How are such structures and their settlors, founders, trustees, directors and beneficiaries treated for tax purposes?
Please refer to the response to Question No 19.
The tax treatment of the structure depends on its legal form as follows:
Non-profit legal entity conducting activity for public benefit, registered in the Central Registry of Non-profit Entities Conducting Activity for Public Benefit Donations made in favor of the entity would be exempt from donation tax and any income from donations would be exempt from CIT at the level of the entity.
Expenses for donations incurred at the level of a donating entity towards such non-profit legal entities would be deductible for CIT purposes up to 10% of its accounting profit before tax.
Non-profit legal entities conducting activity for public benefit are exempt from real estate transfer tax, vehicles transfer tax and inheritance tax as well.
Income from business activities (if any) of the non-profit legal entity (e.g. from rent, disposal of assets etc.) should be included in its overall tax base and thus be subject to 10% CIT.
Non-profit legal entity conducting activity for private benefit
Donations made in favor of such legal entity would be subject to local donation tax in the range of 3.3% - 6.6% (depending on the respective municipality) while income from donations would be exempt from CIT at the level of the entity.
Expenses for donations incurred at the level of a donating entity towards such non-profit legal entity will be non-deductible for CIT purposes.
Non-profit legal entities conducting activity for private benefit are not exempt from real estate transfer tax and vehicles transfer tax (in the range of 0.1%-3%) and inheritance tax (in the range of 3.3% - 6.6% on any inheritance share above BGN 250 thousand).
Income from business activities (if any) of the non-profit legal entity (e.g. from rent, disposal of assets etc.) should be included in its overall tax base and thus be subject to 10% CIT.
Non-personified entities are not considered transparent for CIT purposes in Bulgaria, thus any profits (both related to business transactions or received donations) realized by the entity would be subject to 10% CIT at the level of the non-personified entity.
Donations made in favor of the entity would be subject to local donation tax in the range of 3.3% - 6.6%.
Expenses for donations incurred at the level of a donating entity towards such non-personified entity would be non-deductible for CIT purposes.
Non-personified entities are not exempt from real estate transfer tax and vehicles transfer tax (in the range of 0.1%-3%) and inheritance tax (in the range of 3.3% - 6.6% on any inheritance share above BGN 250 thousand).
Taxation of dividends towards Bulgarian entities
Dividends distributed by Bulgarian entities towards Bulgarian non-commercial legal entities are subject to 5% Bulgarian withholding (“WHT”) on their gross amount. Any dividends distributed to Bulgarian commercial legal entities are exempt from WHT.
There is no special taxation regime envisaged for the individuals (settlors, founders, directors, etc.) They will be obliged to tax under the general rules of taxation on the effectively received income.
In high level terms, a private limited company will be subject to corporation tax at a rate of 12.5% on profits. Directors of the company will be subject to income tax, USC and PRSI on their salary (which taxes will be paid via the PAYE system). Shareholders, who receive dividends from the company may be subject to DWT.
In relation to Irish resident trusts, settlors will usually only suffer a tax charge in respect of bare trusts settled for the benefit of minor children. As noted in Question 22, settlors will be subject to tax in respect of offshore trusts under the Irish anti-tax avoidance legislation. Trustees will usually be subject to income tax and CGT in respect of the income and gains arising within the trust, unless the trust is a bare trust. The applicable rate of income tax for Irish resident trustees is 20%. Trustees will also be subject to discretionary trust tax in the case of discretionary trusts. Beneficiaries will be subject to CAT on capital appointments from the trust, and will be subject to income tax on income benefits received. Where the capital value received includes accumulated income, they will be subject to income tax in the first instance and CAT on the net benefit received.
A limited partnership will be treated as transparent for tax purposes, and the partners will be subject to income tax and capital gains tax on the profits and gains arising within the partnership in proportion to their interest in the partnership.
Domestic trusts are generally either ‘grantor trusts’ or ‘non-grantor trusts.’ Grantor trusts are trusts that are disregarded for income tax purposes, so that all items of income, gain, expense and loss are attributable to the grantor thereof and not to the trust. To be a grantor trust, the trust must contain certain IRS-approved provisions. Grantor trust status may confer beneficial treatment upon a trust in that all gains in the trust are taxed to the grantor and not to the trust, thereby allowing the trust to grow tax-free while it remains a grantor trust. There are ways in which grantor trust status may be turned off, so that future earnings are taxed to the trust. Grantor trust status ends upon the death of the grantor. Non-grantor trusts are taxed on their income and gains. Distributions from a non-grantor trust to a beneficiary generally carry out distributable net income (DNI) to the beneficiary. Because trust tax brackets are more compressed than those for individuals, carrying out DNI to a beneficiary may result in a lower tax than if the income were taxed at the trust level.
