Cyprus Fact-File Part 4:
Individual Business Tax-Efficient Structures

4.1 Cyprus Individual Business Trusts and Foundations

Trusts can be formed in Cyprus, which has a trust regime essentially based on the English system, later updated by the 1992 International Trusts Law. Both local and international trusts can be formed, although the latter are likely to be of more interest to a foreign settlor , as in the former case, both settlor and beneficiary usually need to be resident in Cyprus.

International Trusts generally have the following key characteristics:

The settlor must be non-resident;
The beneficiaries must also be non-resident (except for local charities);
One of the Trustees must be Cypriot (individual or corporate);
The trust period may be up to 100 years (longer for charitable trusts);
Confidentiality is protected in the law, and foreign judgements are specifically non-recognized;
There is no registration requirement;
Trust documents are in English;
Trust assets may not include immovable property in Cyprus;
Creditors have to prove intent and must claim within two years;
There is Stamp Duty of EUR427;
Broadly speaking, the income and assets of International Trusts are not taxable in Cyprus.

An international trust structured with an eye to the network of double tax treaties in place in Cyprus can often have advantages in a tax sense.

Other Tax-Efficient Structures

The low (10%) company tax rate in place in Cyprus, and the exempt of foreign dividend payments from tax in most cases means that any domestic incorporated structure is likely to offer a degree of tax efficiency for a small business.