Taxation of Cyprus trusts and Cyprus international trusts
1. Cyprus Trust
A Cyprus trust may be defined as an arrangement having the obligation under which a person to whom property is transferred (i.e., the trustee) is bound to deal with the beneficial interest of the property in a particular manner in favour of a specified person or persons or class of persons (i.e., the beneficiaries). The creator of the trust is the settlor. A trust is an arrangement and therefore not a separate legal entity.
2. Cyprus International Trusts
The Cyprus Law defines Cyprus International Trust as being a trust in respect of which:
- The Settlor is not a tax resident in Cyprus during the calendar year which precedes the year of creation of the trust;
- At least one of the Trustees is a tax resident in Cyprus during the trust period; and
- None of the Beneficiaries are tax residents in Cyprus during the calendar year which precedes the year of creation of the trust.
3. Taxation of Cyprus International Trusts
According to Cyprus relevant applicable law:
- Where the beneficiary of a Cyprus International Trust is resident in Cyprus, the income and profits of a Cyprus International Trust which are earned or deemed to be earned from sources within and outside of Cyprus, are subject to every form of taxation imposed in Cyprus and
- Where the beneficiary is not a resident of Cyprus, the income and profits of a Cyprus International Trust which are earned or deemed to be earned from sources within Cyprus, are subject to every form or taxation imposed in Cyprus.
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