Foreign companies may be registered in Cyprus, the same provisions apply as those existing in the United Kingdom for the registration of overseas companies. Registration as an overseas company does not carry with it a legal right to operate locally owing to the exchange control restrictions which apply, as in the case of foreign participation in local companies. Registration is obligatory within one month after a foreign company establishes (with exchange control approval) a place of business in Cyprus.

The Income Tax (Amendment) Law 15 of 1977 opened the way for using branches of foreign companies for offshore activities, including regional offices and offshore banking units, free from any tax incidence. Only if the foreign company is deemed to be managed and controlled from Cyprus there is a 4.25% tax. This arrangement may be very convenient if one wants to take advantage of Cyprus network of Double Taxation Agreements, as such foreign companies would be considered resident in Cyprus for the purpose of such Agreements.

General partnerships are regulated by the Partnerships and Business Names Law, Cap. 116, which is practically the same as the English Law.

They may have from two to twenty partners, all of whom have unlimited liability. The relations of the partners between themselves and with third parties are regulated by the partnership deed and, failing such regulation, certain general provisions in the law become applicable; certain other provisions are, in any case, imposed by law. The partnership must be registered and, on its foundation, must submit to the Registrar of Partnerships a return indicating inter alia its name, its objects, its partners, which of them may bind the partnership by their signatures, and its duration. Foreigners may become partners in a Cyprus partnership, full or partially owned by foreigners, but only after an exchange control permit is obtained.

Limited Partnerships are regulated by the same law as general partnerships. They must have at least one general partner who has unlimited liability and one or more limited partners whose liability is limited to the amount declared in the return filed with the Registrar of Partnerships.

They may be used in conjunction with offshore companies, in order to obtain almost total tax exemption, in lieu of the 4.25% tax chargeable on offshore companies. An individual limited partner with an offshore company as an unlimited partner (with a very limited participation in the profits) may obtain fully tax-free profits for himself.

The underlying principle of a trust is that property is conveyed by a person (natural or

legal), who owns that property and who is commonly referred to as the settler to an independent person (natural or legal) who is known as the trustee. The trustee assumes legal title to the assets held in a trust and is responsible for their safekeeping, administration and distribution. The trustee holds the assets in question for the benefit of one or more persons (natural or legal) referred to as beneficiaries.

The trustees are under a strict legal obligation to carry out the precise terms of the trust. Trustees can either be individuals or companies or even a combination of the two.

For a trust to qualify as an international trust, the following requirements must be fulfilled:

• The settler must not be a permanent resident of Cyprus.
  
• No beneficiary, other than a charitable institution, can be a permanent resident of Cyprus.
  
• The trust property cannot include any immovable property
  situated in Cyprus.
  
• The least one of the trustees, must be a permanent resident of Cyprus.

With regard to the requirement under D above, it must be clarified that Cyprus offshore enterprises do qualify as residents of Cyprus for the purposes of the Law.

Irrevocability / Asset Protection
An international trust will be irrevocable unless a specific power of revocation is reserved in it and the trust cannot be set aside by the settler's creditors unless and to the extent that the creditors can show that the trust was made with the intent to defraud them. The burden of proof of such intent lies with the creditors of the settler and an action against the trustees to set aside the trust, on grounds of fraud, must be brought within two years, from the date when the relevant transfer of assets was made to the trust. In addition, no foreign law relating to inheritance or succession will invalidate a Cyprus international trust.

Duration
The duration of an international trust may be up to 100 years except in cases of charitable or "purpose" trusts, where there is no limit.

Accumulation of Income
The income of an international trust can be accumulated throughout its duration.

Change of Law
The law applicable to a Cyprus international trust can be expressly changed to a foreign law and an existing foreign trust can select Cyprus Law, if the foreign law itself recognizes such a change.

Confidentiality
The Law contains provisions for confidentiality. Such duty is imposed by the Law on trustees, who may not disclose information about the trust to outside parties. No registration of the trust with any authority is necessary.

Taxation
No income or capital gains tax and no estate duty shall be charged in respect of the income of a Cyprus international trust. A stamp duty of CYP.250 is payable once and for all at the time of creation of the trust.

Purpose trusts
Trusts for a purpose or "purpose" trusts can be set up under the provisions of the International Trusts Law.

Variation of trusts
The Cyprus courts have powers to vary the terms of the trust on the lines of the English variation of Trusts Act 1958. Upon application, a Cyprus court may amend or repeal the terms of the trust or the powers of the trustees to manage the trust, if they are satisfied that the proposed arrangement shall be in the interest of the persons on whose behalf the application is made and no substantial prejudice is caused to the interests of any other interested party.

Authorized Investments
The trustees of a Cyprus international trust, have extensive investment powers which,

however, must be exercised with the prudence and diligence of a reasonable person.

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