"The International Trust (Amendment) Law of 2012":
The most significant changes made are the following:
• The definition/requirements for an international trust have been modified so that:
- it is no longer necessary for the settlor to be a Cyprus non-resident for as long as he was not a Cyprus tax resident in the year preceding the year of creation of the trust;
- a Cyprus tax-resident can be a beneficiary under the trust for as long as he was not a Cyprus tax resident in the year preceding the year of creation of the trust;
- the trust fund can now include immovable property in Cyprus;
• The Definitions section has been expanded with the inclusion of a number of key terms including “settlor”, “trustee”, “beneficiary”, “trust object”, “trust fund”, “protector”, “implementation supervisor” (for non charitable purpose trusts);
• The list of matters relating to the trust or any disposition of the trust property which are to be determined in accordance with the laws of Cyprus, to the exclusion of the law of any jurisdiction, has been greatly extended to cover, indicatively and not exhaustively, the validity, interpretation and administration of the trust, the validity and the effect of the transfer of property to the trust, the trustees´ fiduciary and other powers and duties. At the same time, the new law reiterates that the disposition to a trust and the validity of the trust may not be challenged under the inheritance or succession laws in force in Cyprus or any other jurisdiction.
• A new sub-section has been added to expressly safeguard the validity of the trust and any disposition to the trust as well as the capacity and rights of the settlor, the trustee, the protector or the beneficiaries against any challenges on the grounds that the concept of a trust is prohibited or not recognized by the legal provisions of any jurisdiction or by reason of the fact that the trust cancels or overrides interests and liabilities arising under the laws of any jurisdiction.
• A new sub-section has been added to confirm that the settlor may retain an interest in the trust fund and can also can reserve powers to himself (i.e., to revoke, vary, amend the terms of the trust, to appoint or remove any trustees etc) whether as protector and/or otherwise and such reservation by the settlor will not affect the validity of the trust or delay its implementation.
• The 100 year maximum duration for a trust has been abolished so that the trust can now continue for an indefinite period of time.
• The trustees´ investment powers, have been extended to equate those of an absolute owner, and it is clarified that investments may include investments in movable and immovable property both in Cyprus and overseas, and in shares of companies incorporated in Cyprus.
• The confidentiality of the identity of the settlor and the beneficiaries, of the deliberations of the trustees for the exercise of their powers and the financial statements of the trust is preserved in the absence of a court order.
• The trustee must comply and apply the provisions of the law for the Prevention and Suppression of Money Laundering Activities.
• Where the beneficiaries of a trust are not Cyprus tax residents, only the Cyprus-sourced income and profits of the trust are subject to taxation in Cyprus at the rates prevailing in Cyprus.
• The objects which can be considered as “charitable” have been modified.
• The stamp duty on the trust deed has been kept at the same level (Euro 430).