Cyprus: Cyprus International Trusts (2019)

Last Updated: 4 February 2019
Article by Shanda Consult Ltd

The law governing the establishment of trusts in Cyprus is based on the English system. It is a combination of the English Principles of Equity and Statue Law. Cyprus International Trusts are regulated by the International Trusts Law 69(I)/1992 as amended by Law 20(I)/2012.

What is a Trust?

A trust is a settlement or legal agreement affecting at least three parties:

  • The Settlor: (or Grantor, Trustor, Trust Maker); the person (natural or legal) who creates the trust; he/she is the owner of the property to be divested into a trust.
  • The Trustee: legal or natural person, who agrees to hold the trust property in his/her/its name for the benefit of the Beneficiary, under the terms of the trust. Responsible for managing the property.
  • The Beneficiary/Beneficiaries: individuals or companies or any other entities receiving the benefits of the trust property.
    In a Discretionary Trust, instead of specifying specific persons or entities as beneficiaries, classes of beneficiaries are defined, for example "all current and future children of Mrs X", or "charity organisations providing education for refugees and their children in the UK".
  • The Protector: individuals or companies that are typically appointed by the settlor to protect the trust assets. Appointing a protector is optional. The protector has the right to control the trustee but does not have the right to intervene in the trustees obligations and undertakings. The protector has the right to dismiss a trustee.
    If a protector intervenes a trustee's duties or has been granted the right to do so in the Trust Deed, a trust may be recognized as a "sham trust" or "illusionary trust" and thus being considered or even declared void.

Settlement of Trust – Trust Deed

A trust is a fiduciary relationship in which the settlor gives the right to the trustee to hold title to a property (trust property) for the benefit of the beneficiary. The trustee has the legal title to the trust property, whereas the beneficiary has the beneficial title to the trust property. The ultimate beneficial owners of the trust property is/are the beneficiaries.
Consequently, the trustee is the legal owner of a trust's assets, but not the beneficial owner, which is the beneficiary or beneficiaries or classes of beneficiaries.

Trusts are established to provide legal protection for the settlor's assets; for the purposes of wealth management, investment, social goals, charities, succession planning or sometimes tax planning.

The law imposes a strict duty of confidentiality on the trustee about the trust and the identity of the settlor and beneficiary. It is only possible to disclose such information in case of a court order in any civil or criminal proceedings when the court is convinced that such information is important to the outcome of the proceedings.

The main duties of a trustee is to administer the trust property prudently and to comply with the terms of the trust. The terms of a trust are set in the Settlement of Trust, also referred to as Trust Deed or Trust Instrument. Any action taken by a trustee that contravenes the terms of the trust deed is a 'breach of trust' and makes the trustee personally liable for the full extent of any loss incurred.

The Settlor has the right to reserve some powers, such as to revoke or amend the trust or to remove and appoint trustees.

All trusts related matters are determined in accordance with Cyprus Law.

Letter of Wishes for a Trust

In addition to the Trust Deed with its provisions and instructions how the assets of the trust shall be managed etc., a settlor may additionally opt to draft and hand over to the trustee a so-called Letter of Wishes.

A Letter of Wishes is not legally binding for the trustee but shall provide guidance to the trustee on how to manage the trust. A Letter of Wishes is not mandatory.

Unlike a Trust Deed, a Letter of Wishes remains discretely with the trustee. Neither courts nor beneficiaries have the right to demand disclosure of a Letter of Wishes.

Requirements to create a valid
Cyprus International Trust

  • The following three certainties must be present:
    Certainty of Intention: Evidence of express intention of the settlor to create the trust. This is evidenced by the Trust Deed.
    Certainty of Subject Matter: The trust property must be readily identifiable otherwise the trust is void for uncertainty.
    Certainty of Objects: The identity of all the beneficiaries of the trust must be ascertained or ascertainable at the time of setting up the trust.
  • The Settlor shall be of sound mind and of right age.
  • The Settlor (being either a natural or legal person) shall not be a resident of Cyprus at the time when a CIT (Cyprus International Trust) is established. The settlor may become resident of Cyprus once a trust has been established.
  • The beneficiaries shall not be residents of Cyprus at the time when a CIT (Cyprus International Trust) is established. They may become resident of Cyprus once a trust has been established.
  • The trust property can include all kinds of assets situated in Cyprus or anywhere in the world.
  • At least one of the trustees must be resident of Cyprus during the whole duration of the trust.

Cyprus Discretionary Trusts

There are various forms of trusts existing, based on certain details; for a list of trust types, please see the end of this article.

Cyprus discretionary trusts are trusts with now specific individual beneficiaries defined and the selection of beneficiaries as well as their benefit left to the discretion of the trustee.

In case of defining specific individuals or entities as beneficiaries, the settlor, in the trust deed, defines classes of beneficiaries. There is no limit to the definition of classes of beneficiaries, which could be, for example, "all current and future children of Mrs X", or "charity organisations providing education for refugees and their children in the UK", or "the elderly houses in my city".

The settlor may define projects or areas in the Trust Deed, for which the assets, or if preferred so, the gains from the assets, shall be used. A brief example of definition of benefits and beneficiaries: "education costs and financing of viable startups of my children and grandchildren".

