Another EU directive may impact Caribbean offshore business
Friday, August 6, 2004
LONDON, England: New provisions contained in
the third EU directive on money laundering will require professional advisers
to obtain identification from trust beneficiaries. Any EU-regulated financial
institution with an offshore business in the Caribbean will be governed by the new rules.
Under the new proposals, which bring trusts under the same legislation which
governs most other areas of the financial services sector, professional
advisers will be required to obtain identification from beneficiaries who may
receive more than 10% of a trust's assets.
Speaking to the Daily Telegraph earlier this week, an unnamed legal
professional explained, "When these people are asked to produce
identification, they will immediately be alerted to the existence of the
trust. If they didn't know about it, it would be quite natural for them to ask
for more details. If some children are to get more than others, for instance,
this could cause serious arguments." The
lawyer went on to add, "They seem to be trying to get at offshore trusts, but
any trusts in the UK or Ireland will be hit too.”
According to the Telegraph report, the directive's treatment of trusts stems
from the fact that outside of the United Kingdom and Ireland, where they are
employed as straightforward estate planning vehicles, trusts are not widely
used in Europe, and are often viewed as a method of hiding taxable assets from
the government. The trust concept is
essentially a creature of the English rule of equity and is largely unknown to
the civil code legal systems of continental Europe. Trusts have been
extensively employed as offshore financial vehicles in most, if not all, of
the Caribbean tax havens. This latest
directive follows hard on the heels of the European Union's Saving Tax
Directive, which requires financial institutions to collect tax on savings
account interest paid to EU residents, or agree to disclose details of the
account holder to European tax authorities. Britain has forced its
remaining Caribbean colonies to comply with the directive, amid fears that
their offshore business will be substantially diminished as a result.
Back...
Most popular
articles: viewed, printed and e-mailed
Printable
version
| 
