Move out of the UK

Moving Abroad – What to Think About!

Why are People More Mobile in their Lifestyle and What are the Options?

Dixcart has extensive experience, in advising individuals around the world regarding potential changes of residence, when family reasons, personal and/or financial, are dictating that a move is desired or would be helpful.

How Can Dixcart Help?

Dixcart has almost fifty years of experience helping clients structure their international wealth and investments with supporting advice on changes of residence and/or citizenship changes.

Support and advice can include:

  • Assistance in choosing the most appropriate country to re-locate to and/or invest into, considering multiple personal and tax efficiency considerations.
  • Wealth management – a review of the most appropriate way to structure wealth internationally, including succession planning.
  • Exploring business ideas and opportunities with tax efficient corporate structures. Dixcart has the relevant accounting, legal and tax expertise to also provide support for the management of these entities.
  • Tax advice for individuals, including expertise regarding the UK remittance basis of taxation, for clients moving to the UK.

Snapshot Summary by Jurisdiction

Please see below, a ‘snapshot’ of what different countries might offer and where Dixcart can offer direct assistance:

  • Cyprus, is within the EU and has an attractive regime for new residents offering a number of benefits, for companies and individuals.
  • Malta has several residence and visa programmes appropriate to different circumstances, each of which offers tax efficiencies. Malta is within the EU. 
  • Portugal is also a member of the EU and offers the Non-habitual Residents Regime (NHR), which is proving very popular with individuals already in Europe and also those from outside Europe. Portuguese companies are being used increasingly for international business and investment.
  • Saint Kitts & Nevis, located in the Caribbean, offers one of the oldest citizenship programmes in the world, and has a very beneficial tax regime for resident individuals and companies.
  • Switzerland is not a member of the EU, but is located in Europe and is a member of the European Free Trade Association (EEFTA). It offers an attractive tax regime for individuals and is world-renowned as a centre for holding companies.
  • United Kingdom – post Brexit the UK has already successfully negotiated trade deals with the EU and 63 other countries, with more deals under negotiation. The UK Remittance Basis of Taxation can offer significant tax advantages for individuals, for up to 15 years of residence.

Action to Consider

If you are considering a move abroad for yourself, or other family members, this can open up significant investment and financial opportunities. We strongly recommend that you take professional advice to discuss any such move and the pre and post planning that should take place.

Dixcart has many years of experience in managing family wealth across a number of countries and coordinating the movement of individuals. Services also include assistance in securing the necessary visas involved and the establishment and/or re-domiciliation of companies

Additional Information

If you would like any additional information on this topic, please speak to Peter Robertson: advice.uk@dixcart.com.

Malta

What Makes Malta so Attractive to Clients in Common and Civil Law Countries – Wishing to Protect Their Assets?

Maltese legislation combines features of both Common Law and Civil Law, which adds to its appeal, to individuals from countries operating either of these legal systems.

In order to attract not only local, but also foreign clients, trusts and private foundations were introduced, in 2004 and 2007 respectively, as legal vehicles available in Malta.

Trusts and foundations are recognised as flexible vehicles for the holding of many types of asset.

What is a Trust and What is a Foundation?

Maltese Trusts

In 2004, the Trust and Trustees Act was implemented as the first written law regulating domestic trusts in Malta.

A trust is a legally binding arrangement whereby a person (the settlor) transfers asset to another person (the trustee) who takes legal title to the trust assets. The trustee holds the trust assets for the benefit of other persons (the beneficiaries, which may include the settlor), or for a specified purpose.

There are many forms of trust that have been developed over time, some of the most common forms are:

•          Accumulation and maintenance trusts

•          Discretionary trusts

•          Fixed interest in possession trusts

•          Revocable trusts

Maltese Foundations

In 2007, Malta enacted specific legislation regarding foundations. Subsequent legislation was introduced, regulating the taxation of foundations, and this further enhances Malta as a jurisdiction for international private asset planning. Foundations have been described as the civil law alternative to trusts.

The main difference between trusts and foundations is that whereas, in the case of a trust, the settlor settles assets to a trustee to hold for the benefit of the beneficiaries, a foundation entails the creation of an entity with separate legal personality distinct from the founders, the administrators and the beneficiaries.

The legislation introduced registration as a pre-condition to gaining recognition as a separate legal personality, whilst at the same time acting to safeguard the privacy of each private foundation. This is due to the fact that any documents in the Registrar’s possession are not available to third parties, without the prior written consent of the administrators, the supervisory council, if any, or the Court, and only when satisfied that such third parties have a legitimate interest to see this information.

Why Establish a Trust or Foundation?

There are numerous reasons why a trust/foundation may be of benefit, which apply to a trust and private foundation established in Malta: 

  • Confidentiality: the foundation deed states the foundation’s name, its registered address, a description of the initial endowment with which it was formed, and its purposes and objects.

