Are foreign trusts, private foundations etc recognised?
Private Client (3rd edition)
There are no civil or commercial regulations regarding the estab¬lishment of common law trusts or private foundations in Colombia. However, common law trusts are recognised by Colombian law and tax authorities.
Foreign law trusts are recognised pursuant to the Hague Convention on the Law Applicable to Trusts and on their Recognition (hereinafter “the Hague Convention”), which was ratified by Italy in 1989. Foreign family foundations are recognised too.
Foreign Trusts and private foundations are recognised in Cyprus.
a. Trusts governed by foreign law is recognised in Hong Kong pursuant to the Recognition of Trusts Ordinance. An ordinance enacted to enable the Hague Convention on the law applicable to trusts and on their recognition to apply to Hong Kong. There is however no equivalent legislation in Hong Kong with respect to the recognition of foreign private foundation.
Mexican Federal Civil Code establishes that legal situations validly created in a foreign State in accordance with their law shall be recognized.
Consequently, foreign structures validly created under foreign law are recognized for Mexican legal purposes, so in principle, foreign trusts and private foundations are recognized in Mexico (as long as they have been validly created in their country of incorporation), and will receive the legal treatment that corresponds to them depending on the nature that they have in their place of incorporation.
Thus, if the trust is considered as a legal entity with legal personality and its own assets in the place of its incorporation, it will also be considered as a legal entity in Mexico, receiving the corresponding legal treatment.
On the other hand, if the trust is considered in its place of incorporation as a contract, that same nature will be respected in Mexico. In this case, it is important to mention that the legal effects of the contracts will be governed by the law of the place where they should be executed, so if the effects of such foreign trusts will be executed in Mexico, they shall be subject to Mexican legislation.
Similarly, private foundations are recognized in Mexican law, having the corresponding effects depending on their legal nature according to their place of incorporation.
Yes, foreign trusts are recognised in India. Private foundations on the other hand are not recognised in India. A private foundation may be classified as a corporation (having a separate legal personality) or a trust depending on its structure. If it is classified as a trust and has trustees or beneficiaries in India, the income of the foundation may be subject to tax in India.
Yes, foreign trusts and private foundations are recognised in Liechtenstein.
Liechtenstein is a party to the Hague Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition (‘HTC’).
Yes (see Question 18 above for foreign trusts).
As mentioned in point 18 above, trusts are not recognized by Polish law and Poland is not a signatory of the 1985 Hague Convention on the Law Applicable to Trusts and on their Recognition. Therefore, the transfer of assets to a trust would most likely be deemed by Polish courts as a donation made in violation of the heirs’ rights and therefore - treated as the estate – would constitute a base for calculating compulsory shares.
In general, a person entitled to a compulsory portion of the estate is entitled to have his/her claim augmented if assets are transferred to a trust within 10 years prior to the succession event.
However, foreign private foundations are recognized just as any other foreign legal entities.
From a tax perspective, such structures are qualified as ‘fiduciary structures’.
Despite the absence of the concept of "trust" in domestic Russian law, foreign trusts, nevertheless, can be recognised in Russia on the basis of the provisions of the Civil Code which allow to apply foreign law to civil relations between Russian citizens if such relations are complicated by a foreign element and do not contravene the mandatory provisions of Russian law (including the public policy). An example of a mandatory rule may be the application of Russian succession laws towards inheritance of real estate registered in the state register of Russia (Art. 1214 of the Civil Code) and the rules relating to the priority of succession and forced heirship (See the question 12 above). As long as the terms of the foreign trust do not contravene mandatory provisions of Russian law it is possible that Russian courts may respect the freedom of choice of applicable law and may recognize application of foreign trust law to the property and parties in question. However, it is also possible that a trust arrangement will not be recognized, especially if the court finds that the arrangement was used to attempt to avoid application of mandatory provisions of the Russian law.
Foreign endowments, foundations and similar organisations are recognised by Serbian law if they satisfy the conditions from a definition of a foreign endowment or foundation, namely that they are legal persons without members, having such status in accordance with the law of the country in which they are established and which law governs their operation, and that they have public benefit purpose or other purpose which is not contrary to the Constitution and laws of Serbia.
Foreign endowments and foundations and similar organisations that meet the above conditions may operate in Serbia through registered representative offices.
Switzerland does not have a Swiss domestic trust. However, it is a member of the Hague Convention on the Law Applicable to Trusts and on their Recognition and has a long tradition in dealing with foreign trusts.
Foreign foundations and other entities are recognized in Switzerland if they are duly organized according to the governing foreign law.
Foreign trusts are recognized but are disfavoured for US beneficiaries or grantors. There is a heavy reporting burden for US Persons who establish or are beneficiaries of a foreign trust. Foreign private foundations are recognized, but are taxed differently depending on whether they are charitable foundations or are privately-owned.
Foreign trusts and private foundations are recognised in Singapore.
Foreign trust, private foundations and establishment are all legal structures that are recognised in Israel.
Although it is impossible to create a trust under French law and France has not ratified the Hague convention on the recognition of trusts, French courts recognise the effects in France of common law trusts, provided they comply with the mandatory provisions of French law.
However, because there is no distinction in French law between legal and equitable ownership acquiring an asset located in France by a trustee may entail difficulties.
The real estate registry (“registre cadastral”) cannot register the acquisition of a French real estate by an individual or a corporate acting in her/his/its capacity as trustee. This can be achieved by interposing at least one company between the French real estate properties and the trust represented by its trustee.
The ownership of French movable assets may also entail difficulties as the trustee is treated as the apparent owner of any trust’s assets located in France. This is the additional reason why the authors strongly recommend to interpose at least one company between the French movable assets and the trustee representing a foreign trust.
Trusts are generally not recognised in Germany (see question 18). Income received by a foreign trust may be attributed to the settlor or the beneficiaries if they are German residents.
English law recognises trusts (§19.2) and private foundations established under non English law.