UPDATE ON INTERNATIONAL PLANNING ISSUES CYPRUS


Aggressive taxation and invasion of privacy


[ PAOLO PANICO ]


IN SOME CASES, onshore jurisdictions can offer much of the tax benefit of offshore trusts. The privacy of


the trust is also a consideration. The New Zealand foreign trust takes advantage of what was originally an anti- avoidance provision: it exempts trusts with foreign settlors and under some treaties is treated as New Zealand resident, but an Act of 2017 requires registration of full information, initially and annually, and this information may be exchanged with other tax authorities. Ireland treats a settlement made by a non-resident settlor with professional trustees as non-resident for capital gains tax. The Czech trust is treated as a corporate body, taxable at 19%; it is about to be relieved of tax on dividends, but will require registration on a register partially available to public authorities. The fourth AML Directive


ECJ decisions indicating that full disclosure infringes the right to


There have been some


private life


requires the enactment of legislation providing for registration of corporate entities and trusts, but limiting access to trust information. It is currently proposed that access be limited to persons with a legitimate interest, but the European Parliament would


like to go further. There have been some ECJ decisions indicating that full disclosure infringes the right to private life, and similar views have been expressed by the French Constitutional Court, and Germany, the Czech Republic, Ireland, Liechtenstein and Singapore are variously reacting to this conflict between law enforcement and privacy. In the United States, the US ‘foreign trust’ offers tax advantages, and private trusts will not be governed by the CDD rules for US financial intermediaries.


The Common Reporting Standard – issues that have cropped up for trustees and private clients


[ NIKLAS SCHMIDT ]


COUNTRIES ARE REQUIRED by the CRS to cause


banks to collect and return information from reporting financial institutions, which is then exchanged with other jurisdictions. The rules can be seen as invading the individual’s right to respect for private life. In one case, a Portuguese resident was the founder and beneficiary of an Austrian private foundation. The foundation was a passive NFE, and the ‘controlling persons’ were the founder and board members. In the second case, an Austrian resident took out a life insurance policy with the Austrian branch of a Luxembourg insurance company and no reporting was required. In the third case, an Austrian individual was a


non-discretional beneficiary of a Jersey trust. The beneficiary and the protector were reportable. In the fourth case, an Austrian resident set up a Liechtenstein foundation, which was transparent for Austrian tax. The foundation had to treat the founder’s interest as a reportable account.


right to respect for private life


The rules can be seen as invading the individual’s


European Parliament would like to go further


THE ITPA GREEN BOOK 2018 www.itpa.org


It is proposed that access be limited to persons with a legitimate interest, but the


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