Trusts - Forming a Trust in Cyprus

Forming a Trust

There are multiple reasons for forming a trust, including asset protection, tax planning purposes, protecting family wealth and businesses or other beneficiaries, and even to prepare one’s affairs in the event of death. Forming a trust has also increased in popularity due to factors affecting wealth preservation, such as political instability, marital of family disputes and harsh tax regimes.

Advantages of Cyprus Trusts

Tax reasons

Income arising overseas: An individual, who has income arising overseas which he does not wish to remit to his country of residence, can arrange for such income to be directed to a Cyprus Offshore Trust.

Divesting of personal assets: An individual who wishes to divest himself of personal assets for fiscal or other reasons can achieve this by transferring them to an offshore trust.

Pre-migration arrangement: Individuals moving to a high tax country may obtain fiscal advantages in their country by placing funds in a Cyprus Offshore Trust.

Investing in Business Overseas: An individual who wishes to invest in business overseas, but wishes to ensure that the profits and dividends received are not remitted to the country of his residence. may set up a Cyprus Offshore Trust to invest in overseas business.

Investment Holding Company: A trust can be used in one country to own an underlying investment holding company in an other. This type of tax planning device has many advantages in providing the maximum possible protection for both the settler and the beneficiaries alike.

Other reasons:

Exchange Control: An individual with assets outside his country of residence and whose country of residence may in future extend its exchange control restrictions to include remittance of overseas funds, may wish to retain the flexibility of overseas funds by transferring them to a Cyprus offshore Trust.

Confidentiality: An individual who wishes to keep anonymity can do this by setting up a discretionary trust which owns the shares in the company. This is a particularly useful tool and a popular vehicle for carrying out trading and financial activities, particularly for residents of countries which do not recognise the concept of a Trust.

Global Estate Planning: An individual, through the use of a trust, can arrange to be succeeded in inheritance by persons, who, due to the legislation of the individuals country, would otherwise be excluded from the inheritance.

Asset Protection: Individuals from volatile parts of the world may wish to protect part of their fortune from high domestic inflation rates by converting it into strong currency assets, or individuals can protect their assets against possible expropriation laws, future claims of Governments, law suits or international blocking or freezing regulation overseas.