Asset Protection in CyprusUpdated on Tuesday 22nd September 2015
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The protection of assets in Cyprus
Asset protection can be defined as advanced planning strategies which would legally protect one’s assets from potential creditors in case of debt collection or bankruptcy procedures in Cyprus. In Cyprus, asset protection can be done through business or estate planning strategies. Most of high net worth individuals seeking assets protection techniques in Cyprus often appeal to limited partnerships or trusts.
The International Trust Law in Cyprus
One of the most employed asset protection strategy in Cyprus is setting up a trust. In order to encourage the creation of trusts, in March 2012 Cyprus amended its International Trusts Law with new features that enable jurisdictional protection and the residency status of settlor and beneficiary. Moreover, according to the new Trust Law the statutory prohibition of holding immovable property in Cyprus has been eliminated. The new Trust Law is expected to draw more foreign investment in Cyprus. According to the new Cyprus Trust Law, the settlor of a trust is allowed to:
- - retain power to him or herself,
- - be the beneficiary of the trust,
- - to act as a protector or enforcer,
- - to alter the terms of the Cypriot trust,
- - to act as a director of a Cypriot company owned by a trust,
- - appoint or remove trustees.
The new Cyprus International Trust Law gives settlors and beneficiaries protection on an international scale and asset protection efficiency. The Cypriot law is applicable without references to other foreign legislations. The new law relating to inheritances or successions in Cyprus will not interfere with the Trust Law. Beneficiaries and settlors of trusts that want to take up residency in Cyprus will not affect their tax and asset protection benefits.
What are the tax benefits when establishing a trust in Cyprus?
In terms of asset protection, establishing an international trust in Cyprus comes with many advantages for its settlor and beneficiary. Among these are:
- - gains and profits are exempt from paying in the income tax in Cyprus,
- - there is no estate or inheritance tax in Cyprus,
- - international trusts are allowed to undertake business activities in Cyprus,
- - Cyprus does not impose reporting regulations for international trusts,
- - international trusts are not subject to the Cypriot dividend tax when receiving dividends from abroad.
For complete details about the advantages of international trusts, but also for other asset protection strategies you can contact our lawyers in Cyprus.