Generally, private foundations are required annually to pay out an amount equal to at least 5% of their assets for charitable purposes, which includes, for grant-making foundations, grants to public charities. In addition, private grant-making foundations must pay an excise tax of 2% of net investment income; that tax may be reduced by 1% if the annual payment for charitable purposes is increased by at least 1%.
Single member LLCs are not required to file US income tax returns; their income is taxed to their member. Multimember FLPs and LLCs are required to file US income tax returns and are subject to US income tax on their earnings; generally their income is passed out to their partners or members. For tax years beginning after December 31, 2017, certain non-corporate taxpayers, including multimember FLPs and LLCs, may deduct up to 20% of their "qualified business income" (generally, domestic business income from a "qualified trade or business") subject to certain limitations in calculating their taxable income.
Originally the only tax law referring to trusts was article 120.9 of the French tax code which provides that distributions of income made by trusts are assimilated to dividends from foreign sources. The Law of 29 July 2011 (Trust Tax Law) introduced a comprehensive wealth, gift and inheritance tax regime.
The tax regime of trusts currently applicable in France can be summarised as follows.
20.1 Income tax
Income tax on the trustee
Trustees investing in France in their capacity as trustees of foreign trusts are taxable on income and capital gains as apparent owners of the trusts’ assets. The applicable regime depends on the quality of the trustees. Individual trustees owning directly French assets are taxable in France as explained in 2.2. Corporate trustees are subject to the tax treatment applicable to foreign corporations.
Finally, when the trustees (individual trustees or corporate trustees) use intermediate companies to own French located assets (see our comments in § 21), the French tax treatment depends on the tax regime applicable to the intermediate company.
As a consequence, assuming, for example, a pass through French company (“société civile immobilière “SCI”) is used by the trustee to own a French real estate, individual income tax rules would apply if the trustee is an individual trustee and corporate tax rules would apply if the trustee is a corporation.
Rental income received by a corporation (French or foreign) is subject to corporation tax at the rate of 33.33 % (progressively reduced to 25% from 2018 to 2022). Because the taxable basis for corporate tax is determined in depreciating the building the taxation of rental income is as a general rule less expensive for corporation than for individuals despite the limitation of interest which only applies for corporation tax purposes.
Financial income received by foreign companies are subject to a withholding tax at the rate of 21 or 30%. Certain exemptions or reduction of rates apply depending on the country of residence of the companies.
Capital gains taxation is also different depending on the quality of the trustee (individual or corporation). Individual trustees are taxable as explained in §2.2. Corporate trustees are subject either to corporation tax at the current rate of 33.33% (progressively reduced to 25% from 2018 to 2022) or to withholding taxes depending on the nature of the capital gains realised and the country of residence of the trustee.
Income tax on the beneficiaries
When the income generated by the trust is distributed by the trustees to French resident beneficiaries either at the trustees’ discretion or because the beneficiaries have a vested entitlement to the income, the latter are subject to French tax under the provisions of Article 120-9° of the French Tax Code.
Distributions of capital or accumulated income and gains upon the death of the original settlor are not subject to income tax but to inheritance tax (see below).
According to this article, distributions made by trusts are assimilated to dividends from foreign sources currently subject to progressive income tax rates (up to 45%) and social contributions (at the rate of 15.5%) within the hands of beneficiaries who are resident in France.
As from January 1, 2018, it is likely that, irrespective of the nature of the income generated by the trust property (dividends, interest, capital gains…) distributions of trust income to French resident beneficiaries will be subject to income tax and social contributions at a flat rate of 30% (including income tax at the flat rate of 12.80% and social contributions at the rate of 17.20%).
Application of the CFC rules to trusts
Article 123 bis of the French tax code provides in substance for taxation, under specific conditions, of all undistributed income capitalized within “entities” established in low tax jurisdictions, in the hands of their beneficial owners who are French resident individuals.
The Constitutional Court ruled in a decision of 1st March 2017 that the difference in treatment depending on the jurisdiction where the “entity” is established were contrary to the principle of citizen’s equality before taxation.
