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Introduction: What Future For The Trust?

Even the most devoted believer in the rights of humans to dispose of their own assets and to arrange their affairs to their own benefit would have to agree that the trust is an anachronism. But then so is offshore itself. The harmonisers would say that it is irrational and unacceptable to allow a person to separate himself artificially from his property for his personal gain. The tax authorities have dealt with the trust by ignoring it and bypassing it - the few that haven't yet done so will surely fall into line quite soon. So if the trust is not a barrier to a tax collector, why, logically, should it be a barrier to a creditor?

As much as the trust seems to be somehow unethical when used for personal enrichment or protection in defiance of the public interest, it is obviously the right instrument when used to hold assets on behalf of others. The 'Unit Trust', the pensions trustee and other quasi-public guardians of private interests are eminently acceptable, superior to the 'Code' equivalents, and would have had to be invented if they didn't already exist, as is amply proven by their wholesale adoption in 'Code' countries. A genuine generation-hopping anti-inheritance tax trust also seems OK, because this is a morally repugnant tax to many people.

So it's odd, isn't it, that the laws under which individuals gain protection against 'genuine' creditors through a 'fake' disposal of assets should if anything have become stronger, not weaker. This is an area in which the balkanised condition of international law (non-international law, in other words) shows no signs of the creeping globalisation affecting other walks of life. Banking, insurance, pensions, shipping, environment, accounting and a host of other bodies of law are converging. But not trust law, or the national court systems which cradle it. Why is this? Is it because lawyers are rich, too?

Logical or illogical, there is no sign that the trust has run its course, as our review of the main trust-friendly jurisdictions will show. Indeed, in 2006 the Swiss parliament approved the ratification of the Hague Convention on the Law applicable to Trusts and their Recognition.

Modifications to Swiss law to give effect to the Hague Convention concerned the Swiss International Private Law rules dealing with the recognition of foreign decisions and the jurisdiction of Swiss Courts in trust related matters, as well as the introduction into the solvency and bankruptcy law of the principle of segregation of trust assets.

Investec Trust Switzerland Managing Director Xavier Isaac stated at the time that the ratification had sent a clear signal to the international finance community that Switzerland recognised the importance of the Anglo-Saxon trust concept as an essential component of the wider wealth management proposition and of the need for an adequate legal framework when dealing with trust structures.

“It is a major development in the trust landscape internationally and for Switzerland,” he announced, continuing: “Ratification is great as it dissipates much of the uncertainty for trusts in the Swiss legal system.”

Mr Isaac added that high net worth individuals (HNWI) coming to Switzerland expect a secure environment for the structuring and management of their wealth.

“It is therefore the clients who will benefit most from ratification as more and more HNWI will continue to place their confidence in the Swiss financial sector, opening bank accounts and viewing trusts as sound vehicles for wealth management,” he observed.

“It will also give additional international credibility and standing to Switzerland as a proper jurisdiction for wealth management activities in a context where Switzerland is too often the target of some EU and other countries."

“Switzerland is adjusting its existing rules so that Swiss law can now interact with trusts from a legal perspective."

“The Swiss Tax Conference is reviewing the tax treatment on trusts. While the taxation of settlors and beneficiaries in Switzerland is the most complex and sensitive part of the discussion I hope that trusts, which have non-resident settlors and beneficiaries but have Swiss trustees and/or are being administrated in Switzerland, will be treated on tax neutral basis."

The Report

Offshore Trusts Guide: Introduction

Offshore Trusts Guide: Jurisdictions

Bahamas Barbados Bermuda British Virgin Islands Cayman Islands Cook Islands Cyprus Gibraltar Guernsey Isle of Man Jersey Liechtenstein Madeira Malta Mauritius Monaco Nevis New Zealand Panama Seychelles Turks & Caicos Vanuatu


Offshore Trusts News

UK Announces COVID-19 Tax Breaks To Stimulate Economy
Friday 10/7/2020
In a bid to reinvigorate the UK economy and buoy property prices, Chancellor Rishi Sunak has announced plans to slash the VAT rate for the hospitality sector and offer temporary stamp duty relief.

COVID-19: Belgium Clarifies Tax Deadlines For Non-Resident Individuals
Thursday 25/6/2020
On June 24, 2020, the Belgian Ministry of Finance issued a clarification of tax payment deadlines for non-resident individuals after the tax authority issued tax statements with the wrong due dates.

COVID-19: New Zealand To Waive Individual Tax Bills Up To NZD200
Thursday 25/6/2020
The New Zealand Government has announced that it will provide tax relief for low-income earners by waiving nominal tax debts.

France Provides SMEs With More COVID-19 Tax Relief Measures
Thursday 25/6/2020
The French Government has presented to the Council of Ministers a third amendment to the Finance Bill for 2020, which provides additional support for businesses affected by the COVID-19 outbreak.

Italian Tax Agency Summarizes New COVID-19 Tax Support Measures
Thursday 28/5/2020
On May 21, 2020, the Italian Revenue Agency issued a summary of additional tax measures in Decree 34/2020, which are intended to further support taxpayers affected by the COVID-19 virus.

US House Passes COVID-19 Stimulus Bill With Tax Measures
Thursday 28/5/2020
On May 15, 2020, the United States House of Representatives approved the HEROES Act, which amends previous COVID-19-related stimulus legislation by changing loss carryback rules and providing further tax support for businesses and individuals.

Switzerland Launches New Tax Burden Calculation Tool
Thursday 28/5/2020
The Swiss Federal Department of Finance has announced the launch of a new online tool for individuals taxpayers, which is being developed also for legal entities.

No New Tax Announcements In New Zealand's 2020 Budget
Thursday 28/5/2020
New Zealand's new 2020 Budget, announced on May 14, highlighted recently enacted tax measures and announced the creation of a new NZD50bn COVID-19 Response and Recovery Fund.

France Announces COVID-19 Tax Support For Wine Industry
Friday 15/5/2020
On May 11, 2020, the French Government presented a COVID-19-related economic support package targeted at the nation's wine industry, which includes relief from social contributions.

Malaysia Issues FAQs On COVID-19 Tax Residency Issues
Friday 15/5/2020
The Government of Malaysia has issued new FAQs on international tax issues relating to COVID-19 travel restrictions.