Villa d'Este Conference meeting

There are many residence and citizenship by investment programmes, some more successful than others.  HNWIs typically change residence for children’s education, quality of life and tax advantages.  Others do not want to move immediately but want visa-free travel and like real estate investment.  Other reasons for alternative citizenship include visa waivers, retirement, independence, mobility, protection, tax planning, expatriation, security.  There has been an increase in the number of millionaires relocating.  There are residence programmes in Portugal, Cyprus, United Kingdom, New Zealand, Australia, Quebec and US, and citizenship programmes in Malta, Cyprus, Grenada, St Kitts, St Lucia, and Antigua, and new programmes is Italy, Malta and Thailand.

Employees move to other countries for many reasons, many of them coming from the US.  They need job fit, expat fit and family fit.  The client in expat assignment is generally the employer, who may often have different needs from those of the employee.  Since the financial crisis, local hires have become more popular because they cost the employer less.  Tax, social security etc. are a cost to the employer; the tax payable by the employee is determined in nearly all cases by residence, in the US by citizenship, in the UK by domicile as well as residence, and generally by residence and treaty residence. There are employee compliance requirements on arrival and departure, and annually, which technology can assist.  There are STBV and modified payroll requirement in UK.

The employee’s package may include salary, expenses, pensions and share options.  Various taxes may apply.  Expenses may be allowed.  Pension are often the most important benefit and give rise to many tax problems.  So also will shew options.  Capital taxes – on gains, gifts or death may be applicable (in UK CGT, IHT and Temporary Non-Residence rules).  In this context the client will be the employee.

The limited partnership is commonly used in Japan.  It offers the Japanese investor the possibility of deduction for depreciation or loss, despite a contrary decision of the Supreme Court.  Inheritance tax is charged on the done.  In the Takefuji case, the son became resident in Hong Kong and father held his assets through a Dutch holding company.  In Nagoya case, son’s wife failed to become US resident, but the case stimulated a change in the law, but special exemption is available for talented foreigners.

BEPS and CRS operate in Japan.  In Aloe Vera of America Incorporated case, information was leaked to the media by Japanese tax authority.  This is approved by the Court, if intention good.

To combat transfer pricing, the Japanese authorities used secret comparables to establish true profit, but court preferred open comparables of taxpayer.

Swiss banking secrecy was introduced as a counter-measure to Nazi measures.  It came to provide a shelter for illegal activity.  Switzerland agreed to withhold tax on interest, but other forms of income would remain secret. This was legal in Switzerland, but elsewhere it amounted to aiding and abetting tax evasion.  UBS trained staff travelling US to avoid giving away any information.  Eventually, the bank was prosecuted.  Huge fines were paid, and 4,700 names were given to the authorities

I was a whistleblower, but encountered opposition in all areas of Government.

In Switzerland there are duty-free warehouses with customs authority on site, storing sensitive goods.  And there are open customs warehouses with no customs authority not permanently on site.  Tax is postponed until export.  Deposit in a Freeport is an import.  Sensitive (cultural) goods are listed in an inventory, with an export permit.  Goods for export cannot remain longer than 3 years.

Disputes over property in storage are governed by law of destination.  Freeport must register the owner of cultural property.  Importing etc of stolen goods is an offence.  If heft suspected, cultural property may be seized.  More regulation is foreseen.

Samoa is sixteen islands in the South Pacific, close to the Date Line.  There are acts of Parliament providing for international companies, trusts, insurance, partnerships etc.  Samoa is adapting to the new hostility to offshore centres, modernising its laws and regulations to comply with international standards, and offering the client a range of services.

Asset protection is a lawful process to safeguard against future risks.  There are set-up costs, but these are small in relation to size of risk.

Liechtenstein is a good location for asset protection because it is a defendant-friendly jurisdiction.  Foreign judgements (except Austrian and Swiss) are not recognised: creditors must litigate in Liechtenstein.

Liechtenstein has trusts and recognises the Hague Convention.  The court has a favourable attitude to asset protection.  An intending plaintiff has to deposit 10-15% of the amount claimed.  Contingency fees are illegal.  The losing party pays the costs of the successful party.  There is no pre-trial discovery.  Voluntary dispositions have a limitation period of 12 months prior to the grant of an execution order.  Tax compliance is a committee for efficient asset protection.  Liechtenstein offers foundations and also trusts (which are recognised in US and UK).  It has TIEAs, is subject to FATCA and has adopted the CRS.

Some states do not impose any income tax.  The trust law varies between States.  Some States permit private trust companies and purpose trusts.  Wyoming has adopted the modified uniform trust code and other measures with a view to being a jurisdiction sympathetic to trust business.  Foreign trusts can move to Wyoming and pay no tax on its foreign income.  There is no registration of trusts.  It has asset protection trusts – called self-settled spendthrift trusts, which are effective.  A private trust company can be used.  Banks have KYC and have to know the UBO.  Trust must disclose foreign bank accounts (FBAR).  It is argued that a FATCA report is required but contains no information about the beneficiaries