CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.

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

Netherlands To Split Tax Agency
Wednesday 15/1/2020
On January 11, 2020, Dutch Minister of Finance Wopke Hoekstra informed the House of Representatives about the Government's plans to restructure the tax authorities.

Switzerland Simplifies Process For German WHT Refunds
Wednesday 15/1/2020
The Swiss Government has said that from January 31, individuals and legal entitles domiciled in Germany will be able to use an online Swiss application to request a refund of Swiss withholding tax.

Korea Enacts 2019 Tax Revision Bill
Wednesday 15/1/2020
The Korean Government has announced that the 2019 Tax Revision Bill was enacted on January 6, 2020, with a number of new measures added to the existing proposals.

IRS Launches Gig Economy Tax Center
Wednesday 15/1/2020
On January 9, 2019, the United States Internal Revenue Service announced the launch of a new Gig Economy Tax Center, which is intended to help taxpayers meet their tax obligations through more streamlined information.

Nigeria Offers Grace Period For Obtaining Tax Clearance Certificates
Wednesday 15/1/2020
The Executive Chairman of Nigeria's Federal Inland Revenue Service, Muhammad Nami, has signed a notice providing companies with an extra 30-day window to obtain a tax clearance certificate.

German FinMin Outlines 2020 Tax Changes
Tuesday 31/12/2019
The German Ministry of Finance has outlined a number of tax changes that are due to take effect in 2020 and 2021.

Luxembourg's 2020 Budget Approved By Parliament
Tuesday 31/12/2019
On December 19, 2019, Luxembourg's Chamber of Deputies approved the Government's Budget for 2020, which among other measures includes important changes to the validity of advanced tax rulings.

Tax Extenders Passed In US Spending Package
Monday 23/12/2019
On December 17, 2019, the United States House of Representatives passed a year-end spending package, which includes legislation extending numerous expired and expiring tax provisions, and repealing certain taxes introduced to help fund the Obamacare health care reforms.

Nigeria To Begin Tax Enforcement Campaign
Monday 23/12/2019
On December 17, 2019, Nigeria's Federal Inland Revenue Service issued a seven-day notice to tax defaulters and announced that it will soon begin a nationwide tax enforcement campaign in order to pursue those with unpaid taxes.

Belgium To Expedite VAT Refunds For Start-Ups
Tuesday 31/12/2019
On December 18, 2019, the Belgian Federal Public Finance Service announced that start-up companies can request accelerated refunds of value-added tax credits from January 1, 2020.