On the settlement of assets into a trust, those assets cease to form part of the estate of the settlor. The legal title passes to the trustee, whilst the rights to future enjoyment are passed to the beneficiaries.

  • Asset protection: if a home country is not politically or economically stable, a trust/foundation can be established overseas and assets transferred into it (professional advice should always be taken in the home country, prior to any transfer taking place).
  • Securitisation vehicle: Maltese law allows for the use of a foundation in place of a trust, as an appropriate vehicle for the securitisation of debt.
  • Tax benefit: A Malta trust or foundation may be set up to make use of compliant avenues to minimise estate taxes, defer taxable events to a later date or shift tax burdens onto beneficiaries with more favourable tax impositions
  • Succession planning: a trust and foundation can generate a greater degree of privacy and flexibility than may be possible with a will alone. Trusts and foundations can be used to avoid the separation of family estates and to prevent disputes between heirs.
  • Spendthrift beneficiaries: trusts and foundations can be created to prevent reckless heirs from spending family wealth on the death of their parents, by limiting their interest to income or to capital (at least until they reach a certain age, or until they fulfil certain requirements). Trusts and foundations can be drafted in such a way that a beneficiary is ‘excluded’, if they are, for example, declared bankrupt.
  • A solution for the care of individuals with special needs and minors: a trust and foundation can be used to make special provisions for beneficiaries who will be unable to care for themselves on the death of the settlor/founder, and in situations where it may be appropriate that one heir should benefit more on the death of the settlor/founder, as they require a greater amount of care, with its associated costs.
  • Lifestyle planning: partners who are not married, or whose family arrangements are not straight-forward may find that some countries’ legal systems do not provide adequate solutions on their death or separation. In such cases a specifically drafted trust or foundation can be used to ensure that partners, and children of such partners, are treated as the settlor or founder intends.

Taxation of Trusts and Foundations in Malta

Taxation of Trusts

Under Maltese Tax Laws, trusts are considered to be transparent in that income earned by the trust and distributed to the beneficiaries is not taxable in Malta.

Taxation of a Foundation

A foundation can either be treated as a company, which is both resident and domiciled in Malta, OR as a trust:

  • Taxation as a Trust

A Maltese foundation can irrevocably elect that the foundation be treated as a trust, for tax purposes.

An election to be treated as a trust gives rise to beneficial private asset planning opportunities, particularly where the founder and beneficiaries are not resident and/or domiciled in Malta. In such a situation no tax and/or duty will be payable in Malta. This applies on settlement and in relation to the income, attributable to the foundation.

  • Taxation as a Company

If a Maltese foundation decides to be taxed as a company, as with other companies in Malta, the income and/or gains realised are subject to tax in Malta on a worldwide basis at the flat rate of 35%.

However, on the distribution of qualifying foreign or local source income, by the foundation in favour of its beneficiaries, the beneficiaries will generally be entitled to a refund of 6/7ths of the Malta tax paid by the foundation, giving an effective tax rate of 5%. This assumes that the beneficiaries are not resident and/or domiciled in Malta.

A number of reliefs are also available to foundations, as well as to companies – amongst these are; the full imputation system, participation exemption, and access to appropriate unilateral agreements, Malta also has wide network of Double Tax Treaties.

Where the beneficiaries of a trust are not resident in Malta and there is no Maltese source income, the income will not usually suffer Maltese tax even if it is not distributed to the beneficiaries.

Duration

Under Maltese Law both trusts and foundations can continue until the 100th anniversary of the date of creation.

Dixcart as Trustees

Dixcart has provided trustee and related trust services in Guernsey, the Isle of Man, Nevis, Switzerland and the UK for over thirty five years and has extensive experience in the formation and administration of trusts and foundations.

Dixcart can provide trust services through its wholly owned group company Elise Trustees Limited, in Malta, which is licensed to act as a trustee by the Malta Financial Services Authority.

Additional Information

If you would like further information regarding trusts and foundations in Malta, please speak to Jonathan Vassallo: advice.malta@dixcart.com, at the Dixcart office in Malta or your usual Dixcart contact.

Isle of Man

Substance Requirements in the Isle of Man and Guernsey – Are You Compliant?

Background

In 2017, the European Union (“EU”) Code of Conduct Group (Business Taxation) (“COCG”) investigated the tax policies of a large number of non-EU countries, including the Isle of Man (IOM) and Guernsey, against the concept of “good tax governance” standards of tax transparency, fair taxation and anti-Base Erosion and Profit Shifting (“BEPS”) measures.

