TRUSTS V FOUNDATIONS THE CYPRUS INTERNATIONAL TRUST OPTION

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

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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

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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

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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

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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

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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)

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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)

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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

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EFFICIENT TAX STRUCTURE WITH CIT
Protector Physical person or company
?
CIT

• Cyprus International Trust

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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

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International Collective Investment Schemes
(ICIS)The New Trend
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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)

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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

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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

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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

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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
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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

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• GLOBALSERVE CONSULTANTS LTD
• 9 VASSILI MICHAELIDES
• 3026, LIMASSOL-CYPRUS
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• TEL. [phone]
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• CONTACT PERSONS
• DINOS ANTONIOU, C.E.O
• PHANI SCHIZA ANTONIOU, MANAGING
• DIRECTOR

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