As a result, French tax resident settlors and/or beneficiaries of non-EU trusts are now allowed to bring the proof that the trust was not created for tax avoidance purpose in order to avoid application of the CFC rules.
Similarly, assuming Article 123 bis of the French tax code should apply, French tax resident settlors and/or beneficiaries of trusts established in jurisdictions having no exchange of information agreement with France can now bring the proof that the trust’s real income is inferior to that determined by application of a theoretical rate of return.
As a conclusion, if properly created and managed, an irrevocable and discretionary trust prevent against the application of the French CFC rules provided by article 123 bis of the French tax code.
20.2 Wealth tax (ISF or IFI)
Up until December 31, 2011, according to case law, wealth tax (ISF at this time) was due neither by the settlor nor by the beneficiaries of a discretionary trust even when the trust held French assets. One of the main purpose of the Law was to close what the French tax authorities considered unsurprisingly to be a loophole.
As from January 1, 2012, assets or rights held in trusts (including irrevocable and discretionary trusts) as well as income or capital gains which are capitalized in said trusts are taxable in the hands of the original settlor or if he/she died in the hands of the beneficiaries thereafter deemed to be settlors irrespective of the nature of the trust.
The French resident settlors (or deemed settlors), currently, must therefore include in their ISF tax return the worldwide assets of the trust as if they were their own assets, irrespective of the terms of the trust and its characterization as revocable or irrevocable, even if they are not beneficiaries and/or do not receive any distributions.
In case of failure by the settlor (or deemed settlor) to comply with the ISF obligations of reporting and payment (when the tax is due) a sui generis tax applies at the flat rate of 1,50 % regardless of the value of the assets (as opposed to the wealth tax there is no threshold). The 1,50 % tax should be paid by the trustees before June 15 of the relevant tax year. If they do not pay the tax, the law provides that the beneficiaries are jointly liable to pay it.
As from January 1, 2018, it is likely that ISF will be replaced by IFI a tax on immovable property (see § 4.2.). Movable assets (including financial assets and pieces of art) held in trust, will then not be subject to wealth tax any longer. Only French real estate properties directly or indirectly own by the trust will remain subject to IFI in the hand of the settlors and deemed settlors of trusts. The sui generis tax will remain due assuming French real estate properties were not reported by the settlors or deemed settlor for IFI purposes.
20.3. Gift and inheritance tax regime applicable to trusts
The transfer of assets from the settlors to trusts is not treated as a taxable event for French gift tax purposes.
As from July 31, 2012, when a transfer of assets made through a trust is treated under civil law as a transfer on death (succession) or transfer inter vivos (donation), taxation occurs under the same regime which would apply in the absence of a trust. In other word upon distribution of the assets (including accumulated income) of the trust the beneficiaries should benefit from the standard tax-free allowances and tax rates corresponding to the family relationship between them and the settlor or deemed settlors (see § 5).
Even when no distribution occurs, the death of the settlor (or deemed settlors) is treated as a taxable event for inheritance tax purposes subject to the following rates:
- If at the date of the death the share of the assets which is due to a particular beneficiary is determined, this share is subject to inheritance tax according to the rates corresponding to the family relationship between the settlor (or deemed settlor) and the beneficiary. The trust’s assets have to be included in the inheritance tax return to be filed by the heirs.
- If at the date of the death a specific share of assets is globally due to the descendants of the settlor (and only to the descendants) these are subject to inheritance tax at the flat rate of 45%.
- If at the date of the death a specific share of assets is globally due to the surviving spouse of the settlor, no inheritance tax is due.
- In all other cases inheritance tax is due at the flat rate of 60 %. The rate of 60% also applies to trusts created by French resident settlors after May 11, 2011.
From an income tax perspective, (foreign law) trusts (resident or not) can be subject to three different regimes. They can be (i) separate taxable persons subject to corporate income tax; (ii) subject to a transparency regime whereby the income of the trust is computed at the level of the trust but then imputed to the beneficiary (if the beneficiary has a right to the trust income); or (iii) wholly disregarded (this is the case for e.g. revocable trusts). From an inheritance and gift tax perspective, according to the tax authorities’ view, the addition of assets to the trust fund is a taxable event. Tax rates and exempt amounts are computed on the basis of the family relationship between the settlor and the beneficiaries.
Italian non-commercial partnerships are subject to a transparency regime, which allows to preserve certain beneficial features of individual taxation (e.g. flat rates on most income and gains from financial assets and no taxation of capital gains on real property after a 5-year holding period).