Although the COCG had no concerns with most of the principles of good tax governance as they relate to the IOM and Guernsey and a number of other jurisdictions that subject corporate profits to zero or near zero rates, or have no corporate tax regimes, they did express concerns regarding the lack of economic substance requirement for entities doing business in and through these jurisdictions.

As a consequence, in November 2017 the IOM and Guernsey (along with several other jurisdictions) committed to address these concerns. This commitment manifested itself in the form of the Substance Requirements which were approved on 11 December 2018. The legislation applies to accounting periods commencing on or after 1 January 2019.

The Crown Dependencies (defined as the IOM, Guernsey and Jersey), issued final guidance (“Substance Guidance”), regarding the Substance Requirements on 22 November 2019, to supplement the key aspects document that had been issued in December 2018.

What are the Economic Substance Regulations?

The core requirement of the Substance Regulations is that an Isle of Man or Guernsey (referred to each as “the Island”) tax resident company must, for each accounting period in which it derives any income from a relevant sector, have “adequate substance” in its jurisdiction.

Relevant sectors include

  • Banking
  • Insurance
  • Shipping
  • Fund Management (this does not include companies that are Collective Investment Vehicles)
  • Financing & leasing
  • Headquarters
  • Distribution and service centres
  • Pure Equity Holding Companies; and
  • Intellectual Property (for which there are specific requirements in high risk

At a high level, companies with relevant sector income, other than pure equity holding companies, will have adequate substance in the Island, if they are directed and managed in the jurisdiction, conduct core income-generating activities (“CIGA”) in the jurisdiction and have adequate people, premises and expenditure in the jurisdiction.

Directed and Managed

Being ‘directed and managed in the Island’ is distinct from the residency test of ‘management and control’. 

Companies must ensure that there are an adequate number of board meetings* held and attended in the relevant Island to show that the company has substance.  This requirement does not mean that all meetings need be held in the relevant Island.  The key points of consideration to meet this test are:

  • the frequency of meetings – should be sufficient to meet the business needs of the company;
  • how directors attend board meetings – a quorum should be physically present in the Island and tax authorities have recommended that the majority of directors should be physically present.  Furthermore, directors are expected to physically attend the majority of meetings;
  • the board should have relevant technical knowledge and experience;
  • strategic and significant decisions must be made at the board meetings.

*Board minutes should at a minimum, evidence key strategic decisions being made in the meeting held at the appropriate location.  If the board of directors does not, in practice, make the key decisions, tax authorities will look to understand who does, and where.

Core Income Generating Activities (CIGA)

  • t all CIGAs that are listed in the relevant Islands’ Regulations need to be carried out, but those that are, must comply with substance requirements.
  • Certain back office roles such as IT and accounting support do not comprise CIGAs.
  • In general, the substance requirements have been designed to respect outsourcing models, though where CIGAs are outsourced they should still be carried out in the Island and be adequately supervised.

Adequate Physical Presence

  • Demonstrated by having adequately qualified employees, premises and expenditure on Island.
  • It is common practice that the physical presence can be demonstrated through outsourcing to an Island-based administrator or corporate service provider, though such providers cannot double-count their resources provided.

What Information is Required to be Provided?

As part of the income tax filing process, companies carrying on relevant activities will be required to provide the following information:

  • business/income types, in order to identify the type of relevant activity;
  • amount and type of gross income by relevant activity – this will generally be the turnover figure from the financial statements;
  • amount of operating expenditure by relevant activity – this will generally be the company’s operating expenditure from the financial statements, excluding capital;
  • details of premises – business address;
  • number of (qualified) employees, specifying the number of full-time equivalents;
  • confirmation of the Core Income Generating Activities (CIGA), conducted for each relevant activity;
  • confirmation of whether any CIGA has been outsourced and if so relevant details;
  • the financial statements; and
  • net book value of tangible assets.

The legislation in each Island also includes specific powers to request additional information in relation to any substance information provided on or with the income tax return.

The legislation allows the Income Tax authorities to enquire into the income tax return of a corporate taxpayer, provided notice of the enquiry is given within 12 months of the receipt of the income tax return, or amendment to that return.

Failure to Comply

It is important too, that clients continue to monitor company activity to ensure ongoing compliance with the substance requirements, as a company may not be subject to the substance test in one year but fall into the regime in a subsequent year.  

Sanctions can be imposed including penalties between £50k and £100k for a first offence, with additional financial penalties for a subsequent offence.  In addition, where the Assessor believes there is no realistic possibility of a company meeting the substance requirements, he may seek to have the company struck off the register.

Can you Opt-out of Tax Residence in the Island?

In the Isle of Man, for instance, if, as is often the case, such companies are in fact tax resident elsewhere (and registered as such), the board of directors could elect (within section 2N(2) ITA 1970) to be treated as non-IOM tax resident. This means they will cease to be IOM corporate taxpayers and the Order will not apply to those companies, although the company will still exist.

