Cyprus 1994 meeting

Meeting Summary
  • An Overview: Cyprus as an Offshore Centre, 1994Peter Economides (updated 1998)
    • The offshore legislation was introduced in 1975 and the industry has developed hugely since then.
      The location of Cyprus – between Europe, Africa and Asia – has been helpful to the growth of the offshore industry. The northern part of the Island is occupied by Turkish forces, but its administration is not internationally recognised. Cyprus has a high standard of living and is a member of the United Nations and other international bodies. It has developed an efficient banking system, a high standard of accounting services, excellent air links and telecommunications. The Association Agreement with the European Community gives Cyprus access to EU markets.

      The offshore company pays tax at 4.25%. Beneficial ownership must be with non-residents. An audit is required. There is no withholding tax on dividends. Offshore partnerships, offshore branches, offshore banking units (OBU’s) or representative offices, offshore insurance and offshore captive insurance companies and shipping companies may be used. The Cyprus Registry now has over 2,300 ships and is the third largest in the world (5th largest, measured in tonnage)

      Cyprus has 21 tax treaties. Offshore companies are excluded from the U.S. and Canadian treaties and from part of the U.K., German and French treaties.

      Over 22,500 offshore companies are now in operation. Most of them come from Europe and, recently, the majority of new companies have originated from Eastern Europe. Of those having operations on the ground, over 50% are situated in Limassol. There are over 1000 of these employing over 2,700 expatriates. Revenue to the Cyprus government amounts to some US$ 377 million, and is rising rapidly.

  • Cyprus as a base for doing Business in the Middle East and Eastern EuropeChristos Mavrellis (updated 1998)
    • An offshore company may have a fully-operational office in the country, but must conduct its activities outside Cyprus although it may establish and operate a fully fledged office in Cyprus to manage its out of Cyprus activities. Exceptionally, ship-management companies may conduct activities in Cyprus, in the course of managing ships belonging to Cyprus companies. A similar rule applies to an OBU which is allowed to do business with other offshore companies in Cyprus.
      Offshore companies employ about 4,300, of whom nearly half are expatriates. Expatriates enjoy a special tax regime, paying 50% of the tax payable by other residents and no tax on the remuneration referable to services rendered abroad.

      An offshore company may use a bonded warehouse and engage in simple transshipment operations and may make certain imports duty-free. Offshore companies are outside the scope of V.A.T.

      Offshore companies are used to provide in the Middle East the services of personnel based in Cyprus. There are tax treaties with Kuwait, Syria and Egypt.

      A branch of a French company taxable outside France which has its own management, clientele and operations is not taxable in France; if the branch is in Cyprus and has its management – but not its control – in Cyprus, the branch profits are not taxable in Cyprus. The Netherlands has a similar rule, but in that case the branch needs to have its control in Cyprus and pay Cyprus tax at 4.25%.

      The treaties Cyprus made with the former Eastern Bloc countries have proved in present circumstances very useful. An offshore company is liable to tax in Cyprus by virtue of its place of incorporation and is therefore a “resident of Cyprus” for treaty purposes wherever its management and control may be. In particular, a wide range of royalty payments may be made by residents of Russia and of other members of the Commonwealth States to an offshore company without withholding tax. Some treaties allow tax credit and thus the foreign tax may be set off against the 4.25%.

      Cyprus has also been used by Russians as a base for doing their business abroad and for registering their ships.

  • Drafting Trust Instruments under Cyprus LawJames Kessler (updated 1998)
    • An international trust has ten advantages – the provisions for its validity in s.3 (1)), for protection against insolvency of the settlor in s.3 (2) and (3), for its irrevocability, for a 100 year duration, for a purpose trust, for implied investment powers, for changing the proper law, for variation, for confidentiality and for tax exemption. However s.5 provides for a trust to terminate at the end of the perpetuity period.
      If there is a power to add beneficiaries, it seems this should be limited to non-resident beneficiaries. An international trust can become an ordinary trust – e.g. on the death of a single trustee, or on the settlor or a beneficiary becoming resident. Or vice-versa, if a trust satisfies the international trust requirements after its creation. It is therefore wise to provide for both the common law and statutory perpetuity requirements to be satisfied. The draft should include the equivalent of s.158 of the English Law of Property Act 1925. The STEP standard provisions provide a good basis for a draft Cyprus trust.

