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TRUSTS V FOUNDATIONS THE CYPRUS INTERNATIONAL TRUST OPTION

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Title: TRUSTS V FOUNDATIONS THE CYPRUS INTERNATIONAL TRUST OPTION


1
WEALTH ASSET VEHICLES THE CYPRUS
INTERNATIONAL TRUST AND THE INTERNATIONAL
COLLECTIVE INVESTMENT SCHEME OPTIONS

2
NEED FOR ASSET PROTECTION VEHICLES
  • SUCCESSFUL BUSINESS PEOPLE AND WEALTHY FAMILIES
    MAY POSSESS VALUABLE ASSETS WORLDWIDE
  • NEED FOR EFFICIENT STRUCTURE TO HOLD, PROTECT
    AND MANAGE THEM TO RESPOND TO THE DIFFERENT
    SYSTEMS AND RULES OF THE VARIOUS JURISDICTIONS
    UNDER COMMON AND CIVIL LAW
  • NEED FOR ASSET PROTECTION VEHICLES
  • TRUSTS ARE THE VEHICLES IN COMMON LAW
    JURISDICTIONS
  • FOUNDATIONS ARE FOUND IN CIVIL LAW JURISDICTIONS
  • WE PRESENT THE CYPRUS INTERNATIONAL TRUSTS AS
    AN OPTIMUM OPTION

3
USES OF TRUSTS
  • SUCCESSION PLANNING Smooth and effective
    transfer of assets from one generation to the
    other as per the wishes of the owner and not in
    line with the forced heirship rules
  • ASSET PROTECTION AGAINST THIRD PARTY Assets
    transferred to a trust are protected from attacks
    from creditors, ex business partners and divorce
    disputes
  • TAX PLANNING An efficient planning involving
    trust can help to avoid inheritance tax and
    optimize income or capital gains tax liability
  • CONFIDENTIALITY The trust deed is not a public
    document and does not have to be disclosed to
    third parties
  • CONSOLIDATION AND CONTROL Helps to avoid
    dissipation of wealth by spendthrift heirs and
    ensures the continuation of successful
    enterprises irrespective of the abilities and the
    differences of the heirs under professional
    management

4
CONCEPT OF TRUST
  • An equitable obligation
  • binding a person or a company, called the
    trustees
  • to deal with property over which he has control,
    called the trust fund,
  • vested to him by the previous owner and creator
    of the trust, the settlor
  • for the benefit of other persons, called the
    beneficiaries
  • In accordance with the instructions and wishes of
    the settlor on certain terms and with certain
    powers, usually set out in the Trust Deed
  • In simple terms under a trust a settlor divests
    himself/herself of the legal title to property in
    favour of trustees, who derive no benefit from
    the trust itself, but they hold such property for
    the benefit of other persons

5
PARTIES TO THE TRUST
  • SETTLOR Creates the trust and transfers his/her
    property to the trust and decides the terms of
    the trust and the rights to be granted to the
    beneficiaries and the powers to the trustees
  • TRUSTEES They can be physical persons or legal
    entities ( the latter are known as Private Trust
    companies PTC) and manage the fund in line with
    the terms of the trust deed and the wishes of the
    settlor as they may be outlined in writing in the
    Letter of Wishes for the benefit of the
    beneficiaries
  • BENEFICIARIES are those for whose benefit the
    trust was created and for whose benefit the
    trustees manage the trust property
  • THE PROTECTOR This is the person that acts as a
    watchdog over the trusts affairs and will have
    the right to appoint and dismiss the trustees,
    have their consent sought before trust capital is
    distributed or before the number of trustees is
    increased. The settlor may be a protector but as
    a rule a trustee may not. The protector has the
    right to veto general decisions taken by the
    trustees such as the decision to transfer the
    assets to the beneficiaries. A protector is not
    necessary but it may be appointed for the peace
    of mind of the settlor

6
IMPORTANT ASPECTS OF TRUST
  • Divided ownership The assets comprising the
    trust fund are legally held and registered as
    owned by the trustee and the trustee is under a
    duty to control and manage the property BUT only
    beneficiaries are entitled to the benefit and
    profit of the trust they own this property
    beneficially.
  • Trust does not posses separate legal
    personalityit operates by the trustees acting
    in their name
  • In many jurisdictions the same person may
    simultaneously be a settlor, trustee and the
    beneficiary of the trust ( though it is not
    advisable for tax or asset protection purposes)
  • Law of EquityTrust Obligations and the
    beneficiaries rights are protected by court on
    the basis of the law of equity.If the trustees
    are unclear about the best way to manage the
    trust, or intend to alter the trust conditions as
    this is to the best interests of the
    beneficiaries, they can seek instructions and
    sanction of their actions from the court
  • Discretionary trusts give the trustees
    discretion on such matters as which beneficiary
    receives income and /or capital and when. The
    trustees require instructions on the use of
    discretion ( Letter of Wishes) In Fixed Trusts
    ,beneficiaries have a fixed right to income and
    or capital
  • 1)