Section 2N(2) states ‘a company is not resident in the Isle of Man if it can be proven to the satisfaction of the Assessor that:

(a) its business is centrally managed and controlled in another country; and

(b) it is resident for tax purposes under the other country’s law; and

(c) either —

  • it is resident for tax purposes under the other country’s law under a double taxation agreement between the Isle of Man and the other country in which a tie–breaker clause applies; or
  • the highest rate at which any company may be charged to tax on any part of its profits in the other country is 15% or higher; and

(d) there is a bona fide commercial reason for its residence status in the other country, which status is not motivated by a wish to avoid or reduce Isle of Man income tax for any person.”

In Guernsey, as in the Isle of Man, if a company is and can evidence it is tax resident elsewhere, then it can file a ‘707 Company Requesting Non Tax Resident Status’, to be exempt from complying with the economic substance requirements.

Guernsey and the Isle of Man  – How Can we Help?

Dixcart has offices in Guernsey and the Isle of Man and each are fully conversant with the measures that have been implemented in these jurisdictions and have been assisting its clients in ensuring adequate substance requirements are met.

Should you require additional information regarding economic substance and the measures adopted please contact Steve de Jersey in our Guernsey office: advice.guernsey@dixcart.com, or Steve Doyle in the Dixcart office in the Isle of Man regarding application of the substance rules in this jurisdiction: advice.iom@dixcart.com

Should you have a general question regarding economic substance please contact: advice@dixcart.com.

Dixcart Trust Corporation Limited, Guernsey: Full Fiduciary Licence granted by the Guernsey Financial Services Commission. Guernsey registered company number: 6512.

Dixcart Management (IOM) Limited is licensed by the Isle of Man Financial Services Authority.

Guernsey

Family Offices: Steps, Stages and Structures – Private Trust Companies and the Guernsey Private Foundation Solution

Individuals and families use various structures to protect their assets from uncertainty and volatility and to deal with estate and succession planning matters. Very often asset protection alone is not the principal driver in creating such structures.

It is not uncommon for a family’s next generation to move to new countries to study, work, establish businesses and settle down. As families become more internationally mobile the complexity of administering family estates and assets along with cross border, succession and estate planning matters, increases.

Steps, Stages and Structures

Before a family’s estate reaches the size and complexity which requires the establishment of a dedicated, single family office, there are a number of stages through which the structure might transition.

Pooled and enhanced fiduciary support

At an early stage several disparate family related structures are transferred to a single fiduciary provider or trustee with whom the family has a good existing relationship or who has been recommended by a trusted advisor.

These structures will generally take the form of a discretionary Trust or Foundation. The Trustee or Foundation Council can then be instructed to assist with developing the position into a standalone family office position, utilising their knowledge, experience and existing resources of qualified staff and policies and procedures. At this stage efficiencies are created in the management and administration of the structures under a single provider, the family / advisor relationship is reinforced, and additional cost efficiencies often result.

Private Trust Company (PTC)

For many years the PTC has been the preferred vehicle for administering the assets of wealthy families and many variants have emerged across those jurisdictions which specialise in providing them and whose legislation and regulation are particularly suited to private wealth management. One of the main attractions of the PTC is that decisions, relating to the underlying trusts, are made by directors who are carefully chosen by the family or may even be family members.

There are a number of variants of the PTC, which can be limited by either shares or guarantee or even with separate classes of shares for voting purposes.  Consideration as to the level of control exerted over the PTC needs to be carefully considered as too much control can lead to tax implications. The most common solution to the control issue has been to hold shares in the PTC through a purpose trust (see diagram), which creates additional layers of ownership and administration.

Whilst PTC’s remain a popular specialist solution, Guernsey can also offer a simpler structure through the Private Trust Foundation (PTF).

Private Trust Foundation (PTF)

The PTF removes the need for any ownership layers above the PTC and can simplify the structure and therefore administration and cost (see diagram). The PTF is established under the Foundations (Guernsey) Law 2012 (the “Law”) with the sole purpose of acting as trustee of the trusts for the benefit of an individual or family.

The Law makes it clear that a Guernsey Foundation, upon establishment, has its own legal personality, independent from that of its founder and any foundation officials.

Diagram: The Classic Private Trust Company Structure and Guernsey Foundation Solution

The Guernsey PTF will be run and managed in a similar way to a PTC with the involvement of a local licensed fiduciary, such as Dixcart, but with the significant advantage that, as an orphan vehicle, it does not have any other owners or controllers.

Additionally, family members or other trusted advisors can be appointed to the PTF council, which is responsible for acting as trustee to the underlying family trusts.

Managed Services

The penultimate stage, in the progressive route to establishing a full standalone family office directly employing appropriately experienced staff in the jurisdiction of choice, is managed support from a fiduciary provider.