Trusts have been taxable in Israel since 2006. Under the Israeli tax law trusts there are different types of trusts, as follow:
Israeli Residents Trust:
An Israeli Resident Trust is defined as a trust in which either (a) in the year it was formed it had at least one Israeli resident settlor and one Israeli resident beneficiary and in the tax year at least one beneficiary is an Israeli resident; or (b) all its settlors died and it has at least one Israeli beneficiary. In addition trusts that do not fall into one of the other existing categories are treated as Israeli resident trusts.
Taxation: An Israeli Resident Trust is subject to tax and reporting on its entire worldwide income. The transfer of assets to an Israeli Resident Trust for no consideration is generally not considered a tax event in Israel. Distributions from an Israeli Resident Trust are viewed as having been transferred from the settlor directly to the beneficiaries. Distributions for no consideration will be treated as was gifted to the beneficiaries by the settlor. If the beneficiary is an Israeli resident then the distribution should be tax exempt, since gifts between Israeli residents are generally tax free. If the distribution is a non-cash gift to a foreign resident, it is generally treated as a taxable deemed sale at the fair market value of the asset.
Israeli beneficiary trust
An Israeli Beneficiary Trust is a trust which:
(i) all of it settlers were non-Israeli residents who continued to be foreign residents from the day on which the trust was established until the relevant tax year; and
(ii) has at least one Israeli beneficiary. In addition, if all Israeli resident beneficiaries are close relatives of the living settlor(s) and the required notification is given to the ITA, the trust is classified as a relatives trust.
Taxation: If an Israeli Beneficiary Trust does not comply with the above conditions, it will be considered to be an Israeli Resident Trust and subject to tax on its worldwide income.
If the trust complies with the above conditions and classified as a relatives trust, it will be taxed at a rate of 30% on the income proportion of the distributions to Israeli beneficiaries. The trustee may elect to be taxed at a rate of 25% on its current income and gains with respect to the portion of the income attributable to Israeli beneficiaries. The election is irrevocable.
Foreign Resident Trust
A Foreign Resident Trust is defined as a trust in which:
(a) all the settlors are either non-Israeli residents or are deceased; and
(b) all its beneficiaries are non-Israeli residents or Public Interest Beneficiaries.
Taxation: A Foreign Resident Trust is treated as a foreign resident for tax purposes and therefore subject to tax and reporting obligations only to the extent that it recognised Israeli sourced income.
Foreign Beneficiary Trust
This is an irrevocable trust that is not an Israeli resident trust, where the beneficiaries are all identifiable foreign residents and at least one settlor is, or was at the date of death, an Israeli tax resident.
Taxation: A Foreign Beneficiary Trust is treated as a foreign resident for tax purposes and therefore subject to tax and reporting obligations only to the extent that it realises Israeli sourced income. However, if the trust is not obligated to reporting in Israel, the trustee must submit a declaration to the ITA each year confirming its status as such.
A Testamentary Trust is defined as a trust that meets the following two conditions:
(a) The trust was settled under a last will and testament;
(b) All of the settlors were testators who were Israeli residents at the time of their death.
If all the beneficiaries of a Testamentary Trust are non-Israeli residents, the trust will become a Foreign Resident Testamentary Trust.
A Foreign Resident Testamentary Trust is considered a foreign tax resident in Israel and subject to tax and reporting only to the extent that it realises Israeli sourced income. If there is even one Israeli beneficiary in the trust, it will become an Israeli Resident Testamentary Trust and remain subject to tax and reporting on all of its worldwide income.
From a tax perspective, the inheritor is classified as the individual holding usufruct rights on the property upon which the “inheritance trust” was established, while the trustee as the individual holding bare ownership rights upon that same property.
As such, any income generated by leasing the property upon which the “inheritance trust” is established will be taxed as income from leases [analyzed in question 2 above] in the inheritor’s name.
Non-charitable foundations with German residence are subject to German corporate tax (about 15,8% including the solidarity surcharge). However, a participation exemption may apply for shareholdings in corporations. Transfers of the founders to the foundation may trigger gift tax (however, business property relief may apply). A distribution of income to beneficiaries will be taxed just like a dividend; withholding tax will apply. There is no special tax regime for family companies or partnerships. The taxation of the entity and its shareholders/partners will depend on various factors, including the legal form of the entity and the assets held in the individual case.
A civil/family partnership is a tax transparent entity. Income and capital gains will be taxed directly in the hands of its partners as if the underlying assets were held directly by them.
