Reform Of Cyprus International Trust Of 1992

After 20 years from the introduction of the initial International Trust law, the long-awaited reform of the Cyprus International Trust (CIT) came into effect on 23 March 2012.

The law governing the CIT was enacted in 1992 ('The International Trust Law No.69(I)/92).

The most important changes introduced in the new law are summarized as follows:

1. Residency

   The new amendments clearly state that the settlor and beneficiaries of the trust may not be a tax resident of Cyprus only in the year proceeding the year of creation of the trust.

   It also removes the restriction on ownership of immovable property in Cyprus.

   The original CIT law of 1992 contained three requirements to establishing an international trust, namely:

   The settlor was not be a permanent resident of Cyprus; The beneficiaries (with the exception of charities) were not permanent residents of Cyprus; The trust property did not include any immovable property situated within Cyprus; There had to be at least one Cyprus-resident trustee at all times. The amendments allow now for the possible relocation of the beneficiaries and settlor to Cyprus. Vagueness of the 1992 law with regards to above was considered a serious drawback of the CIT.

2. Exclusion of overseas law

   The amending law clarifies that:

   Any issues relating to the: validity, interpretation, amendment or administration of an international trust or a disposition to an international trust will be determined by the laws of Cyprus, without reference to the law of any other jurisdiction. Any inheritance or succession statutes in Cyprus or any other country, will not in any way affect the validity of an international trust or any transfer or disposition of property to it. No disposition...