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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

Ukrainian Corporate Tax Reform Plans Shelved
Friday 14/12/2018
Ukraine has reportedly postponed consideration of a bill that would reform the country's corporate tax system to shift the burden of tax from company profits to distributions.

UK Urged To Drop Plan To Extend Offshore Tax Limitations Period
Friday 30/11/2018
The UK Parliament's Economic Affairs Finance Bill Sub-Committee has proposed that provisions should be stripped from the Finance Bill that would extend the time limit on assessing offshore tax to 12 years.

UK Urged To Push Back Making Tax Digital Agenda
Friday 30/11/2018
In a new report released on November 22, 2018, the UK's Economic Affairs Committee called for a one-year delay to the implementation date of Making Tax Digital for VAT.

Germany's Bundestag Approves VAT Reforms
Friday 16/11/2018
Germany's parliament, the Bundestag, has approved the introduction of new value-added tax rules for online marketplaces.

UK To Shutter Second Home Tax Avoidance 'Loophole'
Friday 9/11/2018
The UK Government has announced its intention to tackle the use of a commercial property tax (business rates) exemption, intended only for small businesses, by second-home owners to avoid paying residential property tax (Council Tax) on those homes.

UK Announces Digital Tax, Corporate Tax Reforms In New Budget
Friday 2/11/2018
The UK's 2018 Budget includes changes to tax rules for companies, and notably for multinational groups to conform with the EU's Anti Tax Avoidance Directive. Most significantly, the UK has decided to move ahead of the EU in announcing that it will apply a tax on the turnover of certain digital businesses.

Jersey Tables Legislation For New Economic Substance Rules
Monday 29/10/2018
The Jersey Government has announced that it will release for public consultation guidance notes on the introduction of a new economic substance requirement for certain taxpayers to access Jersey's tax regime.

Australian SME Tax Cuts Now Law
Monday 29/10/2018
Legislation to reduce Australia's small business tax rate received Royal Assent on October 25.

Canada To Push Ahead With Carbon Tax Plans
Monday 29/10/2018
Canada's federal Government has announced that it will impose a carbon price in Ontario, New Brunswick, Manitoba, and Saskatchewan in 2019.

EU Tells Italy To Revise 2019 Budget Plan
Friday 26/10/2018
On October 23, 2018, the European Commission issued a request to the Italian Government that it revise its draft budgetary plan for 2019 because it breaches European Union fiscal rules.