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Examples of specific use of Cypriot structures and their benefits:

Cypriot international trust

One of the most common instruments for assets management in the anglo-saxon legal system is a trust. It is a commonly used tool recognized by the EU which was formerly used to deal with a high inheritance tax. the principle of a trust is that the property which the settler has provided from their own property in favour of a third party (beneficiary) is managed by a trustee.

These are the main advantages of Cyprus International Trust:

  • All income whether trading or otherwise of an International Trust, is not taxable in Cyprus.
  • Dividends, interest or other income received by an International Trust from a Cyprus Company are neither taxable nor subject to withholding tax.
  • Gains on the disposal of the assets of an International Trust are not subject to capital gains tax in Cyprus.
  • An International Trust created for estate duty planning purposes would not be subject to estate duty in Cyprus.
  • There is no inheritance tax in Cyprus
  • Only a fixed stamp duty of Euro 430 and a registration fee of Euro 50 are paid upon the creation of an International Trust.
  • Section 8 of the International Trusts Law provides wide powers to the trustee to invest all or part of the trust property provided that he complies with the trust deed and shows diligence and prudence that a reasonable person would be expected to exercise when he makes investments.
  • Section 3(2) of the International Trusts Law provides that unless it is proved to the court that the trust was made with intent to defraud persons who were creditors of the settlor at the time when the payment of transfer of assets was made to the trust, the trust shall not be void or voidable. The burden of proof lies on the person seeking to annul the transfer.
  • Section 3(3) states that any action for the avoidance of the trust should be filed not later than 2 years form the date that the assets were transferred or disposed to the trust.
  • Any question on the validity, administration or disposition to an international trust shall be determined pursuant to the law of Cyprus without reference to any other law. The validity if a trust is not affected by the inheritance law of Cyprus or of another country.
  • The settlor may reserve powers to himself, retain a beneficial interest in the trust property or act as the protector.
  • The trustee, a beneficiary or the protector has the right to apply to the court for directions concerning the manner in which the trustee may act in certain occasions such as the administration of the trust, or any power of the trustee or the protector

A trust may own business companies and in case of need it may use nominee services.

Cypriot claim management company

Many companies in the Czech Republic dealing with claims acquisition, management and sale frequently encounter bookkeeping issues with these claims or problems with tax deduction of loss from operations with these claims. These issues may be solved by holding and management of such claims via a company registered in Cyprus where a joint IFRS system is used both for bookkeeping and taxes which makes the whole process significantly easier. Writing-off of unpaid claims without any unnecessary restrictions does not constitute a problem as well as any operation reasonably justified to the auditor. Therefore only an existing income from these claims is subjected to a tax.

Cypriot holding company

The tax exemption for received dividends, capital revenues and dividends paid abroad makes Cyprus and ideal holding company place of business. As the bookkeeping regulations are getting more strict, holding companies will have to deal with the problem of a consolidated balance which constitutes an expensive operation with no real added value, especially for private companies with shares not sold on a public market. We study deep into this problem so that we may recommend suitable solutions for our clients.

Cypriot company for Intellectual property

The news for 2012 is the fact, that the new legislation, since the end of May, has made Cyprus an ideal place for holding intellectual property rights. The term intellectual property means any intangible assets, including copyrights, patents and trademarks. The effective tax rate of 2% is the result of the exemption of 80% of revenues which in combination with other benefits including a network of Cyprus treaties for the avoidance of double taxation makes Cyprus a highly attractive destination and the highly respectable place for the holding of intellectual property rights of all kinds.