Offshore Trusts Report: Cyprus
Supervision, Licensing and Tax
Trust services in Cyprus are provided through International
Trustee Services Companies.
Until 2003, the Central Bank of Cyprus was the authority
responsible for the licensing and regulation of international business
enterprises (i.e. companies which are beneficially owned exclusively
by non-residents) involved in the provision of trustee services
to the public at large, known as International Trustee Services
Companies or ITCs.
Following the enactment of the Financial Services
Firms Law in July 2002 (Law No. 148(I)/2002),(as subsequently amended
in January 2003), as from 16th January 2003, the responsibility
for the licensing and supervision of international business enterprises
which offer financial services in or from within Cyprus to the public
at large was transferred to the Cyprus Capital Market Commission.
The Central Bank of Cyprus is therefore no longer
legally empowered to authorise new international business enterprises
to provide financial services, under the provisions of the Exchange
The Central Bank of Cyprus remained, however,
until 31 August 2003, the competent authority responsible for
the regulation of existing IFCs and ITCs. Existing companies
were required to apply to the Cyprus Capital Market Commission,
by 30 June 2003 the latest, in order to obtain a licence under
the above mentioned Law.
While Stamp Duty is levied, broadly speaking,
the income and assets of International Trusts are not taxable
All income whether trading or otherwise of an International
Trust is not taxable in Cyprus;
Dividends, interest or other income received by a Trust
from a Cyprus international business company are also neither
taxable nor subject to withholding tax;
Gains on the disposal of the assets of an International
Trust are not subject to capital gains tax in Cyprus;
An alien who creates an International Trust in Cyprus
and retires in Cyprus is still exempt from tax if all the
property settled and the income earned is abroad, even if
he is a beneficiary.
It is often possible to combine Cyprus International
Trusts with the island's network of double-tax treaties to create
very advantageous results.