Introduction - The Cyprus International Trusts Law of 1992 (the “Law”) has finally been amended by the Cyprus International Trusts (Amending) Law of 2012 (hereinafter the “Amended Law”). The recent amendments to the Law aim to strengthen the position of Cyprus as one of the most attractive trust jurisdictions by providing a flexible, secure and modern legal and taxation framework.
These amendments have effectively removed any ambiguities and uncertainties which were inherent to the provisions governing international trusts in Cyprus, since they were first enacted in 1992, and inadvertently allow for more flexibility as regards the workings of international trusts whilst at the same time embrace more beneficial provisions regarding inter alia the taxation regime. The Amended Law now seems to be more easily adaptable to the business needs of today’s ever growing requirements.
We set out below an outline of the key changes brought about by the Amended Law:
Definition of an ‘International Trust’ (Settlor - Trustee – Beneficiary)
The Amended Law incorporates a new definition of what an international trust must consist of in order to be established by removing any difficulties that may have existed in the past as regards the residency of the settlor and the beneficiaries. The Amended Law now provides that an international trust can be established if the settlor and any beneficiary are not Cyprus tax residents in the calendar year preceding the year of the creation of the trust, thus settlors can now relocate to Cyprus after establishing an international trust and beneficiaries no longer need to be non Cyprus tax residents during the life of the trust. The definition of an international trust in the Law used to be more rigid, specifying that both settlors and beneficiaries should not be Cyprus tax residents, without defining however a time-limit to this restriction and excluding thus any flexibility for settlors and beneficiaries wishing ultimately to relocate to Cyprus.
Validity of an international trust and exclusion of any foreign law
All issues arising in connection to the international trusts or any disposition of property to a trust are determined, subject to the terms of the trust, in accordance with the laws of Cyprus, without reference to the laws of any other jurisdiction, for example the powers and duties of the trustees and questions arising in relation to the validity and administration of international trusts and their effect are governed by the laws of Cyprus. It is further provided by the Amended Law that inheritance laws of both Cyprus and other jurisdictions do not interfere in any way with the effect of an international trust thus giving exclusivity to the trust laws of Cyprus as regards Cyprus international trusts by excluding in effect any relevant foreign laws. These provisions aim to surround the workings of an international trust with an iron clad asset protection framework.
Settlor’s Reserved Powers and Interests
The Amended Law stipulates that the maintenance of or grant to the Settlors of rights or interests over the trust property or reserved powers (irrespective of whether such powers are exercised in their capacity as protectors/nominators or enforcers of the trust) do not affect the validity of the trust. A settlor now may have reserved powers to, inter alia, revoke or amend the provisions of the trust, to appoint or remove any trustee, enforcer, protector/nominator or beneficiary of the trust and is able to limit the trustees’ powers which can be exercised only with the consent of the settlor or any other person which is expressly referred to in the terms which govern the trust.
No limit for the duration of an international trust
An international trust that is created on or after the Amended Law coming into force and subject to the terms of the trust has no limit as to the period of its duration, at which time a trust may continue to be valid and enforceable for an indefinite period. This differs greatly from the Law that was in force as regards international trusts, which restricted the duration of a trust to 100 years from the date on which the trust came into force. According to the Law such an indefinite duration was possible only for charitable or purposes trusts.
Approved Investments
The Amended Law gives the trustee of an international trust investment powers to invest all or part of the capital of the trust as if the trustee was himself the absolute owner of the trust property. Such investment powers of the trustee have now been extended so as to allow the trustees to hold, maintain and/or invest in movable and immovable property located in Cyprus and elsewhere, which also includes investing in shares of a company incorporated in Cyprus.
Taxation of International Trusts
As regards the provisions for taxation of international trusts they have also been amended by the Amended Law and now provide that in the case of a beneficiary who is a resident of Cyprus the income and profits of an international trust derived from sources either within or outside Cyprus shall be taxed in Cyprus. In cases where the beneficiary is a non Cyprus resident the income and profits derived from sources within Cyprus shall be taxed in Cyprus; thus the Amended Law still remains favorable as regards the taxation on international trusts.
