A trust may be defined as the obligation under which a person to whom property is transferred (i.e. the trustee) is bound to deal with the beneficial interest in such property in a particular manner in favor of a specified person or persons or class of persons (i.e. the beneficiaries). The creator of the trust is the settlor. A trust is not a separate legal entity.

International Trusts

The Law defines an International Trust as being a trust in respect of which:

  1. The Settlor is not a tax resident in Cyprus during the calendar year which precedes the year of creation of the trust;
  2. At least one of the Trustees is a tax resident in Cyprus during the trust period; and
  3. None of the Beneficiaries are tax residents in Cyprus during the calendar year which precedes the year of creation of the trust.

According to applicable law:

  1. Where the beneficiary is resident in Cyprus, the income and profits of a Cyprus International Trust which are earned or deemed to be earned from sources within and outside of Cyprus, are subject to every form of taxation imposed in Cyprus and
  2. Where the beneficiary is not a resident of Cyprus, the income and profits of a Cyprus International Trust which are earned or deemed to be earned from sources within Cyprus, are subject to every form or taxation imposed in Cyprus.

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