7
CYRPUS INTERNATIONAL TRUSTS
  • Cyprus Trust Law is based on International Trust
    Law 69/1992 based on the English system, The
    Trustees Law Cap 193 and the equity and Case Law
    in England
  • CIT is a trust whereby
  • The settlor is not a permanent resident of Cyprus
    (to be abolished under the new trustees law)
  • The trust property does not include immovable
    property in Cyprus ( to be abolished)
  • At least one of the trustees is resident in
    Cyprus
  • The nature of CIT can be discretionary I,e the
    trustee is allowed to exercise a large element of
    discretion with regard to distribution of income
    and assets and to choose from a large pool of
    potential beneficiaries which could very from
    year to year
  • Beneficiaries are not permanent resident of
    Cyprus ( to be abolished)
  • Duration Max 100 years (to be abolished under
    the new trustees law)
  • A CIT may be irrevocable ( i.e the settlor cannot
    claim the return of the trust property from the
    trustees) unless otherwise stated in the trust
    deed ( clause of revocation)

8
PRIVATE TRUST COMPANIES
  • A Private Trust Company (PTC ) is a company
    which has its main function acting as trustee of
    a particular trust or a number of related trusts,
    for example with the same settlor or related
    settlors
  • Benefits
  • Desire for a family control/ influence ( they
    can be directors of the PTC) Of course even
    without the PTC there are ways to meet the
    objective of influence by the family
  • Flexibility in appointing experienced and skilled
    persons
  • Quick decision making

9
EFFICIENT TAX STRUCTURE WITH CIT
Protector Physical person or company
?
CIT
  • Cyprus International Trust

10
BENEFITS OF CYRPUS INTERNATIONAL TRUSTS
  • Income gains and profits are exempted from income
    tax, capital gains tax and any other tax in
    Cyprus
  • No withholding tax on dividends, royalties
    received by Cyprus Company
  • No estate duty or inheritance tax in Cyprus
  • Confidentiality is safeguarded as registration is
    optional
  • Trusts may hold shares of Cyprus companies with
    Cypriot nominees for confidentiality
  • The same person can be the settlor, trustee
    (through offshore company in which he is the sole
    director and beneficial owner) and also
    beneficiary
  • No exchange control regulations
  • No reporting requirements

11
International Collective Investment Schemes
(ICIS)The New Trend
12
Introduction on Cyprus Funds( ICIs)
  • In May 1999, Cyprus introduced legislation
    enabling the establishment and regulation of
    International Collective Investment Schemes
    (ICIS).
  • The Central Bank of Cyprus is the regulatory and
    supervisory authority for ICIS which issues the
    licences for establishment of International
    Collective Investment Schemes, which are the
    Cyprus Funds.
  • The sole objective of an ICIS is the collective
    investment of funds of unitholders.
  • Licensing Requirements The Bank must be provided
    with such information so as to be satisfied as to
    the competence of the directors, promoters,
    managers or trustees
  • Taking into account the investment policy and the
    particular investment objectives, an ICIS may be
    designated as fixed or variable capital and can
    be
  • An ICIS marketed to the general public
  • An ICIS marketed solely to experienced investors
    or
  • A private international collective investment
    scheme (only 100 or less investors)

2
3
13
Common uses of a Cyprus fund
  • Property investments, namely in countries having
    double tax treaties
  • with Cyprus (i.e. India, Russia, Poland and
    others)
  • Accumulation of funds of high net worth
    individuals in a private fund
  • Investments in securities bonds and other
    financial instruments
  • Collective fund of several sub-fund portfolios
  • Fund of a number of other funds or sub-funds