This support can include dedicated serviced office space such as the Dixcart Business Centre in St Peter Port, Guernsey and; business facilities, fiduciary, accounting and legal support as fits the situation, with a view to the fiduciary provider helping to grow and develop the position into a standalone family, office operating independently.

Additional Information

For further information on private wealth structures and their management, please contact Bruce Watterson, Director, Dixcart Trust Corporation Limited, Guernsey: advice.guernsey@dixcart.com

Dixcart Trust Corporation Limited, Guernsey: Full Fiduciary Licence granted by the Guernsey Financial Services Commission. Guernsey registered company number: 6512.

Asset Protection and Trusts – Team Introduction

The Team and Activity

Each of the Dixcart offices has an Asset Protection and Trust Team, providing a variety of services as detailed below.  

John Nelson from the Guernsey office and Steve Doyle from the Dixcart office in the Isle of Man are the two members of the team we are introducing you to today.

Services Available across the offices

The Dixcart Group has more than 45 years of private client advisory expertise in the administration of trusts, foundations and the provision of family office services. International clients can take advantage of these services from any one of the fully regulated, independent trust companies located in the following jurisdictions: Cyprus, Guernsey, Isle of Man, Malta, St Kitts & Nevis, and Switzerland.

Dixcart provides the following international trust services:

  • Estate and international tax planning
  • Family office services
  • Formation and administration of family trusts
  • Formation and administration of foundations 
  • Formation and management of managed trust companies
  • Formation and management of private trust companies / foundations
  • Provision of trustee services
  • Provision of protector services

Introduction to John Nelson and to Steve Doyle

John Nelson joined the Dixcart Group in 2004. He was appointed a Director of Dixcart Trust Corporation Limited in Guernsey in 2006 and of Dixcart Trustees (Switzerland) SA in 2009. In 2010, John Nelson was appointed Managing Director of the Dixcart office in Guernsey.

Steve Doyle joined the Dixcart Isle of Man office in September 2014 and was appointed a Director in June 2017.

John Nelson – john.nelson@dixcart.com

Guernsey is a highly favoured location for the establishment and administration of Trusts and Foundations. John has extensive knowledge in using asset protection and wealth management structures for high net worth individuals and their families and works alongside a number of professional tax advisers, lawyers and other intermediaries in order to provide clients with the best advice for their particular situation.

He has an in-depth knowledge of Guernsey’s beneficial tax regime managing a range of companies and trusts under both the laws of Guernsey and other jurisdictions and has extensive international experience gained through over 35 years in the offshore industry.

John is a member of the Society of Trust and Estate Practitioners, having completed the Diploma in International Trust Management in 2002. He has completed the Institute of Directors Chartered Director programme and holds a post-graduate degree in Corporate Governance from Bournemouth University. John also sits on the panel for the STEP Helpline to assist the association’s members in answering any queries they may have pertaining to the administration of trusts under Guernsey law.

Steve Doyle – steve.doyle@dixcart.com

Steve was one of the founding directors of The Association of Corporate Service Providers (“ACSP”) in the Isle of Man in 1999 which has grown since its set up to having over 100 members on the island.  The association was founded to further the development of the Isle of Man as an international centre for the provision of corporate and trust services.

Steve is a member of the Institute of Chartered Secretaries and Administrators and has over 30 years experience in the offshore finance sector, working with clients and intermediaries on a global basis, and acting as director for a number of client companies.  Steve has also acted as Company Secretary for many businesses including regulated banks.

He has a wide experience of offshore structures including property development and other trading activities as well as private client companies.  Steve is also very experienced in the establishment and administration of family trusts and foundations in the Isle of Man for wealth preservation and asset protection purposes.

He is responsible for business development in the Isle of Man office. This incorporates identifying new opportunities where the Isle of Man can be of benefit to internationally orientated individuals and businesses. He regularly attends international conferences and travels overseas but due to the COVID-19 restrictions has resorted to holding meetings with clients and intermediaries using the internet facilities available.

Dixcart Trust Corporation Limited, Guernsey: Full Fiduciary Licence granted by the Guernsey Financial Services Commission. Guernsey registered company number: 6512.

Dixcart Management (Isle of Man) Limited is licensed by the Isle of Man Financial Services Authority.

Low Tax Trading opportunities

Private Wealth – Navigating Towards The New Normal

Background

As we start 2021, the Covid-19 pandemic remains prevalent across most of the world. Measures are starting to be put in place, in particular the introduction of vaccination programmes, that will hopefully bring the pandemic under control.

Behaviours and lifestyles have had to be dramatically altered. This has impacted on private wealth management, as much as almost every other sector of our lives. Some of these changes are likely to remain with us post pandemic. 

