Wednesday, October 8, 2014
Guernsey's company registry has approved the first ever migration of a foundation from another jurisdiction to Guernsey.
Lloyd's Trust Company (Channel Islands) Limited made the decision to move a Liechtenstein-based foundation to Guernsey following the introduction of foundations legislation in Guernsey last year.
Carey Olsen prepared the migration application for submission to the Registry and advised Lloyds on the foundation's new charter and the rules that needed to be adopted to comply with the Foundations (Guernsey) Law, 2012, as well as legal and regulatory aspects of the migration.
Natasha Kapp, Senior Associate at Carey Olsen, said that the firm has had several inquiries regarding foundation migrations into the island following the introduction of the new law. A foundation has similar features to a trust in that it has a founder who is similar to a settlor, beneficiaries have similar rights to those for discretionary trust beneficiaries, and a foundation's instrument and rules are similar to a trust deed. Foundations are generally a more familiar concept for clients from civil law jurisdictions than trusts, and Guernsey had hoped the introduction of foundations would bring in significant business, in particular from the Middle East.
"Guernsey is very attractive for establishing new foundations because it is a reputable jurisdiction with highly experienced advisers and a sound and rational regulatory environment," Kapp said. "Many existing structures already include foundations established in other jurisdictions and clients can see the benefits that migrating the foundation to Guernsey might bring."
The tax treatment of Guernsey foundations is largely consistent with that of trusts, being generally taxed at a zero rate, in line with the tax treatment of most companies in Guernsey. A 20 percent rate is applicable on income deriving from land or property in Guernsey.