Trust in Cyprus
One of the beauties of working in the finance industry is the ability to go and ply your trade somewhere completely different. In the field of trust, there will be things to learn in terms of local legislation and idiosyncrasies, but essentially it's a case of 'have skills, will travel'. Some of the more exotic jurisdictions have been an option for many years - the BVI and Cayman, for instance - but one that will surprise some people is Cyprus.
After a recent history in which the chief industry was tourism, the island is now well and truly on the map as an international business centre. While the island prides itself on an excellent education system (based on the British model), finance is such a recent arrival there that it can't hope to be self-sufficient with regard to qualified staff for several years.
As in many relatively small places (the population is just under 800,000), the workforce has to be boosted by trained people, not just in this industry, but also in all sorts of others.
Also, there are strict controls on bringing in non-locals, with companies obliged to demonstrate that they have made every effort to recruit a Cyprus resident before they are permitted to look elsewhere.
The Ministry of Commerce, Industry and Tourism is adamant that the island is well catered for within its own shores.
'We have a surplus of qualified people,' said a spokesman. 'Also, the unions are very strong and they're reluctant to see foreign workers coming in. For the moment we can supply the needs of businesses.'
However, our own experience as a global recruitment firm tells us that there are opportunities in Cyprus. While having one of the lowest rates of unemployment in the EU is generally considered a good thing, it does present problems for employers in the lack of available candidates.
Cyprus is a popular location for international consultants, contractors and expatriate workers who do find themselves allowed in. Because this is a former British colony, English is spoken fluently by about 90 per cent of the population, and all major roads and towns are signposted in English and Greek. With a lower cost of living than most of Europe, an excellent climate,
an English public-school system (from pre-school to university level) and one of the lowest
crime rates in Europe, it is not difficult to see why this is considered an excellent place to work and bring up a family.
On 1 May 2004 Cyprus joined the European Union, which means that EU nationals can live and work there without the need for work permits and with no currency restrictions. While the cost of living is lower, it must be taken into account that salaries are often less than in other European countries. However, out of the ten new member countries that joined the EU at that time, Cyprus has the highest GDP and income per head of population.
Now that it has EU membership, the island is ideally placed for international companies trading in Eastern Europe and the Middle East. It currently enjoys the lowest corporate tax rate in the EU (ten per cent). This, coupled with the fact that Nicosia, the capital, ranks as one of the least expensive of the leading international centres, also makes Cyprus an attractive destination for the international business community.
Healthcare is free for all EU nationals - only in private clinics do you have to pay - and every town has its own hospital.
So, the standard of education is excellent, salaries are relatively low, and company tax is ten per cent. All in all, the situation is similar to Dublin before the boom, although obviously the climate is very different - and that can hardly be considered a complaint.
All this has not gone unnoticed in the international business community. More than 30 foreign banks have established a presence here, along with upwards of 1200 international business corporations who have fully fledged offices. On the trust front, among the big names are IFG, Amicorp, Citco, Mutual Trust and Consulco.
Something of which the Ministry of Commerce, Tourism and Trade is very proud is its 'one-stop shop' designed to smooth the path of any new business in Cyprus. The idea is to make it possible to complete all the procedures and acquire all the necessary permits within seven days of the initial application. Although that might be optimistic, it is clear that the island is moving in the right direction.
The government has been intent on 'transforming Cyprus into a regional hub for research and development' and attracting foreign investment in what it calls 'the field of high-tech, knowledge-based products and services which contribute towards the transfer of advanced technological expertise.' The island has dramatically increased the number of people employed in high-tech areas.
And what of all the people needed to fill the positions? The aforementioned well-educated young people are obviously ideal candidates in many areas, and their fluency in the local language makes them particularly desirable in the civil service, where it is largely Cyprus dealing with Cyprus and connections are vital.
In other areas of work, there is little choice but to recruit from outside the island. The world is becoming ever more accustomed to upping sticks and going where the professional action is, but obviously it is important for anyone considering such a drastic change to be fully aware of what they are taking on. Until about five years ago, Cypriot companies often took a do-it-yourself approach, spending valuable time and money on looking for staff perhaps thousands of miles away.
Increasingly, though, they have joined the international firms in realising that there are specialist consultancies that can do it for them - and increase the chance of making the right appointment.
Tourism has not been ignored, with attempts being made to boost visitor figures outside the peak months. This is a place where all-year-round tourism is a realistic proposition, as even in January, which locals might consider the depths of winter, there is often bright sunshine and a pleasant temperature.
Again, this contributes to the island's appeal for those wanting to move from areas where gales and sleet can take the edge off their desire to leave the house and go to work.
The government is promoting the phenomenon of 'medical and wellness tourism', combining the good weather with the much-trumpeted healthcare facilities and expertise.
Cyprus trust law began with the Cyprus Trustee Law Chapter 193, based on the English Trustee Act 1925, but the island's trust regime was brought into line with normal international practice with the International Trusts Law 69(I) of 1992. The result is that there are three types of trust available, of which only the last will normally be of interest to the international settlor:
Local trusts are governed by English common law and the original trustee law. The settlor and beneficiaries are normally residents of Cyprus, and the trust and its property are subject to exchange controls.
Offshore trusts are equally outside the international trusts legislation, and are the same as local trusts except that their beneficiaries must be non-resident and all the trust's activities must be outside Cyprus.
International trusts are the normal form of Cyprus trust used by foreign settlors. They have the following key characteristics:
- The settlor must be non-resident
- The beneficiaries must also be non-resident (except for local charities)
- One of the trustees must be Cypriot (individual or corporate)
- The trust period may be up to 100 years (longer for charitable trusts)
- Confidentiality is protected in the law, and foreign judgements are specifically non-recognised
- There is no registration requirement
- Trust documents are in English
- Trust assets may not include immovable property in Cyprus
- Creditors have to prove intent and must claim within two years
- There is stamp duty of CYP250