Generally, Cyprus International Trusts are transparent for tax purposes. The trustee is not assessed on the income/ gains of the trust and is responsible for discharging the tax liabilities of the beneficiaries on their behalf.
In determining the basis of taxation of a beneficiary in Cyprus, it is important to consider whether or not the beneficiary is tax resident in Cyprus. In the case of a Cypriot tax resident beneficiary, income and gains of the trust earned from sources within and outside Cyprus are subject to tax in Cyprus in accordance with the provisions of the Cypriot tax legislation. Further details on the taxation of Cyprus tax residents in accordance with the legislation can be found here
. Beneficiaries who are not tax resident in Cyprus are subject to tax only on income and profits sourced in Cyprus.
International Cyprus Trusts are liable to taxes such as VAT and stamp duty on their activities in Cyprus.
Capital gains tax applies only regarding gains from the disposal of real estate situated in Cyprus or shares of a company holding property situated in Cyprus.
No estate duty is payable by a Cyprus International Trust that was formed for the purposes of estate duty planning.
Trusts fall within the scope of double taxation treaties in the case where the other contracting state recognises trust structures and principles of equity and the trust itself meets the eligibility criteria set out in the treaty in question.