Cyprus International Trusts – How Could They Benefit You?


By way of an overview, Cyprus’ International Trusts Law (“The International Trusts Law 1992 [No. 69(I)/1992]”) was introduced as a means of implementing the long established English Trust principles into Cypriot Law. The purpose of this Law was to enable the formation of trust vehicles which can be used to channel foreign investments in or through Cyprus. As time passed, however, there arose an increasing need for the Law to be updated, which is why two amendments have been implemented, in the form of Law No. 20(I)/2012 and No. 98(I)/2013. These two amendments were introduced in an effort to streamline the original 1992 Law, by providing clarity on procedures to be followed in certain situations, as well as to introduce obligatory registration of Cyprus International Trusts (“CITs”) and Anti-Money Laundering measures.


A. The first, and most vital, requirement for the creation of a CIT is the existence of a Settlor, a Trustee, and a Beneficiary.

    1. The Settlor could be either a natural or legal person, and would be the creator of the CIT. He would decide on the asset and purpose of the CIT and would then elect a Trustee and specify who the intended Beneficiary of the CIT is.
    2. The Trustee could also be a natural or legal person, which would be appointed by the Settlor in order to hold the legal title of the asset being introduced into the CIT.
    3. The Beneficiary would hold the ‘beneficial’ title until the point comes when the legal title of the asset is transferred to them from the Trustee.
    4. In addition, the Settlor may appoint a Protector, in order to monitor the actions of the Trustee, acting as another means of safeguarding the Beneficiary and the Settlor’s intentions.

B. Worth noting is that by virtue of Section 2(a) of Law 20(I)/2012, the Settlor and the Beneficiary of a CIT should not be residents of Cyprus during the calendar year preceding the formation of the CIT, as this would make the CIT ineligible for Cyprus’ tax benefits. The Settlor and Beneficiary are, however, permitted to become tax residents after the formation of the CIT. In addition, the Settlor can be, depending on the circumstances, a Beneficiary of the Trust. Another requirement is that at least one of the Trustees must be a resident of Cyprus during the entire duration of the Trust. Also, a CIT is permitted to have more than one Settlor, Trustee or Beneficiary.

C. Although it is not a requirement, the Settlor has the option of providing the Trustee(s) with a Letter of Wishes. This is a non-binding document which the Settlor could use in order to provide the Trustee with guidance on the manner in which he desires the Trustee to act.

D. The registration of a CIT is a rather straightforward process, and may be carried out with any of the three Supervisory Authorities in Cyprus. These are the Cyprus Securities and Exchange Commission(“CySEC”), the Cyprus Bar Association (“CBA”), and the Institute of Certified Public Accountants of Cyprus (“ICPAC”). By virtue of Section 12(2) of Law 20(I)/2012, registering a CIT requires the payment of a Stamp Duty fee of €430.

Duties of the Trustee

Based on the ASP Law, the principal Fiduciary Duties of a Trustee are:

  1. To act in utmost good faith;
  2. Duty of care;
  3. Prudent administration of Trust Property;
  4. To strictly comply with the Trust Deed;
  5. Maintain a relationship of trust and confidence;
  6. Loyalty and fidelity;
  7. Not to profit out of the Trust.

In light of this, a breach of trust could occur if a Trustee:

  1. Distributes the assets of a Trust to a Beneficiary who is not entitled to them under the terms of the Trust Deed;
  2. Proceeds to invest the Trust Fund in a way which is not permitted by his express or statutory powers of investment;
  3. Breaches a fiduciary duty, such as the duty of not profiting out of the Trust by, for example, selling an asset belonging to him to the Trust;
  4. Breaches a common law or statutory duty of care by, for example, investing the Trust’s property without exercising the skill and care reasonably required given the circumstances;
  5. Were to employ improper accounting methods;
  6. Mishandles assets;
  7. Deliberately causes financial harm to the Beneficiaries;
  8. Were to find themselves in a conflict of interest and did nothing about it; and
  9. Were to fail to obtain the most advantageous tax rates.


A vital aspect to CITs, and usually a deciding factor for foreign citizens who are deliberating whether their best course of action is setting up a CIT or a Cyprus Company, is the fact that CITs entail a significant amount of secrecy. The Supervisory Authorities in Cyprus maintain Trust Registries in which only a limited amount of information needs to be disclosed. To illustrate, the Name of the CIT, its date of creation and expiration, and the date of any change in Governing Law need to be disclosed. Furthermore, the Settlor(s) and Beneficiary(ies) of a CIT are all anonymous, while only the identity and address of the Trustee(s) must be disclosed. In addition, these Registries are not made readily available to the public, only to Competent Authorities.

Another significant attribute of CITs is the fact that Section 11 of Law 20(I)/2012 binds the Trustees and Protectors to duties of confidentiality, meaning that they cannot disclose information or documents pertaining to the CIT, unless required to by Law or by a Court. In the case of the latter, it is important to note that Section 3(2) of Law 20(I)/2012 states that a Court will only order that the contents of a CIT be disclosed during court proceedings. However, even then, a Court will only do so if it deems it absolutely necessary. As such, a CIT can be used to shield assets from interference in the event of death / inheritance disputes (since no succession rights apply to CITs) and even divorce.

With all of the above said, it is also vital to note that with the introduction of the EU Directive 2018/843 (often referred to as the “Anti Money Laundering Directive 5” or simply, “AMLD5”), the EU aims to have all Member States maintain a more detailed Registry of Trusts. While these Registries would be made available for inspection by Competent Supervisory Authorities, there is nothing to suggest that they will be made available for public inspection, however. In fact, since AMLD5 is a Directive, it means that Member States will have to transpose it into National Law. This is of importance as it leaves room for interpretation, since Member States will need to make it compatible with their existing Laws. For this reason, it is unclear how Cyprus will go about implementing these Registries. It would not be illogical to state that Cyprus will look to ensure that confidentiality is maintained, given the fact that it is one of, if not the main, attractive attributes of CITs. Nevertheless, speculation is all that can be done at the time of writing, as clarity will be provided sometime in the coming year when Cyprus transposes AMLD5. 


Cyprus has one of the most favourable tax systems in not only the EU, but the world as a whole. By signing numerous double tax treaties with other jurisdictions, Cyprus has enabled itself to become the attractive investment hub it is today. This is one of the reasons, and arguably the main one, behind the rise of foreign investment in the recent past. With that said, CITs can be used to utilise the tax benefits that Cyprus offers, while also acting as an investment vehicle which is wrapped in a bow of privacy. CITs provide an alternative solution to individuals who are looking to invest or hold assets or finances, in a stable and private way. The fact that they are flexible and can be moulded in almost any manner that the Settlor desires, and that there are minimal registration requirements, are an added benefit. This is not the only benefit, however, since by virtue of Section 4 of Law No. 69(I)/1992, the Settlor can reserve the power to revoke the CIT at his own discretion, so long as this is expressly provided for in the Trust Deed. As such, CITs are significant and highly beneficial because they offer the parties involved peace of mind, security and choice.


This Article and any content forming part of it is only intended to provide a guide on the subject matter and does not constitute legal or any other advice. If professional advice is required, G.C Charalambous & Co LLC would be glad to assist you in this respect.

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