Tax-News.com reports:
Jersey’s Privy Council has approved an order allowing Foundations to be set up in Jersey. At a meeting held this week in London, an order was made approving the Foundations (Jersey) Law 2009.
Another toy for the tax abusers to play with.
At cost to society at large.
And Jersey seriously ask us to believe that they’re in the “cooperative, respectable, transparent and well regulated group” of jurisdictions.
The evidence on the ground is quite the opposite: they are dedicated to providing structures for offshore abuse; abuse that can only be designed to undermine the legislation or regulation of another jurisdiction behind a deliberate, legally backed veil of secrecy that ensures that those from outside Jersey making use of its regulation cannot be identified to be doing so.
I wonder if Jersey Finance have read 1984?
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Don’t worry. I have it on good word that the EU Commission has already added Jersey Foundations to the list of “arrangements” to be included in the amended EU Savings Tax Directive. First by deeming the individual, according to the 3rd EU anti-money laundering directive, who originally contributed the assets (i.e. not a fiduciary).
Secondly, at a later stage, if the founder is deceased, then the foundation becomes a Paying Agent and must treat the foundation as a fund, i.e. keep track of interest received apply the EUSD upon distribution and must assume interest is the first distribution until fully utilised.
All Jersey’s effort for naught. Too bad that they one move behind in their chess game.
Good news Mark!
Richard
Except Foundations have been established more or less exclusively to meet a demand from non-EU clients. So the EU position is irrelevant.
Paul
I don’t believe you
And I don’t care
Is tax evading for non-EU clients OK when it is not for EU based ones?
Your arguments are as hollows as your morals are non-existent
Richard
Paul,
Most EU (excl. UK) tax scammers favour Foundations over Trusts as evidenced by recent Liechtenstein tax scandals. So much for your argument about Foundations established mostly for non-EU residents.
In any event, Jersey Discretionary trusts are just as screwed by the EUSD amendments, by it going after the Settlor as the deemed Beneficial Owner, or if that is impossible, then the Trust becomes a Paying Agent and must apply the savings tax upon distribution.
… and another kick to Jersey, all their non-UCITS and hedge funds will be within scope. Same with insurance wrappers, same with IBCs, same with capital protected structured products, same with Capital Redemption bonds…. and Jersey branches of EU banks… and … etc…
So sad. Gone are the days of 80’s style tax planning by amateurs pretending to be fiduciary experts.
Richard
Paul is totally correct. You are totally wrong. Jersey foundations were introduced primarily for the Gulf clientele as estate planning vehicles which are an alternative to trusts. As everybody who knows anything about international tax will be only too aware, there are no personal taxes in the Gulf to either avoid or evade, so this has nothing to do with tax evasion.
Its absolutely no problem at all if the extension of the EUSTD covers Jersey foundations. It will be of no material effect.
Not what you want to hear or believe but sorry, its fact.
Rupert
Even if you are right as to the source of initial demand (and I doubt it: that demand came from within the ‘profession’ in Jersey who want further services to offer – corruption is a supply led service) there is nothing to stop the Jersey foundation being used for other purposes
So I utterly refute what you say
Why should I believe those whose stock in trade deceit?
Richard
Richard
Of course there is nothing to stop a foundation being used for other purposes. There is nothing to stop anything anyware being used for other purposes than that for which it is designed, but true to form you will draw your own blinkered conclusions and I know that I won’t change that view.
And specifically what “deceit” is in question ? You refer to tax evasion. I’m saying that for residents of GCC countries that’s simply not relevant. Even tax avoidance isn’t relevant. So where’s the harm ? Isn’t it precisely the sort of financial services business which we should be actively encouraging without any potential tax leakage ?
Rupert
Remember how we define secrecy jurisdictions
Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain. That regulation is designed to undermine the legislation or regulation of another jurisdiction. To facilitate its use secrecy jurisdictions also create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.
Don’t tell me these foundations won’t undermine regulation: they will. Probably on inheritance.
Tax is not the only issue of concern in the world.
Regulatory abuse is breaking the law, however described.
No doubt you do it, regularly.
And deny or turn a blind eye to it as often
Richard
Richard
Again – you’re wrong. Wealthy Arabs own assets all over the world. Most of those assets are located in Western jurisdictions where Islamic law of succession does not apply. By using a foundation (or a trust), they can structure the succession of those assets so that it precisely DOES pass in accordance with Islamic succession law. That is not undermining regulation, is not undermining inheritance and is not causing any tax leakage. They are more familiar and comfortable with foundations than they are with trusts, hence Jersey’s decision to introduce foundations.
And no – actually I don’t regularly partake in regulatory abuse. How you cna possibly state “No doubt you do it, regularly…and deny or turn a blind eye to it as often” is beyond me. You have absolutely no idea what I do.
Rupert
Nonsense! Who imposes their law on people not resident in the domain?
Richard
The other very relevant point with respect to Arabs is that the majority of them have firsthand experience of the rule of law being overturned. Wealthy Lebanese, Iraqis, Iranians (OK, not Arabs but in the region) have all seen revolutions where their property has been taken by the State.
It is second nature for these people to want to build up wealth outside of the Gulf region and to place it in a structure that is stable and will not be affected by political turmoil. Nobody loses any taxes and everything is done in a compliant manner: in fact, that is why Jersey is increasingly being used for shar’ia compliant vehicles.
