How to Set Up a Trust in Cyprus for Asset Protection Offshore

To set up a Cyprus trust, you must appoint a trustee and create a legally binding trust deed outlining the management of assets for beneficiaries.

This process is fully legal under Cyprus International Trust law and offers strong asset protection, tax efficiency, and confidentiality for both residents and foreign investors.

This guide covers:

• What is the trust law in Cyprus?
• How to open a Cyprus trust
• How much to set up a trust in Cyprus?
• What is the tax rate for a trust in Cyprus?
• What are the advantages and disadvantages of setting up a trust in Cyprus?

Key Takeaways:

• Cyprus trusts are fully legal under the Cyprus International Trusts Law and can be used by residents and non-residents.
• They offer strong asset protection, tax efficiency, confidentiality, and no inheritance or wealth tax for non-resident beneficiaries.
• Setting up a trust in Cyprus involves formal steps, including appointing trustees, drafting a trust deed, and transferring assets.
• Taxation depends on beneficiary residency and income source, with non-resident beneficiaries typically exempt from Cyprus taxes.

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The information in this article is for general guidance only. It does not constitute financial, legal, or tax advice, and is not a recommendation or solicitation to invest. Some facts may have changed since the time of writing.

Is it legal to set up a trust in Cyprus?

Yes. It is completely legal to start a trust in Cyprus under the Cyprus International Trusts (CIT) Law of 1992, as amended in 2012.

This law modernized Cyprus trust regulation, aligning it with global standards and ensuring strong asset protection.

Both residents and non-residents can establish trusts, though international trusts are primarily used by foreign individuals managing offshore assets.

A valid Cyprus trust must include:

• A clearly defined settlor, trustee, and beneficiary.
• Trust assets located either in or outside Cyprus.
• Proper documentation under Cypriot trust law.

How do I open a trust in Cyprus?

Legal guidance is essential to ensure the trust structure aligns with your asset protection and tax planning goals.

How much does it cost to open a trust in Cyprus?

Typically, setup fees for Cyprus trusts range between €2,000 and €5,000, covering legal drafting, trustee appointment, and initial registration.

The overall cost depends on the complexity and size of the assets involved.

Ongoing administration and compliance costs may range from €1,000 to €3,000 annually, depending on trustee services and reporting obligations.

High-net-worth individuals often invest larger sums to maintain sophisticated multi-jurisdictional structures for estate or succession planning.

Is it safe to set up a trust in Cyprus?

Yes. It is safe to set up a trust in Cyprus, as the jurisdiction has a strong legal framework, political stability, and adherence to international AML (anti-money laundering) standards.

Cyprus International Trusts are governed by clear laws that safeguard the settlor’s intentions and the beneficiaries’ rights.

Furthermore, Cyprus is a member of the EU and operates under a reliable judicial system, giving foreign investors and expatriates added confidence in its trust regime.

Is there income tax on a trust in Cyprus?

Yes, a trust in Cyprus may be subject to income tax if the beneficiaries are tax residents.

• Non-resident beneficiaries – Income and gains from the trust are not taxed in Cyprus.
• Cyprus-resident beneficiaries – They are taxed on their worldwide income under normal tax rules.

This framework allows international families to use Cyprus as a neutral and tax-efficient jurisdiction for global wealth management.

What are the benefits of a Cyprus trust?

A Cyprus trust offers strong legal protection and significant tax advantages, making it an attractive option for international wealth management.

Key benefits include:

• Robust asset protection – Trust assets are shielded from creditors and claims.
• Tax efficiency – Non-resident beneficiaries are exempt from most Cyprus taxes on income and capital gains.
• Confidentiality – Beneficiaries’ identities remain private under Cypriot law.
• No inheritance or wealth tax – Ideal for succession planning.
• Global recognition – Cyprus trusts are respected under common-law principles.
  These features make Cyprus one of Europe’s most favorable jurisdictions for long-term wealth preservation.

What are the cons of a trust in Cyprus?

The main disadvantages of setting up a trust in Cyprus are the compliance costs, regulatory requirements, and limited control for the settlor.

Other potential drawbacks include:

• Compliance costs – Annual trustee and legal fees can add up.
• Regulatory oversight – Transparency laws require limited disclosure to authorities.
• Jurisdictional risk – If assets are held abroad, local laws in other countries may challenge trust validity.
• Limited settlor control – Once assets are transferred, the settlor loses direct ownership.
  While these issues are generally manageable, professional advice is crucial to avoid legal and tax complications.

Conclusion

Setting up a trust in Cyprus combines strong asset protection, tax efficiency, and confidentiality under a robust legal framework.

For expats and high-net-worth individuals, a Cyprus International Trust can serve as a powerful tool for estate planning and global wealth management, provided it’s structured with professional legal and tax guidance.

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