What are the New Wealth Management Trends?

  • Modified Perception: What is Wealth?

We are witnessing a re-assessment of key priorities.

The importance of family and health have been elevated significantly as have self-fulfilment and happiness. Financial gain naturally remains an important goal for wealth management but this is being balanced against priorities, many of which have been elevated to much greater importance during the past year.   

  • Increased Importance of Business Continuity for Family Wealth Management Planning

Contingency plans for business continuity and wealth management now need to take into account widespread country and regional lockdowns and quarantines, travel disruptions, and significant general disruption to businesses and communities.

Continuity plans need to be assessed and strengthened, where necessary, to build  capabilities now and in anticipation of recovery. These plans and contingencies need to be communicated to key internal and external stakeholders to enhance trust and transparency, and to help mitigate against potential  damage to the preservation of family wealth in the future.

  • Investor Preference for Lower Cost and More Passive Strategies

In general, there has been movement towards less risky and more ‘steady’ investment strategies. In a time of crisis, upheaval and volatility this is to be expected.

  • Client Preference for Less Risk and Additional Planning for the Future

Clients generally have a reduced risk appetite.

Covid-19 has also emphasised people’s mortality and there has been an increased  emphasis on succession planning and the sharing or moving on of responsibilities to the next generation.

As part of this process, clients have been drafting wills and/or reviewing and amending current wills.

  • Increasing Moves Towards Holistic Financial Planning and Philanthropy as a Key Objective

Dixcart has long believed in the advantages of holistic financial planning, by assisting with the management of our clients’ assets as a whole. Increasingly this is being recognised as the most effective way for the future, with a trusted adviser knowing the family members and appreciating and understanding their goals and the nuances of their specific wealth management plan.

In the post-pandemic world it is likely that there may be an increased desire by individuals to spread wealth to those less fortunate than others.

Philanthropy is increasingly becoming an objective for private wealth clients. Individuals can give directly to charity (‘chequebook philanthropy’) or more formal structures can be put in place, to provide an organised platform for giving, as well as offering important tax-planning benefits. It is important that this topic area is discussed with clients and accurately reflected in any wealth management plan.

  • Interaction with Clients Digitally – Rather than Face to Face

In many cases the only way to ‘meet’ the majority of clients has been on-line. This requires a different approach and discipline and an investment in appropriate and secure technology by professionals working with wealthy individuals and family offices, to retain relationships and maintain required support levels.

Whilst previously the older generation had, at times, been reluctant to adopt new technology, Covid-19 has provided a real incentive to embrace change. The inter-generational divide, in terms of technology use, is generally not as great as it was pre-pandemic.

Key business workflows are being ‘digitialised’ to accommodate changes in both client behaviour and employees working remotely. This trend is likely to evolve further and lead to the use of more interactive planning and performance reporting tools, initially in a virtual setting and, in the future, for in-person meetings.

With the increasing reliance on technology, the importance of cyber-security has been elevated to a much higher level. The training of family members and of staff to identify potential breaches, is becoming even more critical.

  • Collaboration Software is Changing the Way People Work

This trend is evident across a number of sectors, including private wealth.  

Wealthy families, as well as the professionals providing wealth management services, have needed to develop new methods of sharing resources across; families, teams and markets.

The new imperative is to provide access to expertise through a variety of different means, other than solely through geographic proximity and physical interaction.

The use of ‘secure team software’ is likely to continue. This applies to wealthy families with individuals located in a number of counties/locations as much as to Family Offices and private wealth managers.

Summary and Additional Information

As we slowly emerge from the recent upheaval and we move to the next ‘normal’, as in the past, the success of wealth management will depend on the ability of professional advisers to listen to clients and adapt to their changing needs. Wealth management specialists will also need to ensure that they are digitally intelligent, in terms of embracing revised means of keeping in touch with contacts and adopting more flexible wealth management operational systems.

  • Dixcart is well placed to meet these challenges. Getting to know our clients and really understanding their objectives, has consistently been our key priority. In addition, we embrace new technology and have our own IT department. The IT team works on projects across the Group, and has helped ensure that we have solutions in place, to communicate with each client in a meaningful manner, and in a way that is most appropriate to them.

If you would like to discuss any of the matters raised in this Information Note, or have any other questions, please contact John Nelson or Steve Doyle at: advice@dixcart.com.

St Kitts & Nevis

St Kitts & Nevis Economic Citizenship – A Brief Jurisdiction Summary

Nevis is an attractive international jurisdiction for citizenship, international business corporations and trusts.

What are the St Kitts & Nevis Citizenship by Investment Routes?

There are three investment routes available, to gain St Kitts & Nevis Economic Citizenship:

Option 1: Sustainable Growth Fund (SGF) Contribution

  • A single applicant can make a contribution of US$150,000 to the Sustainable Growth Fund (SGF).