British Virgin Islands
See the answer to question 19 above in relation to BVI trust duty. Trust instruments which establish merely bare trusts or trusts for exclusively charitable purposes are exempt from such duty.
As indicated above there is no inheritance, capital gains or estate tax in the BVI and income tax is zero-rated.
Businesses operating in the BVI are subject to payroll tax: see the answer to question 9 above.
There are furthermore wide exemptions from tax in section 90 of the Trustee Act: these include exemptions from stamp duty, but they will only apply if the trust’s assets, or its underlying assets, do not include BVI land and if the trustees do not (in their capacity as trustees rather than in their personal i.e. professional capacity) do not carry on a business or trade in the jurisdiction.
All structures within Dubai are tax neutral.
It is possible to establish New Zealand resident trusts which are exempt from New Zealand taxation. The key to the taxation of New Zealand resident trusts is the residence of the settlor rather than the residence of the trustees (unlike many other countries). Under a foreign trust, there is no income tax provided it is not New Zealand sourced.
Foreign-sourced amounts derived by a trustee, where there is no resident settlor, are generally not taxed in New Zealand (provided registration requirements are complied with by the resident trustee). Foreign-sourced amounts distributed to non-resident beneficiaries are also not subject to tax in New Zealand unless they are included in a taxable distribution made by a non-complying trust.
New Zealand LPs are transparent for tax purposes, the IRD will attribute the partnership’s activities to the underlying partners in proportion to their partnership interests. Provided the partnership does not carry on a business in New Zealand, the non-resident limited partner is not taxed in New Zealand, and the income of the partnership is attributable to the limited partner, then the partnership itself will not pay tax in New Zealand.
- Trusts settled in Monaco under Law 214
The settlement of trusts and/or the transfer of a foreign trust to Monaco under Law n°214 triggers stamp duties in Monaco. Article 7 of Law n°214 states that a deed of trust resulting from the creation or the transfer of foreign trusts to Monaco is subject to a stamp duty of 1,3% if there is only one beneficiary, 1,5% if there are two beneficiaries, 1,7% if there are more than two beneficiaries.
Alternatively, at the party’s request, an annual tax of 0.20% of the value of the trust assets may be paid.
If the assets settled into trust are shares of Monegasque companies, stamp duties ranging from 0.05% to 0.45% depending on the number of beneficiaries are due on the value of the shares.
Finally, since there is no capital gains nor income tax in Monaco, the beneficiaries domiciled in Monaco (except for French citizens) will not be liable for any tax.
Under Law 1.381 of 29 June 2011, trusts holding real property rights on immovable assets located in Monaco are subject to transfer tax in Monaco (see question 8 above).
- Single and Multi-family offices:
Single family offices, as civil SAM, are generally not subject to business profit tax.
Multi-family offices are generally subject to company taxes and VAT.
Finally, since there is no direct tax in Monaco, directors and shareholders domiciled in Monaco are not liable for any income or capital gains tax on their remuneration, they are only liable to Monegasque social contributions if applicable.
Please see answers in question 18 above.
20.1 The tax treatment of settlors (§19.1), trustees (§19.1) and beneficiaries (§19.1) of a trust (§19.1) (other than a bare trust (§19.2)) depends in the first place on whether they are UK-resident (§1.5-1.7; §20.5) and, in the case of settlors and beneficiaries, whether they are domiciled (§1.9), deemed domiciled (§1.10) or deemed domiciled for inheritance tax purposes (§5.9) in the UK. Property held on a bare trust is treated for tax purposes as belonging to the beneficiaries, and the rules described below do not apply to bare trusts.
20.2 In general, the non-UK assets of a trust, provided the trust was funded by a settlor (§20.1) who (at the time of the funding) was neither domiciled (§1.9) nor deemed domiciled for inheritance tax purposes (§5.9) in the UK, fall outside the scope of inheritance tax (§5), and this continues to be the case even if the settlor later becomes domiciled or deemed domiciled for inheritance tax purposes in the UK (unless he is a formerly domiciled resident (§5.9)). For this purpose, non-UK assets representing the value of UK residential property are generally treated as UK assets.
