What important legislative changes do you anticipate so far as they affect your advice to private clients?
We are not aware of any anticipated major legislative changes both in terms of tax and legal perspective.
Irish tax advice to private clients is subject to change following the publication of the annual Finance Bill in October of each year and the subsequent enactment of the annual Finance Act shortly thereafter.
The question of whether a central register of beneficial ownership for trusts will be established is also going to be very relevant.
On December 22, 2017, President Trump signed into law H.R. 1, a Congressional bill informally known as the “Tax Cuts and Jobs Act” (the Act), which represents the most significant overhaul to the US tax system in over 30 years. Generally, the provisions of the Act take effect for tax years beginning after December 31, 2017. Among other changes, the Act modifies the individual income tax brackets, doubles the amount of the exclusions from gift, estate and generation-skipping transfer taxes, and limits individual income tax deductions for state and local taxes. These changes are effective until January 1, 2026, at which time the Act provides for a return to prior law. The above answers reflect the current state of the law under the Act.
There is no important legislative changes the authors anticipate as our advice already take into account the new tax regime introduced by the draft of financial law for 2018.
Recently, the tax reporting obligation for resident beneficiaries of non-resident trusts have been expanded. Administrative guidelines have not been issued yet. The forthcoming release of such guidelines will hopefully provide useful clarifications on the scope and operation of the new reporting obligations.
The followings are recent legislation amendments enacted under the tax law:
The taxable income of a close-held corporation (a company which is controlled by up to 5 people), which results from the activity of its individual Substantial Shareholder (whether directly or indirectly, including through a relative), will be considered as the individual's personal earned income, under certain conditions
Withdrawals by substantial shareholders
A withdrawal of more than NIS 100,000 from a company, including by way of a loan or by way of providing security for a loan, and the constant use of company's assets, by a Substantial Shareholder, shall be regarded as an income of such an individual shareholder. Where the company has “accumulated profits” this income shall be deemed to be a dividend income, and where the company does not have “accumulated profits” and employer-employee relationship exists between the individual and the company, this income shall be deemed to be an employment income. Otherwise, the income shall be regarded as income from business or occupation.
Greece plans to introduce in 2018-2019 the national wealth registry.
Although it is still early to make any forecasts as to the exact data and material that will be included therein, individuals could anticipate that the upcoming wealth registry might facilitate a general tax reformation.
As such, it is crucial that efficient wealth management practices are in place in advance to prevent “last minute” and “under pressure” decision making procedures in connection to holding and managing assets that are meant to be passed on from generation to generation.
The disposition on German foundation law will be revised. Presumably, the legal regime will be more liberal. However, a legislative proposal has not yet been issued. It isn’t expected before summer/autumn 2018.
Recently, an important reform of the Belgian succession law has been approved. The new rules will enter into force on 1 September 2018. All gifts that were made, even the ones before 1 September 2018, will in principle be subject to this new legislation. Moreover, the government is currently working on a reform of matrimonial property law. Since there has not been submitted a legislative proposal so far, the content and the timing of the reform remains unclear. The Belgian Companies Code will soon be completely reformed as well.
British Virgin Islands
The Trust and Succession Law Review Committee of the BVI Branch of STEP (the proposals of which led to VISTA, the BVI’s PTC Regulations and all the other major recent amendments to the BVI’s trust legislation) is actively in the process of drawing up further proposals for suggested trust and succession law reform and these proposals, which are confidential, are at an advanced stage. The committee is chaired by co-author Vanessa King.
Legislative changes can and often do happen very rapidly in Dubai. The proposed new Foundations Law and extension of the Trust Law in the DIFC, and the introduction of VAT, should be noted (as well as the forthcoming probate court for non-Muslims in Abu Dhabi), but anyone wishing to become resident in, or invest in Dubai, is always best advised to seek prior advice before doing so in order that the current position can be ratified in advance.
New Zealand has committed to the second phase of CRS implementation under the OECD model. This means that New Zealand (through the IRD) will begin exchanging information about the source and beneficial ownership of entities from 1 July 2018. New Zealand will only provide financial account information to 58 reportable jurisdictions, starting with the 9-month period ending 31 March 2018 and annually from thereon.
The Trusts Bill currently before Parliament, it aims to modernise and clarify the trusts law regime and will replace the Trustees Act 1956 and Perpetuities Act 1964. In its current state, the Bill will extend the maximum trust period from 80 years to 125. Its main function is to codify many of the trust law developments since the Trustees Act, which currently exist in case law.
The codification of the conflict of law and jurisdiction rules following the recent enactment of the Code on Private International Law (Law no.1.448 of 28 June 2017, published in the Official Journal of Monaco on 7 July 2017) has a major impact on estate-planning.
There is currently growing consensus for the idea that cohabitation needs to be regulated. The current absence of legal provisions is clearly out-of-step with changing social realities and the consequent increasing frequency of cohabitation of both heterosexual and homosexual couples. New legislation is therefore currently under consideration which aims at filling such legal void.
Legislation is being considered to amend the provisions of the Civil Code relating to the judicial protection of adults who, by reason of an impairment or insufficiency of their personal faculties, are not in position to protect their interests. The new legal provisions aim at allowing individuals to make advance arrangements for their care and/or representation in the event of incapacity.
Finally, in December 2016, Monaco has ratified the Common Reporting Standard (CRS) agreements and conventions. Consequently, the automatic exchange of information entered into force on 1st January 2017 and Monaco will undertake the first automatic exchanges in January 2018.
The Swiss Federal council is currently involved in a legislative process intended to modernise Swiss inheritance law. The main objectives of this reform are:
- to take into account the realities of family in the twenty-first century (i.e. blended family, single-parent household, live-in partnership, unmarried couple with children);
- to grant more freedom to the testator with regard to the forced heirship rights;
- to introduce a bequest regime in favour of the cohabitant and children;
- to facilitate the transfer of family-owned business.
The new Swiss legal regime governing adoption will enter into force as of 1 January 2018 (adoption possible for same-sex partners; minimum age of adopters reduced from 35 years old to 28 years old).
27.1 Amendments to the tax rates, bands, allowances and rules referred to above typically take effect from the beginning of each new tax year (§2.13), and so changes should be expected with effect from 6 April 2018.
27.2 The UK proposes to extend the scope of capital gains tax (§2.6; §8.3) to disposals (§2.8), on or after 6 April 2019, by non-UK resident (§1.5-1.7) individuals of non-residential real property situated in the UK, subject to the rebasing of such property as at that date. Capital gains tax may also be extended to disposals by non-UK resident individuals of interests in companies which own UK real property.
27.3 With effect from 6 April 2018 the UK is expected to introduce anti-avoidance rules which will apply, for example, where non-UK resident trustees (§19.1) make distributions to non-UK resident (§1.5-1.7) individuals who, later, make onward gifts (directly or indirectly) to UK-resident individuals. One of the effects of these rules would generally be to impose income tax and capital gains tax (under the rules described in §20.6) on the onward gifts as if they were distributions made directly by the trustees to the UK-resident donees.
27.4 Scotland may, for future tax years (§2.13), exercise its power for certain income tax (§2.1) purposes to apply to Scottish taxpayers different rates and bands from those applying to UK-resident (§1.5-1.7) individuals who are not Scottish taxpayers. Scottish taxpayers include those UK-resident individuals whose main or only home is in Scotland, and those UK-resident individuals who do not have their main or only home in any part of the UK but spend more midnights in Scotland than in any other part of the UK (i.e. England, Wales or Northern Ireland).