14
Characteristics Structure of Private ICIS in
the form of International Variable Capital
Company ( the most commonly used type)
  • Maximum number of members upto 100 investors
  • Share capital of the company may vary according
    to the investors participating/exiting the fund
    Thus when investors buy, the company issues more
    units and when investors exit, the company
    reduces the number of units.
  • Board of Directors the principal shareholder (s)
    may appoint themselves or their representatives
    to become members of the Board.
  • A Cyprus Holding Company needs to be formed for
    the formation of the fund, followed by the
    application to the Central Bank of Cyprus. The
    approval of the license is a 3 month procedure
  • Cannot be offered/ marketed to the general public
    and the right to transfer is restricted

15
Characteristics Structure of Private ICIS in
the form of International Variable Capital
Company ( the most commonly used type)
  • Custodian needs to be appointed with whom assets
    are placed.
  • Cyprus Banks are very trust worthy also banks
    in other countries are also accepted as
    custodians
  • Administrator needs to be appointed in Cyprus
    whose task is to calculate the net assets value
    and other financial matters. The accountants of
    Globalserve can play this role
  • External auditor needs to be appointed. Dinos
    Antoniou Co ltd can be auditor to ICIs
  • A Fund Manager needs to be appointed ( but it can
    also be a member of the board who is experienced
    in fund management)
  • Investors do not have to be experienced and there
    is no minimum subscription
  • It Is not required to apply investment
    restrictions

16
INVESTORS
Family Foundation
Trust
Directly Physical Person
Legal Entity
Off-shore SPV 1
Off-shore SPV 1
Off-shore SPV N
Fund Custodian
Advisory Committee
Fund Administration
AAA Investment Fund
Fund Board of Directors
Auditors
SPV 1 Cyprus Holding company
SPV N Cyprus Holding company
SPV 2 Cyprus Holding company
Investment 1
Investment 2
Investment N
17
BENEFITS OF ICIS
  • Cyprus ICIS enjoy significant tax incentives
  • An ICIS is treated identically as any other
    Cypriot entity, hence enjoys 10 flat corporation
    tax on annual net profits earned worldwide.
  • Exemption from tax on profits from sale of
    shares and other instruments.
  • Exemption from tax on foreign dividends
    received.
  • No withholding tax on income repatriation
    (dividends paid to unitholders).
  • No capital gains tax on disposal of shares/units
    by the holders.
  • A wide network of Double Tax Treaties in place
    with more than 45 countries worldwide.
  • Funds also offer
  • diversification of risk
  • Confidentiality with respect to the identity of
    the investors
  • Professional expertise in managing investments


11
2
18
  • CONTACT US
  • GLOBALSERVE CONSULTANTS LTD
  • 9 VASSILI MICHAELIDES
  • 3026, LIMASSOL-CYPRUS
  • P.O BOX 57048, 3311, LIMASSOL, CYPRUS
  • TEL. 00357 25 817181, 00357 25 824545
  • FAX. 00357 25 824055
  • WEB SITE www.globalserve.com.cy
  • EMAIL info_at_globalserve.com.cy
  • CONTACT PERSONS
  • DINOS ANTONIOU, C.E.O
  • PHANI SCHIZA ANTONIOU, MANAGING
  • DIRECTOR

19
  • THANK YOU ???????

20
Disclaimer
  • Whilst every effort was made to ensure that the
    information contained in this booklet is correct
    and error-free, no responsibility or liability
    can be accepted by Globalserve Consultants Ltd
    for any loss or damage incurred as a result of
    relying on information contained in this booklet.
    Globalserve Consultants Ltd, its management and
    staff, any individual or legal entity that has
    contributed in any way to the preparation,
    composition or promulgation of this booklet
    hereby disclaim any overall liability arising
    from any inappropriate, improper or fraudulent
    use. This document is not intended to be used as
    a general guide to investing, or as a source of
    any specific investment recommendations, and
    makes no implied or express recommendations.
    This document does not constitute an offer or
    solicitation to any person in any jurisdiction in
    which such an offer or solicitation is not
    authorized or to any person to whom it would be
    unlawful to make such as offer or solicitation.
    It is the responsibility of any person or persons
    in possession of this material to inform
    themselves of and to observe all applicable laws
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    including MiFID compliance. Prospective
    investors should inform themselves and take
    appropriate advice as to any applicable legal
    requirements and any applicable taxation and
    exchange control regulations in the countries of
    their citizenship, residence or domicile which
    might be relevant to the subscription, purchase,
    holding, exchange, redemption or disposal of any
    investments. No part of this material may be i)
    copied, photocopied or duplicated in any form, by
    any means, or ii) redistributed without the prior
    written consent of Globalserve Consultants Ltd .


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