For additional dependants (children or parents), the contribution requirement is US$10,000 per dependant. The addition of a sibling under the Sustainable Growth Fund, will be US$20,000.

Option 2: Approved Property Development

  • Investment of a minimum US$400,000 in an approved property development. The property must be held for a minimum of 5 years after the citizenship has been granted.

A registration fee is payable by the applicant and additional fees are required for the spouse, children under the age of 18 and additional family members over the age of 18. The addition of a sibling is US$40,000.

If this route is selected, the Dixcart office in Nevis can help organise management services, if the property is rented out. The property can be sold on after 5 years.

Option 3: Luxury Real Estate

  • Investment of a minimum US$200,000 in new luxury real estate. The property must be held for a minimum of 7 years, after the citizenship has been granted.

A registration fee is payable by the applicant and additional fees are required for the spouse, children under the age of 18 and any additional family members over the age of 18. The addition of a sibling is US$40,000.

Advantages: St Kitts & Nevis Economic Citizenship Programme

A St Kitts & Nevis passport can provide a relatively fast option to ease travel and to gain residence, if required, whilst plans are being made to live elsewhere. Naturally, successful applicants can choose to move to St Kitts & Nevis.

Applicants do not need to visit St Kitts & Nevis in order to apply for a St Kitts & Nevis passport. They do, however, need to use an approved intermediary on the island, such as Dixcart, to coordinate the application.

There are NO conditions attached to a St Kitts & Nevis passport in terms of the number of days that need to be spent on St Kitts & Nevis. Other advantages include:

  • Visa-free access to over 130 countries around the world including Europe, UK, Hong Kong, Russia, Ukraine, and Switzerland.
  • Fast processing times; approval can be achieved in between 45 to 60 days using the ‘accelerated process’ and 90 to 120 days with standard processing.
  • Inclusion of dependant children up to the age of 30.
  • Inclusion of dependant parents from the age of 55.
  • Inclusion of siblings if he/she is the brother or sister of either the main applicant or his/her spouse, is unmarried and childless, under the age of 30, and dependent on the applicant for financial support.
  • Sponsorship of common law partners.
  • Ability to pass citizenship on to children.

Additional Advantages Offered by the Jurisdiction of St Kitts & Nevis

Nevis offers a number of benefits as an International business centre. It does not levy VAT or other indirect taxes in relation to Nevis International Business Corporations (IBCs), and there is NO personal income tax, NO capital gains tax, NO wealth tax, and NO death duty or inheritance tax.

Nevis Structures and their Key Benefits:

  • IBC – International Business Corporation  
    • Sole directors allowed (both personal and corporate).
    • Incorporated in 24 to 48 hours.
    • Easy to setup and maintain, private and cost effective.
    • Ability to have documents legalised in the UAE, due to the St Kitts Consulate in Dubai.
    • Certificates of Good Standing/Incumbency can be notarised and apostilled in under 24 hours.
  • LLC – Limited Liability Company
    • A legal entity with separate rights and liabilities, distinct from its managers and members, which is liable for its own debts, obligations and liabilities.
    • Can be used for any legal purpose, including financing US and non-US operations, real estate holding, manufacturing and investment vehicles for international trusts.
    • Incorporated in 24 to 48 hours.
    • Foreign LLCs may convert to become a Nevis LLC through use of a simple conversion plan.
    • Foreign entities may convert to become a Nevis LLC after redomiciling to Nevis.
    • Extra protection can be gained by stating that ‘the explicit naming of a member or manager in a legal action being brought against the company is legal grounds for dismissal or at least for a motion of misjoinder’.
  • PTC – Private Trustee Company
    • No licence required to act as trustee (for private family arrangements).
    • Incorporated in 24 to 48 hours with sole directors allowed (both personal and corporate).
    • Can be owned either by a purpose trust or by the settlor.
    • Ability to have a representative of the underlying asset companies on the Board of the PTC and it is relatively easy to replace the Board and therefore the effective trustees, if necessary.
  • Nevis International Trusts
    • Registered in 24 to 48 hours.
    • Cannot be declared void, voidable or defective by reason of any forced heirship rules of the Settlor’s domicile, residence, place of current incorporation, formation or establishment.
    • No rule against perpetuity unless otherwise provided for; the international trust can therefore have unlimited duration.
    • Foreign judgements are not enforceable in Nevis.  Any civil action to recover assets would need to be brought, in addition, in the Courts of St Kitts & Nevis.
    • A deposit of $100,000 must be paid before creditor action can be taken.
    • If the Protector has the authority to direct the Trustees to make and approve distributions, or to direct the Trustees to make particular investments, statutory protection is given to the Trustees for acting on the direction of the Protector, in the absence of wilful misconduct.
  • Multiform Foundations
  • Asset protection and succession planning opportunities.
  • Can be set up for estate planning, charity, financing and special investment holding arrangements.
  • Can take the form of a foundation, a company, a trust or a partnership.
  • The ordinance allows for entities to be converted or transformed, continued or consolidated and merged into Nevis Multiform Foundations.