And if anyone misuses foundations to evade tax, well, you have the EUSD covering them, so you must be happy.
But don’t let the facts get in teh way Richard.
“Nonsense! Who imposes their law on people not resident in the domain?”
Jersey is not imposing its laws on non-residents, it is imposing its laws on property (companies, foundations, trusts) established in Jersey.
Property rights apply where the property is situate regardless of the domicile of the owner of the property.
So the UK Companies Act applies to UK Companies. It does not apply to UK residents establishing companies anywhere in the world. The UK stamp duty regime applies to shares quoted on the LSE, not to any shares in the world bought by UK people.
Don’t let the facts get in the way Richard!
Yes Rupert. We all vehemently believe that Jersey is now providing Foundations exclusively to Arabs for legitimate inheritance planning…
… whilst the nearby European continent mass clients will still be coerced into utilising the strange anglo-saxon trust structure. 😯
Mark
I would be interested in reading more about the proposed changes in the ESD you briefly explain here.
Could you share with us a web link with the amendments fully explained?
Thanks
Richard
I’m genuinely amazed that as a tax practitioner you would make such a comment.
If I own French real estate then upon my death that realty has a French situs and so the succession of ownership passes in accordance with French succession laws rather than in accordance with the succession laws of where I live. By using a non-French company to own the property I can change the situs of that asset into personalty, and so ensure that the assets pass in accordance with my domestic succession law.
As I am sure you will be aware, Islamic law favours sons over daughters, and the extent of this depends on whether the Moslem is a Sunni or Shia. Their use of suitable vehicles to ensure that foreign-situs assets (including shares of foreign companies used to hold their overseas real estate) pass in accordance with their relevant succession law is of massive importance to them. Trusts and foundations are sufficiently flexible to deal with this and as they have no domestic taxes, they also have no domestic anti-avoidance laws to comply with, so logically they will choose the best option open to them. They are keener on foundations than trusts and have veered for many years towards using Liechtenstein foundations without being particularly comfortable with Liechtenstein, and so a Jersey foundation is very attractive to them.
Paul and Rupert
Thanks for so neatly falling into the elephant trap
Note how I defined a secrecy jurisdiction. I said they are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain. That regulation is designed to undermine the legislation or regulation of another jurisdiction. To facilitate its use secrecy jurisdictions also create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.
Is tax mentioned? No.
It’s secrecy to abuse regulation and law that worries us.
Is it Jersey’s job to undermine the inheritance laws of France? NO!
Or of anywhere else? NO!
Sorry, but as ever you show you are simply creating wholly artificial structures to undermine the rule of law.
Some of that law is democratic. Some, I admit is not. But you don’t bother which: you undermine it anyway.
That is why all steps to curtail your abuse are defensive: you have seen fit as so called professional people to take control of micro states and to use them to declare war on the law of other states. by undermining their law.
That is wholly unacceptable. That is why we need to put you out of business. You oppose the right of a state to self-determination as surely as any terrorists do. And you seek to undermine democracy on the way.
It’s why you have to go. What you do is wholly and utterly unacceptable.
Richard
Richard
So now you are trying to say than an Arab who invests his massive wealth globally outside of his region should simply accept that on death his estate is going to be tied up in complex probate for many years while conflicts of different succession laws are decided, causing no end of grief for his legitimate heirs, rather than adopting clear, lawful, tried and tested estate planning techniques to ensure the smooth succession of his wealth in accordance with his own domestic succession laws ? Its a bit like you buying a property in France and not bothering to cover it efficiently in your will.
The irony of your comments is remarkable. Here we have an example of people using foreign vehicles specifically so that assets pass in accordance with domestic law, whereas you normally attack everyone for using foreign vehicles which are designed to circumvent domestic law ! Which is it to be ? You can’t have it both ways.
Or are you saying that Arab investment overseas is so undesirable that the Western economy does not want or need their money ?
Rupert
I am saying of course invest in France (and elsewhere) if you wish
But comply with the law of France
That’s the price you pay for expecting the French to protect your property
Which they do
Richard
Rupert, Paul
You are pariahs. You create no wealth yourself but you help to preserve and augment the vast wealth of those who have stolen it from others by appropriating their surplus labour (via financial capital structures) or by appropriating the land and natural resources which are the common inheritance of all. I feel sorry for the majority of inhabitants of your states who must feel ashamed of what you do in their name.
Richard
Yes indeed – comply with the laws of France.
French law expressly provides that realty succession is governed by the situs of the real estate, i.e. France, and that personalty succession (i.e. company shares) is governed by the situs of that personalty. There is clear provision in French law for foreigners owning French real estate through foreign companies. Nobody is contravening French law. They are exercising the choice given to foreigners by the French legal system to choose whether to own French real estate directly or to own it through a French company or by a foreign company and are complying totally with those provisions.
How and why can that possibly be wrong ?
I may not agree with your stance on tax planning but at least I can see where you are coming from. Surely you are not now saying that estate planning is unlawful or immoral ?
Hum,
Here is the EU Commission link to the EUSD amendments http://ec.europa.eu/taxation_customs/resources/documents/taxation/personal_tax/savings_tax/savings_directive_review/COM(2008)727_en.pdf
Any part you don’t understand, let me know.
@hum…