Choice of Law
The Amended Law provides that a trust is governed by the law chosen by the settlor, which is expressed or implied by the terms of the document comprising the trust. When the applicable law is not chosen by the settlor or when the chosen law does not have any trust provisions, the trust is governed by the law which is most closely connected to. In this respect a list of conditions need to be considered, i.e. the country that the trust is administered from, the country in which the trust property is located, the country of residence of the trustee, the purposes of the trust and the country in which these shall be materialized. Further, the Amended Law stipulates that where an international trust contains a choice of law clause in favor of the laws of Cyprus, the provisions of the Amended Law shall apply as a matter of public policy notwithstanding other provisions on conflict of laws which apply in Cyprus. The Amended Law provides in certain cases also exclusive jurisdiction to the Cyprus courts, subject to the terms of the trust.
Other Amendments
Other provisions have also been amended by the Amended Law, to include a clearer image of what is deemed to qualify as a ‘charitable purpose’ in order to be considered as a charitable institution under the Amended Law whereby the purposes of such charitable institutions have been extended to widen the definition of such institutions; the concept of a ‘protector/nominator’ of an international trust has been introduced by the Amended Law which has been defined as a person other than the Trustee to whom powers of any kind are assigned to by the Trust, including the power to advise the Trustee as to his duties or his right for approval or for veto, including its power for the appointment or cancellation of the appointment of the Trustee. In general a more detailed definitions list is introduced by the Amended Law to clarify and expand on the legal framework of international trusts in the interest of more certainty.
For further information please contact us at:
Clerides, Anastassiou, Neophytou LLC
Ergoserve Building
Limassol, Cyprus
Tel: +357 25 274050
info@cyplaw.com
This material has been prepared by professionals of Clerides, Anastassiou, Neophytou LLC. It is intended as a general guide only, and its application to specific situations will depend on the particular circumstances involved. Accordingly, we recommend that readers seek appropriate professional advice regarding any particular problems that they encounter. This information should not be relied upon as a substitute for such advice. While all reasonable attempts have been made to ensure that the information contained herein is accurate, Clerides, Anastassiou, Neophytou LLC accepts no responsibility for any errors or omission it may contain or any opinions contained herein whether caused by negligence or otherwise, or for any losses, however caused, sustained by any person that relies upon it.
Clerides, Anastassiou, Neophytou LLC provides corporate and commercial legal services, to public and private international and local clients spanning multiple industries. Please visit our internet site at www.cyplaw.com for a full description of our services and representative transactions.
All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior permission of the publisher.
Monday 14 May 2012
Saturday 5 May 2012
CLERIDES, ANASTASSIOU, NEOPHYTOU LLC COMES HIGHLY RECOMMENDED BY LEGAL RANKING AGENCIES
It gives us great pleasure to inform our esteemed clientele and associates that the recent editions of Legal 500 and Chambers and Partners highly praised our firm for the quality and responsiveness of service reflecting the firm’s in-depth expertise with cross border transactions and exemplary value added service.
LEGAL 500
TAX
The recent edition of Legal 500 reports our firm’s team as “highly qualified professionals” with “in-depth experience”. Stavros Clerides, the firm’s tax partner is awarded the “Leading Individual” recognition, the only individual or lawyer awarded by Legal 500 in this field in Cyprus whereas the firm achieved an overall Tier 2 ranking. Legal 500 reports that Stavros Clerides’ “solid grasp of international tax law combined with his knowledge of Cyprus law makes him unique in the marketplace”.
CORPORATE AND M&A
The current edition reports that the firm provides appropriate and skilful advice and an extremely good level of service. The practice head, Effie Anastasiou is reported as very thorough and providing accurate legal advice.
BANKING AND FINANCE
The edition acknowledges the heavy referral work received by international firms. Practice head Effie Anastasiou comes highly recommended.
CHAMBERS AND PARTNERS
The current edition highly recommends the firm and practice heads for their responsiveness, quality of service, value for money services and technical knowledge.
For Tax, practice head Stavros Clerides has achieved a Tier 1 ranking whereas the firm achieved an overall Tier 2 ranking.
