How is any such structure constituted, what are the main rules that govern it, is there any requirement for registration with or disclosure to any authority or regulator, and what information about the structure is available to the public?
Тhe Bulgarian Non-profit Legal Entities Act of 2000 provides for the possibility to establish a private foundation (one that pursues private rather than public purposes) by a unilateral act of incorporation, either during one’s lifetime or upon one’s death by which the property is provided free of charge in order to achieve the envisaged non-profit purpose, which may be of a different nature – environmental, educational, sports, etc.
The foundation is a separate legal entity. The main information regarding the foundation, seat and management address, its purpose, government bodies and the names of the members of these bodies, etc. is publicly available in the register of Non-Profit Legal Entities. The following documents are also subject to entry in the register of Non-Profit Legal Entities: the act of incorporation, which specifies the foundation’s property upon its incorporation, the financial statements and decisions changes regarding the foundation.
The establishment of Bulgarian companies is regulated by the Bulgarian Commerce Act of 1991. The most common types of companies are the limited liability company and the joint stock company. The information on the shareholders in a joint stock company is not publicly available in the Commercial Registry, in which companies in Bulgaria are registered.
All three structures referred to above are governed firstly by common law and secondly by specific statutory enactments.
The private limited company is constituted by the subscription of the shareholders to a constitution (formerly a memorandum and articles of association). The constitution must be filed, together with a Form A1, with the Companies Registration Office in Ireland in order for the company to be validly incorporated. A copy of the constitution will be available to members of the public. Following implementation of certain aspects of Article 30 of the Fourth Anti-Money Laundering Directive (EU 2015/ 849), by virtue of the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 which came into operation on 15 November 2016, all companies must keep a register of beneficial ownership. In due course, companies will be required to file this information with a central beneficial ownership register.
A trust will normally be established either by an express deed or declaration of trust, or under the will of a testator. For a trust to be valid, there must exist three certainties: certainty of intention, certainty of subject matter and certainty of objects. With regard to a class of discretionary objects, it is necessary that it can be ascertained whether a particular person is or is not a beneficiary at any given time. There is no governmental registration requirement. There is no central register of beneficial ownership or interests.
A partnership will normally be formed by written agreement executed by the partners, and usually under seal, but a partnership can come into existence by oral agreement or indeed by the conduct of the parties. A limited partnership must be registered with the CRO.
Domestic trust structures, including trusts with a charitable component, are created pursuant to the governing law of a state or other jurisdiction of the US. The various states compete against each other to provide favourable trust law (including the extension or repeal of the rule against perpetuities, the limiting of beneficiaries’ rights to receive information on trust assets, and the creation of favourable laws relating to trustees and protectors) and tax law to attract trust business. Generally, the creation of a domestic trust does not require the filing of the trust instrument with any governing authority or regulator, and the trust may remain private. If a US gift tax return is filed to report a gift or sale to a trust, it is common to include a copy of the trust instrument with the return. US gift tax returns are confidential and not subject to public exhibition. US income tax returns that may be required for domestic trusts are likewise confidential.
As in the case of trusts, domestic private foundations, FLPs and FLLCs are created pursuant to the governing law of a state or other jurisdiction of the US; and the various states compete against each other to provide favourable partnership and corporate law applicable to these entities. Private foundations may be formed as a trust or as a corporation (the latter provides additional flexibility and less court oversight), and in general, the creation of a private foundation or FLP or FLLC requires the filing of a certificate of incorporation or of limited partnership with the office of the Secretary of State of the chosen state. Annual tax reporting must be made to the IRS and, depending upon the chosen state, may be required to be made to the state. Annual information returns filed by a private foundation with the IRS are public documents. Annual income tax returns of FLPs and FLLCs are confidential.
In order to be efficient, any structure of ownership should be carefully designed and taking into consideration the family members’ personal situation, the importance of the wealth, the nature and location of the assets as well as the objectives of the family.
As already explained, all trusts and companies used in the ownership structure should be properly set up and managed. They should also have another reason than reducing or avoiding taxes.
As a general rule, any trusts, private foundations, French companies involved in the structure of ownership having a connection with France should be disclosed.
The disclosure regime of trusts (which also include foundations and any similar arrangement) illustrates the of the French tax authorities’ appetite for receiving information.
As from January 1, 2012, if the settlor or one of the beneficiaries is resident in France or if the trust fund contains French assets, the trustee must disclose to the French tax authorities the formation of the trust, any variation of its terms and its termination as well as the market value of the trust assets on the 1st January of each year.
The French Constitutional Court, in a decision dated March 16, 2017, held that the proportional penalties of 5% and 12,5% of the trust’s assets value due in case of absence of reporting were unconstitutional, as disproportionate in regards to the infringement they sought to sanction. As a consequence, as from December 31, 2016, failing to comply with the above reporting requirements triggers the application of a fixed penalty amounting to € 20,000 per missing return ( € 10,000 before December 8, 2013).
