Northern Cyprus has become a hub not only for tourism but also for business due to its entrepreneur-friendly environment, characterized by accommodating policies, low taxation, and ample opportunities. Establishing a trust company is a sought-after service in the Turkish Republic of Northern Cyprus (TRNC), as it provides a safeguard for trust assets, securing the financial interests and safety of beneficiaries.
Opportunities in Northern Cyprus
Tourism is the primary contributor to the GDP of the TRNC, but the government is keen on diversifying the economy by attracting more profitable industries. To this end, a distinctive business climate has been cultivated to entice foreign investors to park their capital in the country. Here, international entrepreneurs benefit from the flexible tax regime, designated free economic zones, and the elimination of double taxation.
Additional benefits of the TRNC are certainly appealing:
- Strategic location: Situated at the crossroads of Africa, Asia, and Europe, Northern Cyprus offers simplified processes for international business launch.
- Residency opportunities: Foreign businesspeople starting ventures in the TRNC take advantage of an easy residency permit process.
- Economic growth: The consistent economic expansion in recent years boosts investor confidence in the TRNC.
- Cost-effective property: The real estate market in the TRNC provides foreign entrepreneurs with the option to lease or purchase both commercial and residential properties affordably.
Northern Cyprus also opens up fresh prospects for business owners in hospitality, dining, and tourism-related services.
Benefits of trust companies in the TRNC
A trust company is dedicated to managing assets for third-party beneficiaries. Its key features are the confidentiality and safeguarding of the beneficiaries’ interests. Trusts are designed to create secure structures that maintain anonymity and shield assets from legal challenges.
These are their primary advantages:
- Confidentiality: Trusts offer a high degree of privacy.
- Credit Protection: Assets managed by a trust are not owned by the founder but by the trust itself, shielding them from creditors.
- Tax Optimization: Trusts can be relocated to jurisdictions with more favorable tax laws to reduce tax liabilities.
- Inheritance Management: Trusts are frequently established to secure the financial future of heirs.
- Financial Planning: Trusts provide a means to strategically plan for inheritance or retirement funds.
The adaptability of a trust company is another significant benefit. The structure can be tailored efficiently to meet the specific objectives of the founder.
Trusts are also authorized to conduct a variety of activities:
- construction
- education
- healthcare
- real estate transactions
- currency trading
- factoring.
By raising the authorized capital to EUR 2.5 million and participating in investment activities, you can qualify for citizenship through investment in the TRNC. The trust is also entitled to purchase both commercial and residential properties here.
Trust company formation in Northern Cyprus
To establish a trust company in the TRNC, the following documents are required:
- Identification: A Northern Cyprus citizen’s ID and the foreign founder’s passport.
- Legal Clearance: An apostilled certificate of no criminal record for the foreign citizen.
- Residency Verification: Evidence of residence in the TRNC.
- Property Documents: A TRNC lease agreement or utility bill.
- Financial Commitment: A bank letter confirming the reservation of funds to cover 49% of the authorized capital.
- Director’s Guarantee: A bank-issued letter of guarantee in favor of the company’s director.
The benefits of operating a trust company in the TRNC include:
- Unrestricted business within the Northern Cyprus market.
- Business visas for proprietors and work visas for staff.
- Unlimited transactions involving the company’s accounts.
- Utilization of Turkish bank products through their branches in Northern Cyprus.
- Eligibility for permanent residency after 6 years of business activity.
- The opportunity to acquire TRNC citizenship following 10 years of professional engagement.
The Articles of Association outline specific details:
- Share Distribution: A citizen of the TRNC holds a 51% stake, whereas a foreign individual possesses 49%.
- Business Activities: The scope of operations is defined by the Articles of Association.
This is what the General Agreement stipulates:
- Directorship Limit: A cap on the number of company directors.
- Voting Threshold: The minimum percentage of votes required from co-owners to enact a change in directorship.
Trust deeds
A Trust Deed is an irrevocable contract in which the appointed owner acknowledges the true owner’s (beneficiary’s) entitlement to the trust company.
In the TRNC, the document has certain unique aspects:
- The foreign founder holds the roles of beneficiary, secretary, and director simultaneously.
- A TRNC citizen representing the founder acts as a nominee director and owner.
- Ownership shares are assigned to the beneficiary by the nominee owner through a Trust Deed.
- The foreign director manages all day-to-day operations as authorized by the Board of Directors.
- Directors are responsible for the trust company’s debts, tax payments, and financial dealings.
Trust company formation in the TRNC: essential steps
Here’s what the process for establishing a trust company involves in the TRNC:
- Naming: Selecting a unique name and securing the right to use it.
- Documentation: Preparing the necessary founding documents, including the Articles of Association and General Agreement.
- Bank Correspondence: Acquiring confirmation letters from the bank.
- Registration: Filing the complete set of documents with the relevant authorities for company registration.
- Financial Obligations: Settling taxes on the authorized capital and applicable state duties.
- Legal Paperwork: Collecting the official constituent documents.
- Tax Registration: Entering the company’s details into the Northern Cyprus tax service database.
- Bank Accounts: Opening corporate bank accounts in the TRNC.
- Licensing: Obtaining the necessary license for the specific business activity, which may involve additional fees.
- Municipal Records: Ensuring the company’s information is entered into the municipal register.
- Government Registrations: Registering the company with the Social Security Organization, the Ministry of Labor, and the Pension Fund.
Expert support for your TRNC trusts
International Wealth offers expert support for your trust company, including a range of supplementary services:
- Tax and Licensing Consultation: Guidance on tax matters and obtaining licenses.
- Visa Assistance: Help with securing business visas for directors and work visas for employees.
- Accounting Services: Professional accountant support.
- Tax Reporting: Handling the submission of monthly tax reports.
- Cash Register Setup: Installing cash registers as required.
- Document Processing: Printing of invoices and credit receipt vouchers.
- Signage Permit: Assistance in acquiring permission for the company’s signage.
Please note that these services are available for an additional charge.
If you’re considering setting up a trust company in the TRNC, International Wealth experts are ready to offer comprehensive guidance. Benefit from our assistance with the registration of your trust and the necessary support throughout the process!
