MARCH 2016 LUXEMBOURG


The mid-shore option [ JAMES QUARMBY ]


A MID-SHORE JURISDICTION has less tax rather than no tax, and may have certain exemptions.


Messages from Brussels


[ TIMOTHY LYONS ]


DISCLOSURE of beneficial ownership emanated from


Brussels is to be reflected in national law. The Fourth Money Laundering Directive contains a definition of ‘beneficial owner’ in Article 14.6: it extends to people with control or management powers. Transparency is the key concept. Persons with ‘legitimate interests’ can have access to the information required to be held in the register. These requirements apply also in relation to trusts governed by the law of an EU state. The purpose of the directive is to control the undesirable aspects of freedom of movement of capital. From 1 January 2017 there will be an exchange of tax ruling between member states. The US is hostile to state aid, but the target of the rule against state aid is to protect other member states and the market: the relationship between the taxpayer and the state should, it is argued, be at arm’s length. ‘Tax good governance’


covers state aid but has a wider meaning: the Chapean Communication gives examples – avoiding aggressive tax planning. The massin message from Brussels is that if you are engaged in corporate tax avoidance, you are a target.


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The ITPA Green Book 2017 www.itpa.org


It has tax treaties. It ‘feels’ respectable – which is important nowadays: banks may refuse to deal with zero-tax jurisdictions. There are several push factors – the EU Savings Directive, CRS, FATCA, the register of beneficial owners: taxpayers fear that a connection with a zero-tax jurisdiction may lead to investigation. The US, UK, France and Italy have introduced harsh new penalties for ‘offshore tax evaders’. The UK Act imposes strict liability on taxpayers and penalises failure to prevent tax evasion and ‘offshore asset moves’. In the Murray Group case, the court observed that the tax in dispute was relevant to the national budget and made thus a reason for the taxpayer’s appeal to fail. A treaty network


The mid-shore jurisdiction ‘feels’ respectable - which is important nowadays.


indicates a greater certainty of tax outcome. Article 49 of TFEU offers freedom of establishment


and Article 63 offers free movement of capital; only an EU national can take advantage of these. (Stauffer decided that passive investment is not an establishment). There are treaty overrides, for example, in the UK, TCGA 1992 s10A, the Diverted Profits Tax and other measures. The top 10 interesting jurisdiction options are (10) USA – for example, for the foreign grantor trust, (9) Estonia, (8) Ireland – with the old UK remittance basis for the non-dom, (7) Cyprus – which has a participation exemption, (6) Barbados, (5) Mauritius, (4) Malta, (3) Singapore, (2) Luxembourg, and (1) UK.


Private insurance – cross-border planning


opportunities [ SIMON GORBUTT ]


‘PRIVATE INSURANCE’ is an insurance-based solution for


a private individual and his family. The global citizen needs insurance that is advantageous wherever he may be – for example, a Swede moving to the UK and subsequently retiring to France. Policyholders’ influence over policy investments is permitted in Sweden, but not in the UK or France. A policy may suit a US person resident in the UK, embodying provisions appropriate to both fiscal regimes. A policy can offer trust-like


outcomes without the tax burden of a trust – for example, a gift with restrictions which, for example, in the UK is nevertheless a PET. Insurance may serve to alleviate complexity or facilitate post-death planning.


A policy can offer trust-like outcomes without the tax burden of a trust


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