Cyprus International Trusts: Asset Protection and Succession Planning in One Jurisdiction
Cyprus has firmly established itself as one of the leading trust jurisdictions in Europe, offering robust legal structures, tax advantages, and confidentiality for high-net-worth individuals and family offices. The Cyprus International Trust (CIT) is a key instrument for those seeking effective wealth structuring, asset protection, and succession planning.
What is a Cyprus International Trust?
A Cyprus International Trust is a legal arrangement governed by the International Trusts Law of 1992 (as amended). It involves a settlor (the person who creates the trust), trustees (the managers of the trust assets), and beneficiaries (the persons who benefit from the trust). The trust assets are legally owned and controlled by the trustee, but held for the benefit of the beneficiaries.
To qualify as a CIT: – “The settlor and the beneficiaries must not be Cyprus tax-resident in the calendar year preceding creation; at least one trustee must be Cyprus-resident throughout the trust’s duration; trust property may be movable or immovable, anywhere.”
Key Benefits of a Cyprus International Trust
- Strong Asset Protection
A CIT offers strong protection against future claims, creditors, or forced heirship rules. Assets transferred to the trust are generally immune from such claims after a two-year period, provided the transfer was not intended to defraud creditors. - Succession Planning Without Probate
Trusts allow for the seamless transfer of wealth across generations without the need for probate. The settlor can define the rules of succession in the trust deed, overriding forced heirship laws in many jurisdictions. - Tax Neutrality
CITs are generally tax neutral in Cyprus: – No capital gains tax on disposal of assets held in trust (excluding Cyprus immovable property). – No income tax (if trust is held by non Cyprus tax residents), unless the trust generates Cyprus-sourced income. – Dividends, interest, and royalties received from non-Cyprus sources are exempt from tax (exemptions apply). - Confidentiality
The trust deed and identity of the settlor and beneficiaries are not publicly registered. Trustees and service providers are bound by strict confidentiality laws. - Flexibility
A Cyprus trust can be revocable or irrevocable, discretionary or fixed interest, and may include protectors, investment advisors, and specific succession provisions.
Why Use a Cyprus Trust for Succession?
Families with international connections often face complexity when passing on wealth — different inheritance laws, taxes, and administrative delays. A CIT allows the settlor to: – Centralize global assets into a single, professionally managed structure. – Avoid probate procedures in multiple jurisdictions. – Protect assets from political instability, family disputes, or future matrimonial claims. – Tailor the distribution of wealth based on the family’s needs and values.
Regulatory Environment and Legal Certainty
Cyprus law recognises the validity of trusts and enforces them in its courts. The International Trusts Law was last amended in 2012 to enhance asset protection and provide further clarity on the powers of trustees, rights of beneficiaries, and enforcement of foreign judgments.
Importantly, Cyprus is a common law jurisdiction, and its trust law is based on English trust principles, ensuring familiarity for international advisors and clients.
Establishing a Cyprus International Trust
Creating a Cyprus International Trust (CIT) involves a legally binding arrangement, typically formalized through a written trust deed, and must satisfy specific legal requirements under Cyprus trust law.
A valid CIT requires three key parties:
- Settlor: The individual or legal entity who establishes the trust by transferring assets into it.
- Trustee: A person or licensed trust company in Cyprus who holds legal title to the trust assets and administers them according to the trust terms.
- Beneficiaries: The persons or entities who are entitled to benefit from the trust property, either now or in the future.
To ensure the trust is valid and enforceable, three certainties must be present at the time of establishment:
- Certainty of Intention – The settlor must clearly demonstrate the intention to create a trust, not merely a moral or informal obligation.
- Certainty of Subject Matter – The trust property must be clearly defined and identifiable (e.g., real estate, shares, bank accounts).
- Certainty of Objects – The beneficiaries must be clearly identifiable, either by name or as part of a defined class (e.g., “my children” or “my grandchildren”).
In addition to these core elements, for a trust to qualify as a Cyprus International Trust, the following conditions must be met under the International Trusts Law of 1992 (as amended):
- The settlor must not have been a tax resident of Cyprus in the calendar year immediately preceding the creation of the trust.
- At least one trustee must be a permanent resident of Cyprus.
- The trust may hold assets located anywhere in the world (exceptions may apply).
Once established, the CIT becomes a powerful and flexible structure for wealth preservation, international estate planning, and asset protection.
Conclusion
The Cyprus International Trust is a flexible, secure, and tax-efficient solution for individuals and families seeking long-term asset protection and succession planning. It provides a high degree of legal certainty while offering discretion, global structuring options, and continuity across generations.
To explore whether a Cyprus trust structure suits your objectives, speak with one of our specialists at Asterisk Corporate Services today at contact@asterisk.cy.
Plan wisely. Protect effectively. Pass on securely.
Disclaimer: The information provided above is for general informational purposes only and does not constitute legal, tax, or financial advice. For personalized guidance, please consult a qualified professional.
