Trusts

In simple terms a Trust is a scheme set up by a person (called the Settlor) whereby another person (called the Trustee) is dealing with the property over which he has control (called the Trust Property) for the benefit of persons (called the Beneficiaries) of whom he may himself be one.

The most usual form of a Trust is that of an irrevocable discretionary trust which is created by the Settlor transferring the owner-ship of assets during his or her lifetime to the Trustee who is required to hold the property in accordance with the terms of the Trust Deed for the Beneficiaries as directed.

The property ceases to be owned by the Settlor thus affording him the possibility to avoid taxation liability that would otherwise have become payable had the Settlor remained owner of the Property.

In addition the existence of such Trust may enable the Settlors to avoid the disclosure of sources of income and assets which they have transferred into Trust as such income and assets will no longer belong to the Settlor but the Trustee.

Another reason for setting up a Trust is to protect and preserve property in the family and to benefit disabled persons by making them beneficiaries under the Trust without giving them control of the property.

An International Trust may be set up by foreign settlors for the benefit of foreign beneficiaries under the Cyprus International Trust Law. A Cyprus International Trust is a Trust in respect of which:

• The Settlor is not a permanent resident in Cyprus.
• At least one of the Trustees for the time being is during the whole duration of the Trust a permanent resident in Cyprus.
• No beneficiary other than a charitable institution is a permanent resident in Cyprus.
• The Trust property does not include any immovable property situated in Cyprus.

A Trust can qualify as an International Trust even if the Settlor, Trustee or the Beneficiaries are Cyprus registered companies or partnerships, the shares in which are being held by non-Cyprus residents.

Advantages in setting up a Cyprus International Trust:

• Exemption from any requirements of registration or filing.
• Exemption from income and estate tax. A fixed stamp duty of Euro -427,15 is payable on creation of the Trust.
• No specific governmental consents are required for its creation.
• It cannot be set aside in the event of the Settlor's bankruptcy unless and to the extent that it is proven to the satisfaction of the Court that the trust was made with the intent to defraud the creditors of the Settlor who were creditors at the time when the Settlor transferred the assets to the Trust.
• Any action to set aside an International Trust on the grounds of fraudulent intent on the part of the Settlor must be brought by the creditors within two years of the date of transfer of the assets to the Trust.
• It may continue for a period of up to 100 years.
• The income of an International Trust may be accumulated for the entire duration of the Trust.
• A strict duty of confidentiality on the Trustees is imposed which can only be lifted by virtue of a Court order or in criminal proceedings in Cyprus.
• The law relating to inheritance or succession in force in Cyprus or in any other country is not affecting in any way the transfer or disposition of property to an International Trust or its validity.

Mouaimis & Mouaimis are able to provide for any type of International Trusts under the Cyprus International Trust Law and to offer to our clients a comprehensive and reliable range of offshore trust operation and maintenance services.

We will be able to provide you with any information in relation to the legal or any other requirements with regard to the setting up, administration and operation of a Cyprus International Trust as well as the costs and legal fees involved in providing these services.