In addition, failing to report may also give rise to an additional 80% surcharge (with a minimum of € 20,000) applying to all French tax consequences bearing on the trustee(s), the settlor(s) or the beneficiarie(s) – income tax, wealth tax (ISF and/or IFI), inheritance/gift tax, trustees’ specific 1.5% levy – which may be due in respect of the trust assets and distributions or reportable modifications which may have occurred.
The French Constitutional Court, in a decision dated 21 October 2016 held that the register of trusts cannot be available to the public on the ground that it would allow anyone, in violation to the fundamental right of privacy, to collect information in relation to the settlors and beneficiaries of French connected trusts, as well as in relation to the trust itself. The register is now only accessible to certain authorities such as the French tax authorities, the judicial authorities or the customs.
The Italian Civil Code does not regulate the trust, (but trusts regulated by foreign laws can be recognised in Italy; see 21).
Italian foundations may be created to achieve purposes of social benefit, not to pursue the segregation and conservation of family wealth.
The Italian non-commercial partnership (società semplice) is widely used to hold assets including real estate. The partnership agreement can be structured in a very flexible way. The splitting of voting rights from profit participation rights may be achieved. Individuals other than family members may be prevented from acquiring an interest in the partnership and from being involved in the management of the assets.
See Question 18.
The Greek law “inheritance trust” is constituted via the testator’s will.
There is no registry or provision for disclosure to any authority of the “inheritance trust” and no information about the structure is available to the public, apart from standard filing of the property’s rights [usufruct and bare ownership] before the publicly accessed land registry [listed and tracked by individuals’ names] or cadastre [listed and tracked by property’s location as well as by individuals’ names].
A private foundation needs to be approved by the foundation supervisory authority (“Stiftungsaufsicht”). It is subject to the rules established in its articles and certain statutory provisions. The beneficial owners of such a foundation need to be registered in the transparency register which has been established on 1 October 2017 and is open to any individual with a legitimate interest.
Family companies and partnerships need to be registered with the commercial register. However, the legal regimes are different: Generally speaking, the legal regime of a partnership is more flexible compared to the one of a company. In contrast to family partnerships and private foundations the articles of association of family companies need to be notarised and are available to the public through the commercial register.
A civil/family partnership can be constituted by signing a private deed. It has no legal personality and is subject to only a limited number of legal provisions, which leaves the partners a great deal of flexibility to organise it as they wish. It is also a very discrete entity since neither its constitution deed, nor its annual accounts need to be published. However, based on the 4th European AML-Directive, Belgium has to create a national UBO-register with information on the UBO’s of a.o. companies and legal entities. Currently, it is unclear how this will impact civil/family partnerships.
British Virgin Islands
A BVI trust would be constituted in exactly the same manner as that in which an English trust is constituted. Trust duty of US$200 is however payable on most trust instruments: the duty is paid by affixing BVI revenue stamps for this amount to the original document and ‘cancelling’ these in the prescribed manner; the payment of the duty would not involve the submission of the document to any revenue or other authorities; confidentiality is thereby maintained. Subject to (in practice rare) exceptions relating to certain trusts which are set up as collective investment schemes, neither the trust instrument nor any of its contents would be filed with any authority or regulator and no information whatsoever would be available to the public.
The Beneficial Ownership Secure Search Systems Act came in to force on 30 June 2017 and requires the name, date of birth, nationality and residential address of all beneficial owners of BVI companies to be entered in a secure searchable non-public database.
In order to constitute a BVI limited partnership two or more persons (which may be a natural person, a company or other legal entity) must execute articles of partnership which would be the agreement that governs the relationship between the partners. The articles are submitted to a BVI registered agent and are not public documents. The BVI registered agent is required to subscribe to a memorandum of partnership which is filed with the Registry. The memorandum, which is a public document, would include the name of the partnership, its objects and purpose, details of the general partner and other information. Upon receipt of memorandum the Registrar will register the partnership and issue a certificate of limited partnership.
A DIFC trust (whether express, charitable or non charitable) can be constituted by one of 4 methods; 1) transfer of property by the settlor during their lifetime or by Will, 2) a transfer of property between trusts, 3) a declaration by the beneficial owner of property that the property is held on trust by the legal owner and, 4) power of appointment in favour of a trustee. The Dubai Financial Services Authority regulates DIFC trusts, and there is no public register.
