A Cyprus International Trust protects assets against the settlor's future creditors, but only within limits the statute spells out. Under the International Trusts Law 69(I)/1992, as amended by Law 20(I)/2012, a creditor can have the trust set aside only by proving that it was created to defraud them, and must bring that claim within two years of the assets being transferred in. After that window closes, the property is out of reach of the settlor's creditors in a Cyprus court. Before the window closes, and wherever fraud can be shown, the protection is much thinner than the marketing suggests.
Who can set one up
Three residence conditions decide whether a trust qualifies as a Cyprus International Trust (CIT) rather than an ordinary domestic trust:
- 1The settlor must not have been resident in Cyprus in the calendar year before the trust was created.
- 2The beneficiaries, other than a charity, must not have been Cyprus resident in that same preceding year. They can move to Cyprus afterwards.
- 3At least one trustee must be resident in Cyprus for the life of the trust.
The timing in the first condition catches people out. A British family planning to relocate to Limassol can settle a CIT while they are still UK resident, or in the year they arrive. Wait until the second year and the settlor no longer qualifies, because they were resident in the preceding calendar year. If you are working out when your own residence starts, the non-dom and residency checker and our guide to Cyprus tax residency set out the 183-day and 60-day tests.
Before 2012 the rules were tighter still. The original law barred trusts from owning Cypriot land and capped their life at 100 years. The 2012 amendment removed both limits, so a CIT can now hold a villa in Paphos, shares in a Cyprus company or a portfolio in Zurich, and can run indefinitely unless the trust deed says otherwise.
How the creditor protection works
Section 3 of the law does two things. First, a CIT is not void or voidable because the settlor later goes bankrupt or, for a corporate settlor, into liquidation. Second, the trust can be set aside only where a Cyprus court is satisfied that the settlor made it with intent to defraud creditors.
The burden sits with the creditor. They have to prove the settlor's intention at the time of the transfer, which is harder than showing that the transfer left them unpaid. And they have two years from the date of the particular transfer into the trust to bring the action. Because the clock runs from each transfer, assets added later are exposed for two years from their own transfer date.
Three practical points follow from that design:
- A trust set up while a claim is already brewing is the easiest kind to attack. Moving your assets into a CIT the week after a lawsuit is served invites exactly the fraud finding the law allows.
- The protection is against the settlor's creditors. A beneficiary's own creditors are a separate question that depends on how the trust deed is drafted, which is why discretionary trusts and protective clauses are common.
- The two-year rule binds a Cyprus court. A foreign court with jurisdiction over the settlor personally may take a different view of the transfer, and may order the settlor to do things (repatriate assets, give evidence) that the trust itself cannot shield them from.
Forced heirship and foreign judgments
Where the trust deed chooses Cyprus law, the statute says that questions about its validity and administration are decided under Cyprus law without reference to the law of any other country. A disposition into the trust cannot be challenged on the ground that another country's succession or family law would treat it differently, or that the other country does not recognise trusts at all.
This is the feature that draws families from civil-law countries. Cyprus's own succession law, the Wills and Succession Law, Cap. 195, reserves a fixed share of an estate for a spouse and children, as our guide to Cyprus wills and inheritance explains. Assets settled into a CIT during the settlor's lifetime are no longer part of the estate, so neither Cap. 195 nor a foreign forced heirship regime reaches them in a Cyprus court. A disappointed heir can still sue abroad. What they cannot easily do is enforce the result against a Cyprus trustee.
What the settlor can keep
The 2012 amendment lets the settlor reserve significant powers without invalidating the trust: to revoke or vary its terms, to direct distributions or investments, to appoint and remove trustees and protectors, and to change the governing law. The statute also provides that the settlor's exercise of these powers does not, on its own, point to an intention to defraud.
That flexibility cuts both ways. The more control the settlor keeps, the easier it is for a foreign court or tax authority to argue that the assets never really left them. An English judge dealing with a divorce or a bankruptcy, for instance, will look hard at a trust the settlor can revoke on demand. Asset protection and retained control pull in opposite directions, and a good deed strikes the balance deliberately.
How a CIT is taxed
A CIT is looked through for Cyprus tax purposes, so what matters is where each beneficiary lives:
| Beneficiary | Cyprus tax on trust income and gains |
|---|---|
| Not Cyprus tax resident | Only on Cyprus-source income |
| Cyprus tax resident | On worldwide income, under the normal rules |
For a non-resident family, income and gains from outside Cyprus are therefore outside Cyprus tax, special defence contribution included. Cyprus has no inheritance tax or estate duty (it was abolished in 2000, as our inheritance tax guide sets out), so nothing is charged when the settlor dies. Cypriot property moved into the trust carries a flat Land Registry transfer fee of €50 on a transfer to a trustee, rather than the normal sliding scale.
The Cyprus side is only half the picture. A UK-resident settlor stays within HMRC's settlor-interested trust rules, and since April 2025 UK inheritance tax on trusts depends on whether the settlor is a long-term UK resident. Settling assets into a CIT can trigger an immediate 20% lifetime charge on value above the £325,000 nil-rate band, plus ten-yearly charges of up to 6%. Get UK advice before the transfer, not after.
Confidentiality and the trust register
Trustees may not disclose the settlor's identity, the beneficiaries or the trust assets unless a Cyprus court orders it. That duty of confidence now sits alongside anti-money laundering rules. Since the Fifth AML Directive was brought into the Prevention and Suppression of Money Laundering Law 188(I)/2007 in 2021, express trusts administered in Cyprus must record their beneficial owners on a register kept by the Cyprus Securities and Exchange Commission (CySEC). CySEC most recently amended its directive on that register in August 2026. The register is not open to the public, but the authorities can see it, and Cyprus exchanges tax information with other countries under EU and OECD rules. Confidentiality in 2026 means privacy from neighbours and litigants, not from HMRC.
Professional trustees must be licensed under the Administrative Services Law of 2012 and are supervised by CySEC, the Cyprus Bar Association or ICPAC, depending on who they are.
A reform bill is pending
In June 2026 a bill went to the House of Representatives that would rename CITs "Cyprus Express Trusts" and scrap the residence conditions for settlors and beneficiaries, so that Cyprus residents could use the same regime. Reports on the bill also describe the fraud limitation period running two years from discovery rather than from the transfer, which would weaken the protection for settlors. As of late September 2026 the bill was still awaiting committee scrutiny. Anyone settling a trust now should ask their adviser how the deed would sit under the new wording if it passes.
Is a Cyprus trust right for you?
It suits a non-resident family that wants long-term management of assets, succession outside a forced heirship regime, and protection against future, unforeseeable claims. It does not suit someone who already faces a creditor, or who wants to keep full control while pretending otherwise. Costs vary between trustee firms, so ask for a written schedule of set-up and annual fees before you commit.
Planning a Cyprus trust? Browse tax and wealth planning lawyers or wills and probate specialists in our directory, and have the trust deed reviewed by a qualified Cyprus advocate alongside your home-country tax adviser.