The beneficial ownership of a property is separated from the legal title according to a trust agreement. The settlor or trustor is the person who establishes the trust and the trustee is the person to whom the property is endorsed or entrusted for the benefit of another, who is known as the beneficiary.
The concept of trust, which is under the Common Law, is also recognized in Cyprus under the International Trusts Law of 1992. Cyprus has become more promising to investors particularly for those who want to employ trustee services. Trusts, as in many other jurisdictions, are used to carefully plan out the tax schemes of corporations. MN&ASSOCIATES guides and advices its client concerning trustee services so as to facilitate their business to succeed in Cyprus.
A Cyprus International Trust, is considered beneficial under Cypriot Law. Income, profits and gains of international trusts are free from income tax, capital gains tax and other forms of tax in Cyprus. International Trusts are also exempted from estate or inheritance taxes. Income received by an International Trust from a Cyprus company, in the form of dividends, royalties or interest are also tax-exempt. Furthermore, reportorial requirements are not demanded from international trusts hence, the identities of the parties involved in the international trust, namely the settlor, trustee and beneficiaries are kept in private.
There are different types of trusts which may be differentiated by the degree of discretion granted by the settlor to the trustee. In a Discretionary Trust, the trustee is given the opportunity to exercise his own judgment in dealing with the property held in trust, keeping in mind the interest of the beneficiary.
In a Fixed Trust, little or no discretion is exercised by the trustee since decisions are strictly made by the settlor. However, there can also be a combination of the Fixed and Discretionary. With the amendment of the International Trusts Law of 1992, the modification and revocation of the terms of the trust is already allowed as well as removal of the Trustee or Beneficiary, depending on the decision of the settlor.
Furthermore, settlors who are foreign investors may now reside in Cyprus and still be able to benefit from the tax exemptions. The power of the trustee had also been expanded by allowing them to invest in movable and immovable property in Cyprus and abroad. All of these changes are aimed in giving more opportunities to foreign investors.
In order to assure investors that their business plans are carefully followed, a Letter of Wishes may be prepared. This document enumerates all the requirements of the settlor such as, the distribution of the property’s income and the disposal of the property itself. A settlor may be an individual or a corporation. The settlor may opt to employ an individual trustee or a corporate of trustees. By choosing a corporate of trustees, a new company may be set up to address the needs of the settlor.
MN&ASSOCIATES extensive experience guarantees clients will receive efficient and reliable trustee services.