It is then left to the trustee to decide when and how the trust will fulfil those provisions of the Trust Deed. If, after having finalised their education, only one of three children runs a viable startup, only that one child qualifies for benefiting from startup financing by the trust.

An advantage of a Cyprus Discretionary Trust is that none of the members of the class of possible beneficiaries has a right for claims against the trust.

The members of a class of beneficiaries become beneficiaries once the trustee decides as per the provisions of the Trust Deed, and perhaps of the Letter of Wishes.

As long as the members of the class of beneficiaries did not become actual beneficiaries, they cannot be held tax-liable for any assets and gains of assets of the trust, because they cannot be assumed as beneficiaries.


It is important that a settlor chooses a person of trust as the trust's trustee. Furthermore, a trustee should have asset management and business qualities and experience, because the trustee will be the person who will manage the assets of a trust, as per the provisions of the trust deed and a possible letter of wishes and under the supervision of a possible protector.

The merely appointment of a staff member of a law office or trusts service provider will definitely not suffice. Simple "appointees" without management background might even lead to the undesired result that a trust is recognized as a sham trust or illusionary trust, because it cannot be assumed that a trustee without the necessary management capabilities is able to manage the assets of a trust without a substantial involvement of the settlor.

A substantial involvement of a settlor, though, would be contradictory to the idea and spirit of a trust, to which a settlor entrusts assets for the management by the trustee and for the benefit of the beneficiaries. In such cases, despite the settlement of a trust, that trust might be recognized by courts as not existing.

Cyprus Trust Registry

The law imposes the obligation on resident trustees to register all Cyprus International Trusts with one of the three Competent Authorities i.e. the Cyprus Securities and Exchange Commission (CySEC), the Institute of Certified Public Accountants of Cyprus (ICPAC) or with the Cyprus Bar Association. The Trust registries maintained by the supervising authorities shall contain the following information about the Trusts:

  • Name of the trust
  • Date of creation of the trust
  • Date of termination of the trust
  • Name and address of the trustee
  • Date of any change in the law governing the trust to or from Cyprus Law.

The identity of the settlor and the beneficiaries is not disclosed in the Registry. The Registers of Trusts are not available to the public, but they are available for inspection by the Competent Authorities.

Benefits of Cyprus International Trusts

Asset protection

  • A Cyprus International Trust may be used to protect assets against risks, future claims by governments or creditors, expropriation etc.
  • Future protection from creditors.
  • Future protection from claims of spouses or former spouses.
  • A Cyprus International Trust can be utilized to protect assets against future claims in tort or contact because of transactions entered by the previous owner of the trust property.

Confidentiality and reporting

  • The trustees owe duty of confidentiality to the settlor and to the beneficiaries. They are not allowed to disclose any information or documents unless they are ordered to do so by a specific court order.
  • However; registration of the Cyprus International Trust in the Trusts Registry is mandatory, the registration does not require the submission of the relevant Trust Deed, disclosure of the settlor and the beneficiaries and the information is not available to the public, only to the Competent Authorities in case of inspection.
  • No reporting requirements for Cyprus International Trusts in Cyprus.
  • Please note that in the case of bank account opening on behalf of a trust, the  settlor, the trustee, the protector (if any) and the beneficiaries (if they are not defined as a class of beneficiary without naming them) are legally subject to full due diligence and compliance procedures.

Managing family wealth, estate planning, inheritance planning

A Cyprus International Trust is ideal for asset planning of high net-worth individuals with extended or complicated family structures.

Tax benefits

  • Income, gains and profits from non-Cyprus sources are exempt from taxes in Cyprus.
  • The worldwide income, gains and profits are taxable in Cyprus only if the beneficiary is tax resident in Cyprus.
  • Beneficiaries who are non-tax residents of Cyprus are taxed only on Cyprus sourced income in accordance the Income tax law of Cyprus.
  • Dividends, interests or royalties received by a Cyprus International Trust from a Cyprus company are not taxable and not subject to any withholding tax.
  • No estate duty/inheritance tax.

Reservation of Powers

When setting up the trust the settlor may reserve powers to him/herself specifically drafted into the trust instrument. Such powers are: to revoke, vary or amend the terms of a trust; to appoint or remove any trustee/enforcer/protector/beneficiary/investment adviser; to give (very limited) directions to the trustee etc.

Perpetuity period

Trusts may exist for the duration of a lifetime plus 21 years or in the case where no natural person is involved it can exists for merely 21 years.

No exchange control regulations

Types of Cyprus International Trusts

  • Private Trusts
  • Express Private Trusts
  • Resulting Trusts
  • Constructive Trusts
  • Implied Trusts
  • Charitable Trusts
  • Fixed Trusts
  • Discretionary Trusts

For more information and advice on how a Cyprus International Trust could help to structure your business, and to set up your trust and to benefit from our professional trustee services, please contact us.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
A. Danos & Associates LLC
Patrikios Pavlou & Associates
Shanda Consult Ltd
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
A. Danos & Associates LLC
Patrikios Pavlou & Associates
Shanda Consult Ltd
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions