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Timeframes for registration of Cyprus international trusts
The law regulating companies providing administrative services and related matters ('the Fiduciaries Law') was enacted in December 2012. It established a licensing and supervisory body for corporate and fiduciary services providers per the European Union directive. Pursuant to Cyprus's commitment to transparency and enhanced regulations, on 9 September 2013 the Fiduciaries Law was amended in respect to the disclosure of information on Cypriot International Trusts. Taxand Cyprus investigates these amendments and their potential impact on MNCs operating within the jurisdiction.
Section 3(7) of the Fiduciaries Law (as amended) provides that trustees and service providers will need to identify and verify to their respective supervisory body (ie Cyprus Bar Association, Cyprus Securities and Exchange Commission and the Institute of Certified Public Accountants of Cyprus) the:
- name of the trusts
- trustees’ names at all times
- date of creation and termination of trusts and
- the date of any change in the law governing the trusts.
The timeframe for disclosing the above information to the competent authority for trusts established on or after 9 September 2013 is 15 days from their establishment or the adoption of Cyprus law as the governing law of the trust. As for trusts already in existence on 9 September 2013, the relevant information must be submitted within six months of the entry into force of the amending law, that is to say, before the 9 of March 2014. A notification on any subsequent changes in any of the information mentioned above must be also submitted within 15 days from the date the change took place.
Failure to do so within the above timeframes constitutes a criminal offence that entails a sentence of imprisonment for up to five years, a fine of up to EUR 350,000 or both. It should be highlighted that the trust register maintained by the competent authority is not available to the public but may only be available for inspection by other competent authorities if requested. The authorities are currently exploring the adoption of an electronic submission system so as to expedite the process.
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Also published in Thomson Reuters' Taxnet Pro, 21 March 2014
This development is certainly a serious step towards Cyprus's commitment to keep up with the global developments in regards to anti-money laundering compliance and enhanced transparency in an era when strict confidentiality is increasingly combated. However, Cypriot trustees and service providers must be henceforth very careful in complying with the above requirements within the provided deadlines so as to operate within the requirements of the law and of course avoid any potential fines/liability.