Additional Information

Nevis offers a number of attractive international entities and an appealing Economic Citizenship Programme. If you require additional information, please contact Graham Sutcliffe at our office in Nevis advice.nevis@dixcart.com or your usual Dixcart contact.

UK Holding Companies and Brexit – What are the Implications?

Many have asked “What are the implications caused by Brexit for the UK’s status as a premier jurisdiction for UK holding companies?”

In this Article we examine a number of the features that make a good holding company jurisdiction and consider the UK holding company in this context both pre and post Brexit.

Participation Exemption

Virtually all dividends received by a UK company, be they from the UK or overseas, are exempt from tax. 

  • This continues to be the case after Brexit.

Capital Gains Tax Exemption on Disposal of Shareholdings 

Disposals of substantial shareholdings in trading companies or the holding companies of trading groups are exempt from UK corporation tax, provided that certain conditions are met.

  • This remains the position post Brexit.

No Withholding Tax on Dividends

The UK does not levy withholding tax on dividends paid from UK companies. 

  • This position has not been affected by Brexit.

No Imposition of Capital Gains Tax on Profits Arising from the Sale of Shares in a Holding Company

The UK does not impose capital gains tax on the sale of shares in a UK company by non-residents of the UK. 

  • Brexit does not affect this position.

Minimisation of Withholding Tax on Dividends, Interest and Royalties Paid to UK Companies

The UK has one of the largest networks of double tax treaties in the world.  In most situations where a UK company owns more than 10% of the issued share capital of a foreign company, the rate of withholding tax is reduced to 5% (in some cases it is reduced to zero).

UK companies currently have access to the EU Parent/Subsidiary Directive, as well as the Interest and Royalties Directive, thereby reducing the withholding tax to zero for many European countries. At the time of wrting, it is understood that this will continue during the transitional period until 13/12/2020.

Different EU countries do not have the same laws governing when the benefit of these directives can be applied.  In many cases, where the ultimate beneficial owner is not resident in the claiming jurisdiction, access to the directives is denied.

Post Brexit, UK companies might not have access to these directives.

The ‘fall-back’ position would therefore be to claim relief under one of the UK’s double tax agreements.  The table below shows the effective ‘fall-back’ position to whichever is the better rate: normal domestic rate OR the UK treaty rate.

Dividend WHTInterest WHTRoyalty WHT
Austria5%0%10%
Belgium0%10%0%
Bulgaria0%0%5%
Croatia5%5%5%
Cyprus0%0%0%
Czech Republic5%0%10%
Denmark0%0%0%
Estonia0%0%10%
Finland0%0%0%
France0%0%0%
Germany5%0%0%
Greece10%0%0%
Hungary0%0%0%
Ireland0%0%0%
Italy5%10%8%
Latvia0%0%0%
Lithuania5%0%10%
Luxembourg0%0%0%
Malta0%0%0%
Netherlands0%0%0%
Poland0%5%5%
Portugal0%10%5%
Romania10%10%15%
Slovakia0%0%10%
Slovenia0%0%5%
Spain0%0%0%
Sweden0%0%0%

The zero rate for dividends may be conditional on a minimum shareholding requirement.

Non-imposition of Capital Duty on Share Capital

In the UK there is no capital duty on paid up or issued share capital.  Stamp duty at 0.5% is payable on subsequent share transfers. 

  • Brexit has not changed this.

No Minimum Paid Up Share Capital

There is no minimum paid up share capital for normal limited companies in the UK.  For public companies the minimum issued share capital is £50,000. 

  • Brexit has had no effect on this.

Low Tax on Non-dividend Income

The UK has relatively low corporate taxes.  The current rate is 19%.

Profits of Overseas Branches

A UK company can elect for the profits of its overseas branches to be exempt from UK tax.

  • This election has not been negatively impacted by Brexit.

Research and Development and Patent Box Regimes

The UK offers attractive R&D and Patent Box regimes.

  • Brexit has had no effect on either of these regimes.

Conclusion

Brexit has brought much uncertainty to both sides of the Channel.

Given the UK’s double tax agreements and the domestic law of EU countries, the effect of Brexit, including that post transitional period on UK holding companies, will be marginal.

Additional Information

If you require additional information regarding this subject please contact Laurence Binge – advice.uk@dixcart.com.

Please also see our Corporate Services page for further information.

Updated February 2020