Establishment of a trust on Cyprus is one of the most effective tools to ensure anonymity and avoid the taxation problem related to the CFC tax, moving tax on stocks, and transfer pricing.
A Cyprus trust is not tax liable for income that comes from income sources outside Cyprus. In addition, the trust helps you to remove your legal ownership of, for example, shares even if you are the beneficial owner of the investment income.
It is important, though, to be aware that the concept of a trust mainly exists in common law countries such as England, USA, Australia, New Zealand and the former English colonies such as Cyprus. Other countries that follow civil law such as Denmark, Germany, Sweden, Norway and Finland normally refuse to recognize trusts from common law countries including Cyprus unless the trust’s articles of association meet certain special requirements – among others that the founders of the trust may not be the beneficiaries of the trust.
If you live in a civil law country, it is therefore important to have a local tax advisor examine the trust’s articles of association to make sure they meet civil law requirements. Copenhagen Legal has regular business partners on Cyprus and can help ensure that the articles of association will meet the requirements of any audit reviews undertaken by the authorities.
The cost of establishing a trust in which the articles of association are adjusted to meet civil law regulations and your special needs is approximately Euro € 6,000. Ongoing operation of the trust costs approx. Euro €2-3,000 per year. We also can take on the role of protector for the trust as long as we are not involved in the daily operations of the trust.
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