“Historically, many trust jurisdictions developed legislation aimed primarily at attracting non-resident settlors. That distinction reflected the realities of a different era. Today, however, trusts are widely recognised as legitimate wealth planning vehicles used for succession planning, family governance, business continuity, philanthropy and asset protection. Their use is no longer confined to international or offshore structures,” suggests The Chair of STEP Cyprus and the Deputy Chair of STEP Europe and advocate Nicky Xenofontos.
Speaking to CBN, she discusses the recent proposed Cyprus International Trusts reform, what issues it seeks to address and which groups it will benefit.
What key aspects of the Cyprus Trusts Law does the recent reform aim to modernise, and which longstanding challenges is it intended to resolve?
The proposed reforms represent the most significant review of the Cyprus International Trusts framework since the landmark amendments of 2012.
For more than thirty years, the Cyprus International Trust has been one of the Republic's most successful legal products, offering robust asset protection, succession planning flexibility and legal certainty for international families and entrepreneurs.
However, the global private wealth landscape has evolved considerably. Modern wealth structures are increasingly international, families are more mobile than ever before and there is greater emphasis on transparency, governance and legal certainty.
The proposed legislation addresses these developments by modernising the trust framework and removing distinctions that no longer reflect the realities of today's private wealth environment.
Among the key reforms are:
• the introduction of the concept of the Cyprus Express International Trust;
• the replacement of outdated eligibility criteria;
• the removal of the distinction between Cyprus residents and non-residents in establishing trusts;
• the strengthening of firewall protections against foreign succession, matrimonial and heirship claims;
• clarification of protector powers, reserved powers and purpose trusts;
• modernisation of trust migration provisions;
• enhancement of confidentiality and administrative certainty; and
• extension of modern trust principles to a wider range of Cyprus law trusts.
The reforms preserve the strengths that have made Cyprus successful while ensuring the legislation remains relevant for the next generation of private wealth structures.
What factors made this the right moment to introduce and advance these trust law reforms?
The timing is particularly important because the international trust industry is undergoing a period of transformation.
Historically, many trust jurisdictions developed legislation aimed primarily at attracting non-resident settlors. That distinction reflected the realities of a different era. Today, however, trusts are widely recognised as legitimate wealth planning vehicles used for succession planning, family governance, business continuity, philanthropy and asset protection. Their use is no longer confined to international or offshore structures.
The proposed reforms recognise this evolution. A key objective is to remove artificial distinctions between Cyprus residents and non-residents and establish a single, modern trust framework capable of serving both international clients and Cyprus-based families. This reflects what has publicly been described as the "de-offshorization" of the Cyprus trust regime.
At the same time, Cyprus is increasingly attracting entrepreneurs, family offices, investment principals and internationally mobile families seeking a stable EU jurisdiction with strong legal infrastructure.
The reforms therefore ensure that Cyprus remains competitive internationally while also providing modern trust solutions for domestic wealth planning needs.
The reforms have been described as contributing to the "de-offshorisation" of the Cyprus trust regime. What does this mean in practice?
The concept of "de-offshorisation" should not be misunderstood.
The proposed reforms do not diminish Cyprus' attractiveness as an international trust jurisdiction. Rather, they recognise that trusts are no longer exclusively international or offshore vehicles.
Historically, the Cyprus International Trust regime-imposed distinctions based on the residence status of settlors and beneficiaries. While these criteria served a purpose when the legislation was first enacted, they no longer reflect the realities of modern private wealth planning.
The reforms therefore seek to establish a unified trust framework where access to modern trust legislation is not dependent on whether an individual is resident in Cyprus or abroad.
This approach delivers several important benefits:
• greater simplicity and legal certainty;
• a more coherent legislative framework;
• equal treatment of Cyprus and international families;
• reduced complexity for advisers and trustees; and
• increased competitiveness for Cyprus as a wealth planning jurisdiction.
Importantly, Cyprus remains committed to the highest international standards of transparency, regulation and compliance. The reforms are therefore not about creating an offshore environment, they are about creating a modern, sophisticated and internationally respected trust framework suitable for both local and international use.
Why is aligning the jurisdiction of establishment with tax residency particularly important for the Republic of Cyprus?
These reforms reflect the continued maturation of Cyprus as a leading international private wealth jurisdiction.
The proposed legislation demonstrates that Cyprus is willing to continuously review and modernise its legal infrastructure to ensure it remains aligned with international best practice and market expectations.
Importantly, the reforms recognise that trusts are no longer niche offshore vehicles. They are sophisticated planning tools used by international families, entrepreneurs, family offices, philanthropists and increasingly by Cyprus-based families seeking long-term wealth preservation and succession planning solutions.
Cyprus offers a combination that very few jurisdictions can replicate:
• European Union membership;
• a common law legal system;
• modern trust legislation;
• highly experienced legal, fiduciary and tax professionals;
• strong asset protection provisions;
• political and legal stability; and
• an increasingly sophisticated private wealth ecosystem.
The proposed amendments reinforce these advantages and send a clear message that Cyprus intends to remain at the forefront of international trust and wealth structuring.
Is there anything further you would like to highlight regarding the impact or significance of this reform?
The proposed reforms are not simply a legislative update. They represent the evolution of the Cyprus trust from an 'international' or 'offshore' planning vehicle into a modern trust framework capable of serving both international clients and Cyprus-based families. The objective is greater simplicity, greater certainty and a stronger, more competitive Cyprus trust regime for the future.
