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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

EU Takes Action Against Spain Over Rules On Reporting Of Assets
Thursday 13/6/2019
The European Commission is taking Spain to the Court of Justice over the imposition of "disproportionate" sanctions for failure to report assets held abroad.

Hungary Announces Tax Cut Plan
Wednesday 5/6/2019
On May 31, 2019, the Hungarian Ministry of Finance announced numerous tax cuts as part of an economic growth plan.

Belgium Begins Accepting Personal Income Tax Returns
Friday 10/5/2019
On May 2, 2019, Belgium's finance ministry confirmed that the Tax-on-web portal has been opened for personal and corporate income tax returns for the 2019 fiscal year.

Austria To Cut Corporate Tax To 21pc By 2023
Friday 10/5/2019
Austria's Chancellor, Sebastian Kurz, has announced plans for significant tax cuts for businesses and individuals.

HMRC Loses High-Profile IR35 Case
Friday 10/5/2019
The UK tax agency, HM Revenue and Customs, has lost a significant ruling concerning the application of the IR35 intermediaries legislation.

NZ Accountants Welcome Tax Reform Decisions
Monday 29/4/2019
Chartered Accountants Australia and New Zealand (CA ANZ) has given a guarded welcome to the New Zealand Government's response to the recommendations of the Tax Working Group.

Barbados To Slash PIT Rates Through Indirect Tax Grab
Monday 15/4/2019
Barbados's 2019 Budget includes proposals to remove VAT input tax credits for various supplies, reform the personal income tax regime, and generate more revenues from property taxes and the gaming sector.

Denmark Seeking To Modernize Labor Tax Rules
Friday 5/4/2019
On March 25, 2019, the Danish Tax Ministry announced that it is studying ways in which the tax system can be adapted to new forms of employment and ways of working, with an emphasis on technological developments.

UK's Making Tax Digital Initiative To Cover Only VAT Until 2021
Tuesday 26/3/2019
British businesses have welcomed confirmation from the UK Government that Making Tax Digital will not be rolled out to other taxes and more businesses in 2020.

Canada Launches Tax Filing Season
Tuesday 26/2/2019
On February 19, the Canada Revenue Agency officially opened the 2019 tax filing season.