Curaçao to offer trust

PUBLICATIONS / Newsletters / 2012 / Newsletter June
Curaçao to offer trust
The government of Curaçao has approved a law that will allow for the formation of trust funds. A Curaçao trust will be treated similar to the well known private foundation (Stichting Particulier Fonds, SPF).
The SPF is a type of tax exempt private foundation that does not need to have a charitable purpose. Though it may not engage in profit making business activities, it can strive to manage assets profitably Since payments to beneficiaries outside Curaçao are not taxed either, money can flow freely in and out of an SPF.
Private foundations are often used in our tax-planning structures because they offer protection against business liabilities and allow for the transfer of income to private hands.
A trust is basically a common law version of a foundation: instead of a founder, there is a settlor, and instead of a director there is a trustee. But in spite of the similarities and similar tax treatment of a Curaçao trust and private foundation, it does make a difference for other nations. The use of a trust or a foundation can be instrumental for tax planning structures, depending on whether the proposed beneficiary is living in a common law or civil law jurisdiction.
With enacting a trust law, Curaçao has just increased its tax planning market potential by a large measure.
Please contact us if you like to know more.


Positive changes to Cyprus tax law
With the demise of Greece, the interwoven Cyprus economy has taken a beating. Following the footsteps of other Euro members, the Cypriot government has asked the EU for a bailout. Of course it would be foolish for them not to try, since the European Commission seems so keen in handing out billions of Euro’s.
At the same time the Cyprus government has amended some tax laws, not to raise revenue, but to make the EU member state with the lowest tax rates even more business friendly.
The most important change is the 80% tax exemption on capital gains arising from the sale of intellectual property after all relevant costs have been deducted. Acquisition of IP rights can be amortized over a period of 5 years. The amendment reaffirms Cyprus’ positions as top holding jurisdiction for intellectual property. Where else can you find such a highly respected nation that effectively taxes IP rights at 2%, has a vast tax treaty network, and can access the entire European Union on the basis of the EU royalty and interest directive?
Other tax incentives include an increased depreciation allowance for capital goods including real estate. This change will apply for the years 2012, 2013 and 2014 as follows:
· For all machinery and plant: 20% per annum (previously being 10%)
· For industrial and hotel buildings: 7% per annum (previously being 4%)
Interest expense relating to the direct or indirect acquisition of shares in a 100% subsidiary (irrespective of its tax residency) shall be tax deductible for the Cyprus parent company which suffers the expense. This tax deduction is proportionally not available on the cost of assets owned by the subsidiary which are not used in the business.
And finally, the reduced VAT rate of 5% on the sale or construction of residential real estate shall now apply to non-residents as well.
Although Cyprus is going through some rough times, Cypriot politicians still have their countries best interests in mind, and understand what it takes to attract business.


FATCA: first step towards capital controls
The recently enacted Foreign Account Tax Compliance Act (FATCA) threatens to isolate the United States by treating every American citizen as a suspected tax evader.
Under FATCA, any bank anywhere in the world serving US citizens will be required to report on US account holders and disclose their balances, receipts, and withdrawals to the US tax authorities or face a 30% withholding tax on financial assets held in the US by said bank.
Apart from the arrogance of trying to regulate abroad, the law places a huge administrative burden on foreign banks. It will have severe repercussions for American businesses, as many smaller foreign banks will refuse American customers altogether.
Many countries have vowed to enact law changes necessary to comply with the demands made by US tax authorities. Even Switzerland has effectively abolished its banking secrecy law for American citizens. Ironically this law was enacted in 1934 to protect German citizens from their tyrannical government.
Foreign Financial Institutions (FFI) will have to enter into an agreement with the US tax authorities prior to June 30 2013 or risk 30% withholding tax by 2014.


 The world as we see it
A lot can happen in one month time. The following developments and articles caught our eye for various reasons:
The Greek elections of June 17 resulted in a narrow win for the pro-euro New Democracy party. The Greek political system allows 50 ‘ bonus seats to whomever wins the most seats, which means that New Democracy can form a coalition majority with the other main pro-euro party Pasok. What will that mean to Greece? Probably more of the same we’ve seen in the past 3 years: riots, bail-outs, austerity and new elections.
Meanwhile Spanish banks were bailed-out by the newly formed but not yet approved European Stability Mechanism. As always Nigel Farage gave a brilliant speech to deaf ears in the EU parliament, summarizing the utter stupidity of a debt union between broke nations:
Also held last month: the Bilderberg meeting in Virginia. With the upcoming elections the United States was the obvious choice. We won´t lose ourselves into conspiracy speculation, but we do like to point out that the definition of a conspiracy is a secret plan by a group of people to do something harmful or illegal. The fact that a group of powerful people (including representatives of elected governments) meet in secret should make any rational person suspicious. If these people have our best interests in mind, why the need for secrecy? The G20 meeting is on public record, as is almost everything that goes on at the IMF, World Bank or even the EU. And if something smells fishy, it probably is.
Bad news from the United States election front: Ron Paul has dropped out after it became clear that Mitt Romney´s lead was too great to overcome. His son, Senator Rand Paul, has endorsed Mitt Romney in the hopes of at least securing a vice-presidency. This move has been highly criticized by many Ron Paul supporters. Rand Paul defended himself against allegations of disloyalty by answering questions from supporter in this long interview. He compared his decision to that of his father when he shifted from the Libertarian Party to the Republican party in order to further the freedom movement. This is one of the biggest dilemma’s for liberty minded people: should government be changed from within or challenged from the outside.
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War looms between Turkey and Syria when a Turkish fighter jet was shot down by Syrian air defense systems. Following the incident, Turkey´s president Erdogan vowed to “teach Syria a lesson“. It should be noted however that Turkey has admitted they support Islamic radicals in Syria and that their F4 fighter-bomber had indeed violated Syrian airspace. For those that are unfamiliar with military hardware: the F4 Phantom is a Vietnam era jet of which a remote controlled target drone version is available, which could explain why the wreckage, but not the pilots have been located.
A war between Turkey, a member of NATO, and Syria could trigger an international intervention in the war between the Syrian government and Sunni Islamic terrorists. All they need is a ‘justification’.
Talking about drones, the University of Austin, Texas was asked by the Federal Aviation Authorities and the Department Homeland Security to test the security of one of their drones by trying to hack into their system. Professor Todd Humphreys and his team did just that, using equipment costing less than a $1000 to assemble they managed to fully take over control of the unmanned aircraft. The US government already uses drones domestically for various surveillance missions, so this news will undoubtedly make American citizens sleep better at night.
That irony can be a bitch was also discovered by British comedian Jim Carr. Jimmy, who can be highly critical of wealthy Brits who avoid taxation offshore, had some explaining to do after it was revealed he himself keeps his money on Jersey. Although his Jersey trust is entirely legal, Carr´s hypocritical behavior had placed himself in an indefensible positions when he was filleted by his own comedy show panel members in typical British fashion

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