  • Drafting Trust Instruments under Cyprus LawKypros Chrysostomides
    • Common law and the rules of equity applicable in England in 1960 become part of the law of Cyprus on independence. The 1955 Trust Law is still in force, and is now joined by the 1992 Law.
      Apart from local trusts and international trusts, an offshore trust may be created. It is free of exchange control and tax but not governed by the 1992 Law.

      In creating an international trust, it is wise to make compliance with the four essential requirements express on the face of the trust instrument. Some provisions of the 1992 Law need not be adopted unchanged – S.4, providing for irrevocability, S.5 providing for its duration, s.8 (1) providing wide investment powers, S.9 providing for relocation and s.4, providing for confidentiality. But other provisions cannot be excluded – s.6 which provides for accumulation and s.8 (2) providing a reasonable diligence and prudence test for investment.

      Provisions of the 1955 Law must also be borne in mind – e.g. s.7 (1) permitting investment in bearer securities, s.7 (2) imposing a duty to deposit such securities with a bank and s.34 (1) limiting the number of trustees to four.

      The draft of an offshore trust must cover matters which in the case of an international trust would be dealt with by the 1992 Law – notably the duration of the trust, where recourse will normally be to a royal lives perpetuity period.

      The way forward however will now be in the use of the International Trust under the 1992 Law.

  • Drafting Trust Instruments: General ConsiderationsJames Kessler (updated 1998)
    • Trust drafting seems easy but is actually difficult. A small error relating to the trust period may be fatal to the effectiveness of the trust.
      In defining “beneficiaries”, the draftsman needs to ensure that everyone is included whom it might in any circumstances be desired to benefit. Does the settlor want illegitimate children to be included? In English law, they are nowadays included by statute. This may not be the case elsewhere – e.g. in Cyprus. It is generally desirable to include spouses: a widow may otherwise be impecunious. A power to add beneficiaries needs to be circumscribed; some practitioners think such a power is not valid, and in the context of the “anonymous trust” they may well be right.

      A settlor can find it hard to understand that a trust is not a bank account. A settlor may nevertheless have some measure of control by having a power to dismiss trustees, but he must remember that dismissal is not retrospective and that the power cannot be exercised by the settlor so as to benefit himself. In providing for the transfer of trust assets to new trustees a balance needs to be kept between the legitimate need of the new trustee to take command of the trust assets and the legitimate requirement of the old trustee to meet liabilities incurred in his capacity as such.

      A Protector may be usefully provided for.

      Concision in drafting is nowadays thought to be an advantage: verbiage and archaisms should be avoided.

  • The Cyprus International Trusts Law, 1992Richard Pease (updated 1998)
    • Although Cyprus had absorbed the English rules of equity well before 1975, no offshore trust business developed alongside the offshore company business.
      The 1992 Law was enacted in Greek. It followed the 1955 Law, which was enacted in English. The law of Cyprus includes also the English principles of equity, derived from English cases decided before independence in 1960. The 1992 Law is not a “stand-alone” law: it is grafted on to the earlier law.

      Some of the features of the 1992 Law clarify the earlier law, some update it and some introduce features nowadays found in other offshore jurisdictions.

      To constitute a trust under the new law, the settlor must be non-resident, at least one trustee must be resident in Cyprus, no beneficiary (unless a charity or an offshore company) may be a permanent resident of Cyprus and the trust fund may not include immovable property in Cyprus. These conditions do not present difficulties in practice.

      Provisions of the new Law may be used to enable a settlor (i) to avoid forced heirship laws in his country of domicile (ii) to create an asset protection trust (iii) to adopt a perpetuity period of up to 100 years and provide for accumulation of income throughout that period or (iv) to create a charitable or purpose trust. The Law provides for “diligence and prudence” test of authorised investments by trustees, for changing proper law, for variation of the trust and for confidentiality.

      Most importantly, s.12 of the Law exempts the trust from tax and estate duty, while imposing CY£250 stamp duty payable at the inception of the trust. Exchange control consent is available for the trustee to treat the trust fund as falling outside the exchange control legislation.