20.3 On the other hand, a trust which holds UK assets (or non-UK assets representing the value of UK residential property), or which was funded by a settlor (§20.1) who (at the time of the funding) was domiciled (§1.9) or deemed domiciled for inheritance tax purposes (§5.9) in the UK or who is a formerly domiciled resident, is generally subject to inheritance tax (§5) charges every 10 years and when assets are distributed to beneficiaries (§19.1) otherwise than as income. However, if such a trust is a life interest trust (§19.2) created before 22 March 2006, or a life interest trust created under a Will or for a disabled person, the property of the trust might not be subject to these charges every 10 years and on distributions, and might instead be treated for the purposes of inheritance tax as included in the estate (§5.3) of the beneficiary entitled to the life interest.
20.4 If the settlor (§19.1) is UK-resident (§1.5-1.7) and he or his spouse or civil partner can benefit from the trust, or a minor child of the settlor actually benefits from income (including accumulated income) of the trust, or the trustees (§19.1) make a loan or repay a loan to the settlor or his spouse or civil partner, then income arising to the trustees is generally charged to income tax (§2.1) on the settlor, unless the income has a non-UK source and is protected by the settlor's claim for the remittance basis (§10) in each relevant tax year (§2.13).
20.5 Where the trustees (§19.1) are UK-resident (which will be the case if, for example, they are individuals who are all UK-resident (§1.5-1.7) or where the only trustee is a company which is resident in the UK for tax purposes), they are generally subject to income tax (§2.1) and capital gains tax (§2.6) in a broadly similar way to individuals but sometimes at higher effective rates, with the trustees' precise income tax treatment depending in part on whether the trust is a life interest trust (§19.2). There are rules to prevent double taxation where the settlor (§19.1) also suffers income tax on the trustees' income under the rule described in §20.4.
20.6 Where the trustees (§19.1) are not UK-resident (which will be the case if, for example, they are individuals none of whom is UK-resident (§1.5-1.7) or where the only trustee is a company which is not resident in the UK for tax purposes and does not have a UK permanent establishment) and do not realise UK-source income or dispose of certain kinds of UK assets (such as UK residential property), charges to income tax (§2.1) and capital gains tax (§2.6) do not fall on the trustees themselves, but may in certain circumstances fall on the settlor (§19.1) or beneficiaries (§19.1) instead. For example, if a settlor is UK-resident and domiciled (§1.9) or deemed domiciled (§1.10) in the UK, chargeable gains (§2.7) arising (or deemed to arise (§20.7; §20.8)) to the non-UK resident trustees are generally charged on the settlor, failing which they can be charged on UK-resident beneficiaries who receive (or have received) benefits not charged to income tax (unless those beneficiaries are protected by the remittance basis (§10) and the benefits are not remitted to the UK (§10.3)). Similarly, income which has arisen to non-UK resident trustees and is not charged to income tax on the settlor under the rules described in §20.4 (and income which has arisen to a non-UK company owned or ultimately owned by such trustees) may be charged on a UK-resident settlor who (or whose spouse or civil partner) can benefit directly or indirectly from that income, or else may be charged on a UK-resident beneficiary who does so benefit, in each case subject to the potential protection of the remittance basis. There exists some protection from the charges described in this paragraph for a settlor who is deemed domiciled, but is not domiciled, in the UK and is not a formerly domiciled resident (§5.9), but the protection is lost if, for example, the settlor adds further property to the trust. Protection from some of the income tax charges described in this paragraph may also be available if the arrangements were genuinely commercial and did not have a tax-avoidance purpose. The above rules are expected to be amended with effect from 6 April 2018 (§27.2).
20.7 Trustees (§19.1) are generally deemed for the purposes of capital gains tax (§2.6) to make a disposal (§2.8) at market value of any asset which is distributed to a beneficiary (§19.1) (or to which a beneficiary becomes absolutely entitled), in which case the beneficiary takes the asset with a base cost equal to that value. However, where the distribution of the asset attracts a charge to inheritance tax under the rules described in §20.3, it may be possible to elect for the beneficiary to take the asset at the trustees' base cost, so that capital gains tax is deferred.
20.8 In some circumstances a capital gain arising to a non-UK resident company is attributed to trustees (§19.1) or UK-resident (§1.5-1.7) individuals who are shareholders or creditors of the company, subject to reliefs for commercial arrangements.
20.9 A partnership is generally treated as transparent for UK tax purposes so that, broadly, the partners are taxed on the profits of the partnership in proportion to their rights to share in those profits.
20.10 Directors of a company, and individuals (known as "shadow directors") with significant influence over such directors, generally suffer income tax (§2.1) as if they were employees on the remuneration and other benefits that they receive from the company.