can reside in Cyprus and still be eligible as a settlor under an International Trust. The same applies to beneficiaries; namely the beneficiary should not be a Cyprus resident in the year preceding the year of establishment of the trust. The only exception is that of a charitable trust where the beneficiaries could be Cyprus residents at any given time.

Regarding the trustees, it should be noted that at least one of the trustees should be resident of Cyprus during the whole duration of the Trust.

Validity of International Trust

All matters relating to a Cyprus International Trust shall be determined in accordance with the applicable laws of the Republic of Cyprus.  Anything relating to the validity, interpretation or effect of any trust or transfer shall be governed by the Laws of Cyprus. The same will apply to the fiduciary powers and duties of trustees.

The new Law (Section 3) provides that no International Trust would be considered void or voidable due to the fact that the legal provisions that are in force in any jurisdiction prohibit or do not recognize the substance of the Trust.

The Law clearly states that the inheritance laws of any other country will not be enforced in Cyprus by the Cyprus courts and this provision confirms that the heir-ship provisions in succession laws of foreign countries will not apply to a Cyprus International Trust.

Powers of the Settlor

Section 4A was added to the new Law, extending the powers of the settlor.  Revocation and modification of the terms of the trust by the settlor is now allowed.  Additionally, a settlor may instruct the transfer, distribution, payment or transfer of income or capital from the trust property or the issue of binding instructions and/or directions with regards to the above.  The settlor may also appoint or remove a Trustee, a Beneficiary or a Director of any of the companies that belong to the trust or the settlor can act as a director himself and a settlor may also issue binding instructions to Trustees in relation to the exercise of any power. The most important change however is the fact that the settlor can now choose the applicable law that will govern the Trust and change the governing law or the forum of administration of the Trust.

Duration of Trust

Under the 1992 law, an International Trust could be valid for up to 100 years from the date of its establishment, with the exception of charitable and purpose trusts which were permitted to exist in perpetuity.  The new law abolishes all restrictions on the duration of trusts.

With regards to an International Trust which was established during or after the entry into force of this new Law, it is provided that there is no limit in the period over which a trust may continue to be valid and enforceable.

Notwithstanding anything to the contrary contained in the terms and conditions of the trust, no concession, distribution, payment, holding or disposal of the income or capital of the trust to another trust is invalidated solely on the ground that the other trust continues to be valid and enforceable after the date on which the former trust must come to an end.

Definition of Charitable Institutions

The new Law redefines charitable institutions. According to Section 7, International Trusts are considered as charitable institutions where the trust has as a main objective to achieve one or more of the following purposes:

1. Prevention or alleviation of poverty;
2. Promotion of education;
3. Promotion of religion;
4. Promotion of health or salvation of life;
5. Promotion for the development of citizens and of the community;
6. Promotion of art, culture, heritage or science;
7. Promotion of amateur sports;
8. Promotion of human rights, dispute settlement or reconciliation or the promotion of religious or national harmony or equality and individuality;
9. Promotion of the protection or development of the environment;
10. Relief needs arising from young or advanced age, ill health, disability, economic hardship or other disadvantage;
11. Promotion of the welfare and protection of animals; and
12. For any other reason for the benefit of the general public or which is consistent with paragraphs (a) – (k) above.

Power of Trustee to invest in movable & immovable property

Section 8 of the 1992 Law has been amended.  The Trustee may now hold, maintain or invest in movable property in Cyprus and abroad, including investments in shares in companies registered in Cyprus and in immovable property located in Cyprus or abroad.

The new Law recognises the already existing powers of Trustees; some of the most important powers are:

1. To make capital distribution;
2. To employ;
3. To borrow;
4. To mortgage;
5. To guarantee;
6. To invest/lend money;
7. To make payments for/on behalf of beneficiaries; and
8. To advance money to another trust

Tax Advantages of International Trusts

International Trusts are ideal for asset protection, inheritance and tax planning.  The benefits arising from the use of such trusts distinguish Cyprus as one of the most advantageous trust jurisdictions.

According to Section 12 of the Law, if the beneficiary of such Trust is a resident of Cyprus then the income or profits of such trust which arise in and out of Cyprus will be taxed in Cyprus.

Additionally, in case the beneficiary is not a resident of Cyprus, then the income or profits of such trust that arise within Cyprus are taxed according to the tax laws of Cyprus. In effect any income or profits of such trust that arise outside Cyprus are not taxed in Cyprus.

It should further be noted that the definition of a ‘resident of Cyprus’ has the meaning attributed to the term under the Income Tax Laws.

Confidentiality

Confidentiality and secrecy are still preserved under the new Law and the Trustee, the Protector or any Governmental body is not entitled to disclose information or documents relating to:

a)      The settlor,

b)      The beneficiaries,

c)       The trustees, and

d)      The property of the Trust,

unless the above are ordered by the Courts of Cyprus.

Conclusion

All the above amendments to the International Trust Law of Cyprus will certainly promote Cyprus as one of the most favourable trust jurisdictions and given the island’s beneficial tax regime, the new legislation is expected to be one of the most useful tools in tax planning for foreign investors.

Cyprus Company Formation Multilysis Services Limited

Cyprus Lawyers N. Pirilides & Associates LLC