TRUSTS AND FUNDS – CYPRUS
Protect Assets. Build Legacy. Expand Capital
Cyprus offers internationally recognized trust and fund structures that combine flexibility, confidentiality, and EU regulatory stability. With one of Europe’s most progressive legal and tax environments, Cyprus is a preferred destination for asset protection, wealth management, and collective investment schemes.
At a Glance
| Structure Type | Legal Basis | Main Purpose | Tax Status |
|---|---|---|---|
| Cyprus International Trust (CIT) | International Trusts Law 1992–2012 | Asset protection, succession planning | Exempt / Transparent |
| Alternative Investment Fund (AIF) | AIF Law of 2018 (L.124(I)/2018) | Collective investments (private/public) | 12.5% CT / Pass-through |
| UCITS Fund | UCITS Law of 2012 (L.78(I)/2012) | Retail investor fund | EU passporting rights |
| Investment Fund Manager (AIFM) | AIFM Law of 2013 (L.56(I)/2013) | Management & compliance | Licensed by CySEC |
Cyprus combines English common-law trust principles with full EU fund regulation — secure, efficient, and internationally compliant.
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We design, register, and manage your Cyprus trust or fund structure with full legal and tax optimization.
1. Overview
Cyprus provides two distinct yet complementary regimes for asset and investment structuring:
- Cyprus International Trusts (CITs) — for individuals, families, and businesses seeking asset protection, succession planning, or wealth transfer solutions.
- Cyprus Investment Funds (AIFs & UCITS) — for institutional and private investors seeking regulated fund vehicles for investment management within the EU.
Both frameworks ensure robust confidentiality, tax efficiency, and compliance with international standards.
2. Cyprus International Trusts (CITs)
a) Legal Framework
Established under the International Trusts Law of 1992 (amended 2012), the Cyprus International Trust regime modernized the common-law trust concept to meet international wealth management needs.
Key Participants:
- Settlor – Person establishing the trust
- Trustee – Cyprus-resident individual or corporate trustee managing assets
- Beneficiary – Person entitled to benefit from the trust
- Protector (optional) – Oversees trustee conduct
b) Conditions for a Valid Cyprus International Trust
| Requirement | Description |
|---|---|
| Settlor | Must not be a Cyprus tax resident during the year preceding trust creation |
| Beneficiary | At least one must be a non-Cyprus resident during the year preceding creation |
| Trustee | Must be a Cyprus resident (individual or licensed corporate trustee) |
| Duration | Perpetual (no maximum duration) |
The trust deed must be executed in writing and governed by Cyprus law. Registration is confidential with licensed service providers maintaining the Trusts Register.
c) Main Advantages
- Asset Protection: Trust assets are shielded from settlor bankruptcy or claims (subject to fraud exceptions).
- Tax Efficiency:
- Income and gains of CITs are exempt from Cyprus tax when beneficiaries are non-residents.
- No withholding tax on dividends, interest, or royalties.
- Distributions to non-residents are tax-free.
- Confidentiality: Beneficiary identities are not publicly disclosed.
- Estate Planning: Enables smooth intergenerational wealth transfer.
- Perpetuity: Trusts may last indefinitely under amended law.
d) Uses of Cyprus International Trusts
- Family wealth preservation and succession planning
- Protection from political or creditor risks
- Charitable or philanthropic endowments
- Corporate or pension fund asset holding
- International tax and estate planning
Cyprus International Trusts fully comply with OECD, EU AML, and FATF standards, ensuring legitimacy and global recognition.
3. Cyprus Investment Funds (AIFs & UCITS)
a) Legal Framework
Cyprus is a rapidly growing EU fund jurisdiction governed by:
- Alternative Investment Funds Law (2018)
- UCITS Law (2012)
- Supervised by the Cyprus Securities and Exchange Commission (CySEC)
Funds can be structured as limited partnerships, investment companies, or common funds, with EU passporting rights.
b) Fund Types
| Fund Type | Description | Target Investors |
|---|---|---|
| AIF (Alternative Investment Fund) | Flexible fund for professional or well-informed investors | Private or institutional |
| AIFLNP (AIF with Limited Number of Persons) | Up to 50 investors; lighter regulation | Private investors |
| RAIF (Registered AIF) | Fast-track setup; no CySEC license; managed by AIFM | Institutional / professional |
| UCITS | Retail-oriented EU investment fund | Public investors |
c) Taxation of Funds
- Corporate tax rate: 12.5%
- Dividend income exempt from CT
- Capital gains on securities exempt
- No withholding tax on non-resident distributions
- Interest income taxed at reduced rates
- Fund management services exempt from VAT
Non-resident investors are not taxed on profit redemptions or distributions.
d) Fund Administration and Management
Funds operate under CySEC-supervised entities:
- AIFMs – manage professional funds
- UCITS Management Companies – manage retail funds
- Depositary Banks – safeguard assets
- Fund Administrators – handle accounting, investor services, compliance
e) Advantages of Cyprus Fund Regime
- Full EU passporting rights
- Low setup and management costs
- 12.5% effective corporate tax
- No tax on investor redemptions
- Access to 65+ Double Tax Treaties
- Regulatory stability and investor protection
Cyprus now hosts over €10 billion in assets under management — one of Europe’s fastest-growing fund hubs.
4. Comparative Snapshot
| Feature | Cyprus International Trust (CIT) | Cyprus Investment Fund (AIF/UCITS) |
|---|---|---|
| Purpose | Asset protection, succession, family wealth | Collective investment & asset management |
| Tax Status | Exempt / Transparent | 12.5% CT with exemptions |
| Regulation | Common-law trust regime | CySEC-regulated |
| Duration | Perpetual | Ongoing until liquidation |
| Beneficiary Disclosure | Confidential | Regulated investor registry |
| Ideal For | Private individuals, families, HNWIs | Fund managers, institutions, investors |
5. Why Clients Choose Our Firm
- Establishment of Cyprus International Trusts (CITs)
- Drafting of trust deeds, letters of wishes, and trustee appointments
- AIF, RAIF, and UCITS fund setup and regulatory approval
- Ongoing management, accounting, and CySEC reporting
- Cross-border tax and compliance structuring
We safeguard your wealth and investment structures — combining confidentiality, compliance, and long-term financial strategy under Cyprus’s trusted trust and fund regime.