Within Corporate and Commercial, clients recommended the firm for strong corporate and commercial know-how and the firm’s excellent value for money and round the clock service. Practice head Effie Anastasiou was praised as very thorough and an excellent negotiator whereas Chambers and Partners commented on Stavros Clerides “that he inspires complete confidence and always makes valuable comments and innovative suggestions”.
We shall continue to provide you with high level of services and offer innovative, value added solutions in our core practice areas, that is Corporate and Commercial, Tax, Private Equity, M&A and Capital Markets.
For further information please contact us at:
Clerides, Anastassiou, Neophytou LLC
Ergoserve Building
Limassol, Cyprus
Tel: +357 25 274050
info@cyplaw.com
This material has been prepared by professionals of Clerides, Anastassiou, Neophytou LLC. It is intended as a general guide only, and its application to specific situations will depend on the particular circumstances involved. Accordingly, we recommend that readers seek appropriate professional advice regarding any particular problems that they encounter. This information should not be relied upon as a substitute for such advice. While all reasonable attempts have been made to ensure that the information contained herein is accurate, Clerides, Anastassiou, Neophytou LLC accepts no responsibility for any errors or omission it may contain or any opinions contained herein whether caused by negligence or otherwise, or for any losses, however caused, sustained by any person that relies upon it.
Clerides, Anastassiou, Neophytou LLC provides corporate and commercial legal services, to public and private international and local clients spanning multiple industries. Please visit our internet site at www.cyplaw.com for a full description of our services and representative transactions.
All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior permission of the publisher.
LEGAL 500
TAX
The recent edition of Legal 500 reports our firm’s team as “highly qualified professionals” with “in-depth experience”. Stavros Clerides, the firm’s tax partner is awarded the “Leading Individual” recognition, the only individual or lawyer awarded by Legal 500 in this field in Cyprus whereas the firm achieved an overall Tier 2 ranking. Legal 500 reports that Stavros Clerides’ “solid grasp of international tax law combined with his knowledge of Cyprus law makes him unique in the marketplace”.
CORPORATE AND M&A
The current edition reports that the firm provides appropriate and skilful advice and an extremely good level of service. The practice head, Effie Anastasiou is reported as very thorough and providing accurate legal advice.
BANKING AND FINANCE
The edition acknowledges the heavy referral work received by international firms. Practice head Effie Anastasiou comes highly recommended.
CHAMBERS AND PARTNERS
The current edition highly recommends the firm and practice heads for their responsiveness, quality of service, value for money services and technical knowledge.
For Tax, practice head Stavros Clerides has achieved a Tier 1 ranking whereas the firm achieved an overall Tier 2 ranking.
Within Corporate and Commercial, clients recommended the firm for strong corporate and commercial know-how and the firm’s excellent value for money and round the clock service. Practice head Effie Anastasiou was praised as very thorough and an excellent negotiator whereas Chambers and Partners commented on Stavros Clerides “that he inspires complete confidence and always makes valuable comments and innovative suggestions”.
We shall continue to provide you with high level of services and offer innovative, value added solutions in our core practice areas, that is Corporate and Commercial, Tax, Private Equity, M&A and Capital Markets.
For further information please contact us at:
Clerides, Anastassiou, Neophytou LLC
Ergoserve Building
Limassol, Cyprus
Tel: +357 25 274050
info@cyplaw.com
This material has been prepared by professionals of Clerides, Anastassiou, Neophytou LLC. It is intended as a general guide only, and its application to specific situations will depend on the particular circumstances involved. Accordingly, we recommend that readers seek appropriate professional advice regarding any particular problems that they encounter. This information should not be relied upon as a substitute for such advice. While all reasonable attempts have been made to ensure that the information contained herein is accurate, Clerides, Anastassiou, Neophytou LLC accepts no responsibility for any errors or omission it may contain or any opinions contained herein whether caused by negligence or otherwise, or for any losses, however caused, sustained by any person that relies upon it.
Clerides, Anastassiou, Neophytou LLC provides corporate and commercial legal services, to public and private international and local clients spanning multiple industries. Please visit our internet site at www.cyplaw.com for a full description of our services and representative transactions.
All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior permission of the publisher.
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