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Trusts and foundations

Cyprus International Trust (CIT)

Clients can set up trusts for the purpose of tax planning, management of assets, preservation of wealth, succession planning etc. As Cypriot Trust Law is largely based on British Law, the English definition of ‘Trust’ is also applicable to Cyprus.

To put it simply, a ‘Trust’ is set up so that assets (money, property, shares, etc.) contributed by one party (“Settlor”) are being managed by another ‘trusted’ party (“Trustee”), with a full transfer of ownership title and corresponding rights, for the benefit of a third party (“Beneficiary”). There are different types of Trusts:

Trusts and foundations
A Discretionary Trust

is the most common type of trust used in Cyprus. The word “discretionary” says it all, i.e. that the “Trustees” are able to decide upon their discretion how to distribute the property and proceeds from the property of the trust. The powers of the Trustees may be constrained by the appointment of a “Protector”, who is empowered either to consent to the planned action of the Trustees or not. If a “Protector” has been appointed, the “Trustees” are obliged to obtain the consent of the “Protector” for any action related to the trust.

A Trading Trust

is a mere arrangement of ownership for a trading company, which becomes the trust property. It can provide confidentiality for the beneficiaries.

When the beneficiaries of a trust are non-residents of Cyprus and the income of the trust is from sources outside Cyprus, the income of a Cypriot International Trust is tax exempt in Cyprus. Income and profits of an international trust, which are earned or deemed to be earned from sources both within and outside Cyprus, are subject to every form of taxation imposed in Cyprus in the case of a beneficiary who is resident there. It is also important to note that, for the purposes of the Cypriot International Trust, to be eligible the “Settlor” may not be a tax resident of Cyprus in the year preceding the year of creation of the trust.

A Fixed Trust

limits the “Trustee” to acting in accordance with the specified provisions of the trust settlement.

A Discretionary and Fixed Trust

combines some of the features of a discretionary trust with those of a fixed on. The discretion of the Trustees has proscribed limits, e.g. the trust property and its income may be distributed to certain beneficiaries at a time the Trustee deems appropriate, but ultimately the assigned Beneficiaries have to receive the assigned proportion.

A Protective Trust

is set up on the assumption that specific events need to occur and are conditional to the distribution of the trust assets and income.

Altus Citadel is offering the following administration and trustee services:
  • Drafting of the trust settlement according to the requirements of the Settlor
  • Registration of a trust with the Inland Revenue and CySEC
  • Due diligence of all parties concerned, i.e. Settlor, Beneficiaries, Protector
  • Management of the Trust, underlying property and proceeds
  • Providing full secretarial support

Offshore Trusts and
Foundations

Offshore Trusts are also very popular among investors. Operating on the same principles as the CITs, offshore trusts serve as an alternative for the management and protection of assets structured through the use of an offshore holding company. According to the trust settlement, management and control of the underlying holdings are implemented by the offshore trustees. This helps to situate the place of business and place of transaction for tax purposes in a low tax jurisdiction.

The best way to keep an offshore company tax free is to register it in and manage and control it from a tax haven. Altus Citadel is offering various packages for offshore trusts in Belize, BVI, Seychelles, etc. There are rather similar functions of and reasons for establishing either a Foundation or a Trust. The difference is the legal structure. Trusts historically originate from common law countries, e.g., England, USA and India. Therefore, they are mainly used by these countries. Whereas, foundations are a mainly used in countries subject to civil law, e.g., France, Germany, Russia, and Spain.

A foundation is a separate legal entity, without members or shareholders. It is generally established to reflect the wishes of the Founder, who may be an individual or a corporate entity. These wishes are contained within the Foundation’s Charter and Regulations. As in the case of the Trustee of a Trust, foundations have a “Council” or “Officers” who act for the benefit of the Beneficiaries. Foundations can be established for a fixed or indefinite period of time and can be used for charitable, commercial or family purposes.

Altus Citadel is offering various packages for the offshore foundations in Belize, BVI, Seychelles, etc.

All of our Packages include the following:
  • Company formation and all primary documents
  • Government registration fee
  • Registered Agent service
  • Corporate directorship service by a licensed service provider
  • Business address, correspondence & document administration
  • A set of primary documents, notarized and legalized by Apostille
  • General or Limited Power of Attorney, Apostilled
  • International Foundation formation/ Establishment of the Trust
  • International Foundation Government fee / Government Fee for registration of International Trust
  • Foundation Registered Agent/ provision of Trust Agent
  • Foundation Council Member/ provision of Trustee
  • Original Certificate of Establishment of the Foundation notarized and legalized by Apostille / Original Certificate of Registration of the Trust notarized and legalized by Apostille

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