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International Trust Law of 1992: Analysis of Changes
The much anticipated reform of the Cyprus International Trust Law has finally arrived, as approved by the House of Representatives on 9 March 2012. The much debated amended law will modernise the legal framework for international trusts and is expected to boost investment in Cyprus. Although the 1992 Law established a premium regime for international trusts and Cyprus was rendered as an extremely beneficial jurisdiction, developments in the economy and business practices demanded changes in the existing legislation. The new law clarifies grey areas and removes restrictions and limitations that are no longer necessary while the foundations of the law remained intact. Taxand Cyprus analyses the changes made and looks at what businesses need to consider when tax planning.
The major changes to the law relates to:
- Residency provisions
- Reserved Powers of the Settlor
- Governing Law
- Duration of Trusts
- Charitable Institutions
- Powers of Trustees
The long awaited changes to the 1992 Law modernised and updated the International Trusts Legislation to correspond to the needs of the current economy. Enhanced protection is now provided to Settlors and Beneficiaries as many uncertainties in the law have been clarified and amendments were introduced to illuminate any grey areas. The new law has now been put before the European Commission in order to ascertain alignment with the acquis communautaire. The reform of the International Trust Law brought Cyprus once again in the forefront of trust jurisdictions and given the island's tax regime the new legislation is expected to be one of the most useful tools in tax planning for foreign investors.
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