Cyprus is a popular place to set up trust accounts, and for a good reason. The Mediterranean island nation has a long history of providing financial services to some of the wealthiest and most powerful people.
Before setting up your Cyprus Trust, you must understand some essential aspects of such trusts. Following all the applicable laws is vital to keeping your assets secure in the long run. You will also want to know what makes a trust in Cyprus unique and how it helps you make the most of your investment.
Cyprus International Trusts (CITs) are legal vehicles that provide asset protection, wealth management, and tax planning. Although this is not a comprehensive definition, it does get at the essence of CITs. This type of offshore trust will securely store your assets and keep them away from creditors who may come after your assets.
CITs typically include the following parties:
Because a trust in Cyprus does not operate in the United States, it is not directly governed under U.S. law. However, that doesn’t mean they are off-the-books accounts and under no legally binding obligations. Cyprus Trusts must adhere to several regulations, including:
These laws govern how your trust will work, who can manage it, what you can contribute, when you can extract funds, and much more. For example, the Hague Convention on Trusts regulates voluntary written trusts. It works alongside local Cyprus law, common law, and every other applicable law governing Cyprus Trusts.
Additionally, all trusts must adhere to the regulations created by the Cyprus Securities and Exchange Commission. This agency takes care of investor protection and ensures that tax residents comply with specific rules regarding movable or immovable property.
You should never blindly sign away your assets to bank accounts and trusts without doing your research. Always ask questions and discern if the business relationship is worth the investment. This same principle should be applied to the credibility of a Cyprus Trust.
Cyprus has a well-established banking system that can provide certified public accountants and an experienced trust enforcement supervisor. You can invest your wealth safely and avoid lawsuits, devaluation, and other such circumstances.
Although almost anyone can set up a domestic fund, offshore trusts are typically more complicated. Due to strict security and vetting procedures, not everyone can create trusts in Cyprus. It is wise to contact an offshore trust attorney to help with the setup and certainty of subject matter requirements.
To have your account meet Cyprus International Trusts law, you must meet the following conditions:
Trusts in Cyprus come with numerous benefits compared to other trust types. When you set up your account, you set yourself up to enjoy benefits like the following:
When it comes to offshore accounts in Cyprus, you can choose from several renowned international businesses providing administrative services. These companies offer solutions to maintain your wealth according to proper law. Trustee services come at a price, though.
If you plan to open a Cyprus International Trust, you must pay €450 (approximately $450) for stamp duties. From there, overall costs for trustee services may vary depending on the following factors:
The fees associated with opening an account are not based on the total trust property. A complicated setup process may lead to higher costs than a smooth, simple one. Typically, you can expect prices to range from €170 (approximately $172) to around €1,700 (approximately $1,713).
If you have experience opening different types of trusts and investment accounts, you are likely familiar with minimum capital investment policies. One trust type might have a ridiculously high minimum investment, while another might be completely free.
Cyprus has three different alternative investment funds (AIFs), each with its own rules for initial investment amounts.
One of the main reasons so many international families invest in Cyprus International Trusts involves the excellent tax benefits. The account is under no obligation to pay taxes in Cyprus according to the wealth it holds. You don’t need to worry about taxation as long as you simply hold property.
If and when the trustee uses the trust funds to increase income, income tax laws will come into play. The regulating authority will look at the beneficiary’s status to determine taxes. In addition, you must pay 5% or 10% if your trust contains movies and films that earn royalties.
You can choose from multiple types of trusts in Cyprus, depending on your preferences and needs. Some of the most popular trusts include:
A Cyprus International Trust provides flexibility, security, and ease of use under foreign law. It can also help you avoid mitigate inheritance taxes when your loved ones inherit your assets. You can use it for estate planning or any other legal purpose requiring privacy.
At Blake Harris Law, our experienced attorneys can provide legal advice on fiduciary law, estate duty, inheritance laws, constructive and resulting trusts, implied trusts, capital gains tax, and much more. Go online or call 786-559-1209 to schedule a consultation to discuss setting up a Cyprus Trust.