Under the proposed DIFC Foundations Law due to be implemented in early 2018, an individual looking to establish a foundation, is required to apply to the DIFC Registrar in accordance with the prescribed application rules. There are four categories of foundations based upon their objects; 1) objects which are exclusively charitable, 2) objects which are not charitable, 3) in order to provide benefits to persons identified in its Charter or By-laws, and 4) a combination of the above. Different governance requirements will apply depending on which foundation is created. All foundations are administered in accordance with their Constitution, and the foundation’s Council is the sole governing body. A foundation must have a physical presence in the DIFC, whether that be through a registered DIFC office or Registered Agent, and all foundations are subject to audit and accounting regulations. While there is no public register proposed for DIFC foundations, the Registrar or Registered Agent may be required to release information as to the Ultimate Beneficial Owner, if ordered to do so for legitimate purposes.
Both DIFC trusts and the proposed foundations are exclusive to the jurisdiction of the DIFC, and are governed by the DIFC Courts in accordance with DIFC law.
Focusing on New Zealand foreign trusts (as opposed to domestic trusts) which are established by non-residents, the features and requirements are as follows:
- a trustee holds the trust assets for the beneficiaries described in the trust deed;
- a trust deed describes an equitable and contractual relationship between persons, which is regulated only by the courts;
- the trust is registered with the IRD (information is not publicly available);
- a trustee may be a natural person, company or a limited partnership. The trust may have any number of trustees;
- a New Zealand trust may hold property, trade or operate a business;
- a trustee must be a New Zealand resident to be trustee of an exempt trust;
- a trust can be terminated at any time; and
- the trust may operate for a maximum of 80 years.
Limited partnerships (“LPs”) are another structure often utilized by non-residents. They are registered and maintained in the New Zealand Companies Office, the following qualities apply to them:
- separate legal personality.
- registered office within New Zealand.
- at least one New Zealand resident general partner, however no limited partner needs to be a New Zealand resident.
- overseas LPs may register in New Zealand.
- Under Law 214 of 27 February 1936, the main criterion for an individual willing to settle a trust in Monaco is to be a national of a country providing for a substantive trust law, such as common law countries. The trust will thus be substantially settled according to the national law of the settlor.
A testamentary trust must be settled according to the formal requirements applicable under Monegasque law to wills by public act or mystic wills. Furthermore, for a trust to be valid under Law 214, the settlor must designate a trustee entitled to exercise in Monaco.
Inter vivos trusts must comply with the formal requirements applicable under Monegasque law to inter vivos gifts.
Under Article 11 of the Ministerial Decree n°2012-182 of 5 April 2012, Monaco-based trusts must keep on an annual basis an updated balance sheet.
- Single family offices: there is no law nor rules under Monegasque law governing the creation of single family offices. However, the common practice is for an individual to set up a limited corporation with a civil purpose (Société Anonyme Monegasque, hereafter a “SAM”). These structures are governed by Sovereign Ordinance of 5 March 1895. A SAM must have at least two shareholders who can be either individuals or legal entities. The share capital must be at least 150.000 €. The Memorandum and Articles of Association are established by a Monegasque notary. The Memorandum and Articles of Association of the SAM must be approved by a ministerial order.
- Law 1.439 of 2 December 2016 governing the creation of multi-family offices provides that the activity of a multi-family office must be constituted in the form of a SAM, subject to the prior administrative authorisation issued by ministerial order and the authorisation of the Commission for the Control of Financial Activities, pursuant to the conditions set out by Law n°1.338 of 7 September 2007.
Please see answers in question 18 above.
19.1 A trust is established when specified property is transferred by one person (called the settlor) to other persons (called the trustees), or else comes to be held by the settlor himself as trustee, for the benefit of specified persons or a defined class of persons (called the beneficiaries), so that the trustees are legally obliged to hold and administer those assets for the benefit of the beneficiaries.
19.2 A trust (§19.1) under which a beneficiary (§19.1) is entitled to income as it arises to the trustees is called a life interest trust, and a trust under which beneficiaries have no fixed entitlement but may benefit at the discretion of the trustees (§19.1) is generally called a discretionary trust. A trust under which the trustees hold assets as mere nominees for a beneficiary or beneficiaries, who (if adult) can call for those assets to be transferred to them at any time, is generally called a bare trust.
19.3 Normally, the terms of a trust (§19.1) are set out in a trust document, but English legislation will (so far as it applies to a trust) generally give the trustees (§19.1) a range of standard administrative and other powers if these are not set out in that document. All interests of beneficiaries (§19.1) under a trust (other than a charitable trust (§26.1)) governed by English law must vest within 125 years of the creation of the trust.
19.4 Trusts (§19.1) do not have separate legal personality and can be created without any registration process. However, trustees (§19.1) are generally required to disclose certain details to HMRC, who may in turn provide those details to other UK public authorities and non-UK tax authorities with which the UK has reciprocal arrangements.