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[ESTABLISHING A BUSINESS ENTITY IN CYPRUS]
trusts to suit complex circumstances and provides also other important advantages. The settlor of a Cyprus International Trust (CIT) and the beneficiaries must not be tax residents in Cyprus during the year preceding the year of creating the CIT (they may become tax residents subsequently). At least one of the trustees must be Cyprus resident. Key features • CITs may be challenged only on defraud of creditor grounds with a 2-year limitation period. • CIT matters are determined under Cyprus Law and Cyprus Courts have jurisdiction. • The Settlor can reserve powers including powers to revoke or amend the trust, to appoint and remove trustees, to change the law regulating the CIT and others.
• May be set-up as umbrella funds with multiple compartments. • May be listed on Cyprus Stock Exchange and other recognised EU stock exchanges. Tax • Most income of a Cyprus tax resident fund is tax free (most dividend income, capital gains). • Interest income is taxable, but effective tax can be significantly reduced (considering the NID on new equity). • Services provided by the investment manager of the fund are not subject to VAT. • No withholding tax on payments to non- residents. • No subscription tax on net assets of a fund. • No capital gains tax on disposal of shares/units by the holders. • No tax on capital gains from the sale of immovable property located outside Cyprus. • Extensive network of Double Tax Treaties in place with more than 60 countries. 1.D Cyprus International Trust The legal framework governing trusts in Cyprus is a combination of English Law i.e., the Principles of Equity and local legislation i.e. The Trustees Law (Cap 193) and the International Trusts Law of 1992 as amended. The International Trusts Law has created one of the most attractive trust legal frameworks in the world. It offers the opportunity to create
• A CIT may last for an indefinite period.
• The income of a CIT may accumulate without limitations. • The law regulating a CIT may be changed to another foreign law. • The trustees of a CIT are bound by confidentiality. • CITs are generally transparent for tax purposes. • Capital gains tax applies only regarding gains from the disposal of real estate situated in Cyprus or shares of a company holding property situated in Cyprus.
ILN Corporate Group – Establishing a Business Entity Series
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