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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

Skilled Foreigners Being Turned Away For UK Visas
Monday 18/6/2018
Lower-paid medical practitioners are increasingly having their request for UK working visas rejected, as a result of immigration quotas.

Hong Kong Issues Tax Compliance Guide For Property Owners
Thursday 14/6/2018
On June 14, 2018, Hong Kong's Inland Revenue Department released guidance on the tax obligations of landlords.

Tax Deadline Approaching For Americans Abroad
Thursday 14/6/2018
The United States Internal Revenue Service has summarized the reporting and filing requirements for taxpayers living and working abroad, with the June 15, 2018, deadline for 2017 federal income tax returns now approaching.

First Tax-Deferred Pension Scheme Launched In China
Thursday 14/6/2018
China's Government announced recently that a local insurance company had issued the country's first tax-deferred pension insurance policy, saying it marked the beginning of tax-deferred pension plans in China.

Surveys Suggest Taxpayers Satisfied With TCJA, Says Hatch
Tuesday 5/6/2018
Both large and small businesses in the United States expect the measures included in the recently enacted tax reform legislation, the Tax Cuts and Jobs Act of 2017, to have a positive effect on their operations, according to Senate Finance Committee Chairman Orrin Hatch.

Australia Planning June Vote On Corporate Tax Cut Package
Monday 28/5/2018
The Australian Government will put its company tax reforms before the Senate in June, with the aim of securing a vote by the 28th.

US CPAs Recommend Easing Tax Rules On Partners Of Audited Firms
Tuesday 22/5/2018
The American Institute of Certified Public Accountants has recommended that proposed regulations regarding the Centralized Partnership Audit Regime should provide "maximum flexibility" in adjusting the tax attributes of an audited partnership and its partners.

UK Mulling Extending Recent IR35 Reforms To Private Sector
Tuesday 22/5/2018
On May 18, 2018, the UK Government launched a consultation on enhancing rules surrounding "off-payroll" working (the IR35 rules), to ensure that contractors who work through their own company pay the right tax.

Think Tank Argues Against UK 'Robot Tax'
Tuesday 29/5/2018
In a new report, the Institute of Economic Affairs in the UK has argued against the need for the UK to introduce a so-called "robot tax," on profits from automation.

HK's Legislature Passes 2018/19 Budget Bill
Thursday 17/5/2018
Hong Kong's Secretary for Financial Services and the Treasury, James Lau, has welcomed the recent passage of the 2018/19 Budget Bill through the special administrative region's parliament.