CURRENT ISSUES 2014-2015


CURRENT ISSUES


ITPA meetings always provide a useful – and quite unparalleled – insight into the specialist aspects of international tax planning. If you’ve never been to one here’s a brief round-up of what you’ve been missing…


Double British


AN INDIVIDUAL, RESIDENT and domiciled outside the


United Kingdom, owns an offshore company that in turns owns a UK- resident company. The individual settles the sum to be invested on both companies as trustees, on trust to pay the income to the UK company for its own benefit and subject thereto for the offshore company. The two companies agree that trust investments will be made by the UK company as joint trustee. Dividends flowing from UK companies and companies in treaty countries are beneficially owned by the UK company and not subject to tax in the United Kingdom. But the UK company is a ‘resident of the United Kingdom’ for treaty purpose and is entitled to receive dividends from treaty countries with no withholding tax or a lower rate of withholding tax, as prescribed by the relevant treaties. The UK company makes an onward declaration of dividend to the offshore company – there being no


tax liability on the way, since the United Kingdom does not charge tax on outward-flowing dividends. When the capital gain is ultimately realised, this accrues to the UK company as joint trustee, which can if necessary take advantage of the capital gains article in the relevant treaty. I like to call this structure the ‘Double British’: the UK company is acting in two capacities. It receives as beneficial owner the dividends arising from the trust investments, and enjoys the UK’s benign corporation tax regime for companies receiving and paying dividends. It receives the capital gains from the sale of trust investments as trustee of a settlement made by a non-resident settlor and enjoys the UK’s equally benign capital gains tax regime on gains arising from the sale of the trust investments. And the company has treaty protection in both capacities.


[ MILTON GRUNDY, from THE ANATOMY OF TAX PLANNING,


(AMSTERDAM) ] Registered trusts


CAN YOU REGISTER A TRUST? WELL, THE INGENIOUS draftsman of the 1967 Cayman Trust Law provided


for just that. It’s called an Exempted Trust... In the Cayman Islands you can still register your trust, and you can do the same in Belize. You can do the same in Gibraltar, I believe. That is, simply recording the existence of the trust. It give you a piece of paper that shows the trust is alive and well in that particular jurisdiction.


[ RICHARD PEASE from THE REGULATORY OUTLOOK, (AMSTERDAM) ]


The ITPA Green Book 2016 www.itpa.org


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