  • Trust AdministrationAnthony Whitehouse
    • An imaginary story of trust administration illustrates the extensive damages which can become payable as a result of the ignorance and carelessness of a trust officer. A trust officer needs to understand, for example, the nature of the perpetuity period, the duty of the trustee to be circumspect in making investments or exposing the trust fund to exchange risk. An over-complicated trust is a recipe for expensive disputes with beneficiaries and mistakes by trust officers. Litigation and legal fees are expensive, and can ruin a small trust company. A prospective trustee must be sure that the settlor has a proper title to the assets to be settled. If the client is asking for the trustee to take risks, one solution is to give him his own trust company. A trust instrument should be settled by counsel: standard forms are to be avoided. A trustee should not resign in favour of unsuitable trustees.
      The root of many problems is that the client treats the trust fund as if its assets were his – as eg in the Rahman case. Procedures need to be in place to deal with such matters as renewal of insurance.

      A well-drafted trust instrument will permit trustees to pay taxes where this is in the interest of the beneficiaries. It is a comfort to the beneficiaries for the trustee to have indemnity insurance.

  • Yachts and the E.C.George Economou
    • It used to be possible to keep a yacht in an EC marina for 6 months at a time, avoiding VAT on the boat and its supplies.
      New rules came into force on 1st January 1993. Member states have not yet unified their approach to this Directive, but some common approach is being reached. Savings can be made by “marina- shopping”. The vessel must first be exported outside the EC. VAT rates vary; Madeira’s rate is only 12%. A market value system is universal: Greece offers favourable valuations, but note that any excessively favourable valuation may be questioned by another member state.

      A person not belonging to the EC may import a vessel to the Community for not more than 6 months without VAT, so long as it is not sold or chartered to an EC person during that time. Concessionary treatment is offered by some states to a vessel which was within the Community at the end of 1992 and was registered prior to 1st January 1985.

      The Channel Islands are not part of the EC and a vessel registered there and owned directly or indirectly by a non-EC person may be imported temporarily into the EC.

      It seems that the Greek authorities accept that immobilisation is the equivalent of export.

      The French position is that all vessels chartered out of French ports must pay French VAT. The sale of a yacht used for business may be subject to VAT – eg sale by a charter company. A vessel may be sold free of VAT outside the Community, but may then be subjected to VAT on its re-import.

      The United Kingdom adopts a system of apportionment, charging VAT on the port of a charter involving UK ports. A vessel temporarily imported cannot be chartered in French or Greek waters – though there are some exemptions to this rule.

      The yacht broker’s commission on a sale is subject to VAT in the country in which the vessel is then berthed. If his principal is registered for VAT, he is the person liable for the tax.

      Whatever its flag, a yacht beneficially owned by an EC person must pay VAT on importation, but a yacht owned by a non-EC person may be temporarily imported. The authorities are entitled to look behind a corporate owner.

yeezy boost 350 oxford tan adidas yeezy 350 boost oxford tan release date moonrock yeezy 350 boost legit real fake adidas yezzy boost 350 pirate black moonrock restocking yeezy boost 350 moonrock raffle yeezy boost 350 moonrock 331592665172 is the adidas yeezy boost 350 turtle dove releasing again yeezy boost 350 turtle dove AQ4832 fse 082415 p se yeezy boost 350 adidas yeezy 350 boost where to buy yeezy boost 350 v2 black white adidas yeezy boost 350 pirate black adidas yeezy boost 350 v2 black white adidas yeezy boost 350 v2 blackwhite reservations open december 15 confirmed app buy black friday yeezy boost 350 v2 yeezy boost 350 v2 black white adidas yeezy boost 350 v2 official images adidas yeezy boost 350 v2 restock info adidas yeezy boost 350 v2 beluga solar red adidas yeezy boost 350 v2 beluga launches tomorrow news.23913.html yeezy boost 350 v2 black white release date adidas yeezy yeezy boost 350 v2 bw raffle store list for the black white adidas yeezy boost 350 v2 release news.26285.html adidas yeezy boost 350 v2 black white release procedure announced news.26233.html yeezy boost 350 v2 black white raffle