How Clients Trading Through Interactive Brokers Can Benefit from a Cyprus International Trust

In an era of global investment opportunities, more and more high-net-worth individuals and sophisticated investors are using international brokerage platforms like Interactive Brokers to manage their wealth and diversify across asset classes and jurisdictions. But with wealth comes complexity, and complexity requires smart structuring.

One of the most strategic tools available today for traders and investors looking for asset protection, succession planning, and tax optimization is the Cyprus International Trust (CIT). In this article, we explore how clients who trade through Interactive Brokers can use a CIT, and why Cyprus has become a favored jurisdiction for structuring and protecting global wealth.

1. What is a Cyprus International Trust (CIT)?

A Cyprus International Trust is a legal arrangement where a settlor (the person setting up the trust) transfers assets to a trustee, who holds and manages them for the benefit of one or more beneficiaries. Cyprus trust law is based on English common law and has been enhanced by the International Trusts Law of 1992 (as amended, most recently in 2012), making it one of the most flexible and robust trust regimes in the EU.

To qualify as a CIT:

• The settlor must not be a Cyprus tax resident in the year preceding the creation of the trust.
• At least one of the trustees must be a Cyprus tax resident.
• The beneficiaries must also not be Cyprus tax residents in the year prior to the creation of the trust.

Importantly, the trust can hold any kind of assets, including shares, investment accounts, crypto-assets, and interactive brokerage accounts.

2. Interactive Brokers & International Investment

Interactive Brokers (IB) is a top-tier trading platform offering access to stocks, options, futures, forex, and ETFs across more than 150 markets globally. Investors using IB are typically:

• Sophisticated or high-net-worth individuals.
• Business owners diversifying family wealth.
• Traders managing multiple accounts or strategies.

However, such international trading can lead to exposure in multiple jurisdictions, complex estate planning issues, and a need for enhanced privacy and protection. That’s where the Cyprus International Trust comes into play.

3. How a CIT Can Hold an Interactive Brokers Account

Here’s how a CIT can integrate with your Interactive Brokers trading setup:

A. Setup a Holding Company

In most cases, the trust will not directly hold the IB account. Instead, the standard setup looks like this:

1. The CIT is established with you (the settlor), a Cyprus-based trustee (e.g. a trust practitioner such as AGP Trustees, group company of AGPLAW), and named beneficiaries (yourself, your spouse, children, etc).
2. The CIT establishes an underlying Cyprus company or another jurisdictional holding company (e.g. BVI, UAE, etc.), fully owned by the trust.
3. This underlying company then opens the Interactive Brokers account.

B. Trading via the Holding Company

• The trading activity occurs through the company’s IB account.
• The trust is the ultimate beneficial owner, while you may be appointed as the director of the company, giving you control over day-to-day investment decisions.

This structure combines control (through your role as director) with protection and separation of legal ownership (through the trust and company).

4. Benefits of Using a Cyprus International Trust for IB Trading

Let’s examine the key benefits for Interactive Brokers clients:

A. Asset Protection

• The trust separates the legal ownership from the settlor and the beneficiaries.
• This structure can protect your assets from personal creditors, litigation, divorce claims, or political instability.
• Provided the trust is not set up to defraud existing creditors, the CIT offers strong protection even against future claims.

B. Succession and Estate Planning

• Without proper structuring, brokerage accounts can become frozen upon death of the account holder, leading to lengthy probate and estate procedures.
• With a CIT, you eliminate probate entirely. The trust continues unaffected, and the trustee continues to manage the assets as per the trust deed.
• You can define specific distributions, timing, and even conditions (such as age, education, etc.) for your beneficiaries.
• It allows you to provide for family members, charities, or multi-jurisdictional heirs in a controlled and tax-optimized way.

C. Tax Optimization

While tax advice must be tailored to your specific residency and domicile, Cyprus offers attractive possibilities:

• Income and gains earned by the trust outside of Cyprus are not taxable in Cyprus.
• A Cyprus tax-resident company under the trust umbrella can benefit from:
  • 12.5% corporate tax (one of the lowest in the EU).
  • Exemption from tax on dividends received from abroad.
  • No withholding tax on dividends or interest paid to non-residents.

For traders, this means potentially deferring or minimizing taxation through proper structuring and jurisdictional alignment.

D. Confidentiality & Privacy

• Interactive Brokers accounts are typically linked to an individual’s name. However, by using a company owned by a trust, you gain an additional layer of discretion:
• The trust deed is not publicly accessible.
• Cyprus does not disclose beneficiaries or settlors in any public register (except where FATCA/CRS reporting applies).
• Your name does not appear in the Interactive Brokers account, but you still retain control through your position in the underlying company.

E. Flexibility and Control

• Unlike traditional offshore trusts, the Cyprus trust law allows a settlor to retain certain powers, including:
  • Investment powers (i.e., you may direct the trustee how to invest).
  • The ability to appoint or remove trustees.
  • The right to veto distributions.

This allows traders to maintain effective control over how the IB trading account is used – while still enjoying the benefits of a trust.

5. Common Use Cases: Who Should Consider This Structure?

This setup is ideal for:

• High-net-worth individuals with cross-border investments.
• Entrepreneurs who want to protect capital gains from asset sales.
• Crypto traders using IBKR for crypto-related ETFs or futures.
• Expatriates who want to ensure smooth estate succession.
• Clients in politically unstable or high-tax jurisdictions looking for a neutral EU base.

6. Example Scenario: Alex, a Crypto and Stock Trader

Alex is a dual citizen of Canada and Ukraine, residing in Dubai. He trades actively through Interactive Brokers, with over USD 5 million in his account, spread across stocks, ETFs, and crypto derivatives.

His objectives:

• Protect assets from legal risks or political changes.
• Ensure his children (in Canada) inherit easily.
• Legally reduce tax exposure.

Solution:

• Alex establishes a Cyprus International Trust.
• The trust forms a Cyprus holding company.
• The holding company opens the IBKR account.
• Alex acts as director, and the trustee holds the shares.