Palladium Newsletter - November 2011

Dear Clients,

Welcome to our November newsletter.

Our focus this month is on tax efficient trusts for UK residents and Singaporean companies. As most readers will be aware, Singapore is booming on the back of the continued rise of the East as the centre of the financial and industrialising world. Private banks have flocked in their droves to the city state and it is firmly placing itself as the Switzerland of the future, further supported by its notoriously clean image and tough stance on those who break (internationally accepted) laws. While Singapore has welcomed the lion’s share of global growth in trust companies, private banks, IFAs and the like, an overlooked facet of its offering is its companies.

Advantages of using a Singaporean company over a traditional ‘offshore’ vehicle include the superior perception of using a Singapore vehicle vis-à-vis counter-parties in trade such as customers, suppliers, investors, venture capitalists, governments and banks. If properly structured, a Singapore company can be legally tax exempt, as outlined by the Inland Revenue Authority of Singapore. For onshore profits, S$200,000 (approximately US$156,000) of corporate profits earned in Singapore can be legally tax-exempt for the first three years of business trading. Further, Singaporean companies are low cost, the audit and reporting requirements are repeatedly voted the world’s least onerous and these companies command access to comprehensive double taxation treaties with 62 countries including the major powers of Japan, China, Germany, France, the UK and Canada.

In particular, Singapore is an excellent location to register intellectual property (“IP”), including global trademarks and patents. Singapore is a signatory to international conventions including the World Trade Organisation's (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), which helps protect against IP rights infringements. We look forward to your interest in these vehicles and to assisting you and your clients in your business endeavours.

For UK taxpaying residents, the concept of one’s estate being taxable at 40% above a relatively low threshold can be galling. Many people believe that one has ‘paid one’s share’ after suffering some of the highest income taxes in the world, VAT, a relatively new tax, at record highs of 20%, national insurance which one may never claim against and so on. For this reason, and where people have a solid idea of whom they would like to benefit from their estate, an excluded property trust may be of interest to clients and intermediaries.

The concept is simple in that provided certain conditions are met, all assets settled into an excluded property trust will not suffer inheritance tax on the passing away of the settlor, saving the estate a cool 40%. Further advantages include compounding of growth within the trust without suffering income, capital gains or other taxes and asset protection from future creditors. Typically this structure is established by ‘non-doms’ in the UK before they have been tax resident in the UK for the past 17 out of 20 years – if they do so, the settlor and anyone else can be a beneficiary of that trust and after the settlor becomes a 17 year plus UK tax resident the trust is still ‘excluded property’ so attracts no inheritance tax.

Better still, there may be circumstances where UK resident and domiciled residents can take advantage…

Please visit us at www.palladiumtrustservices.net or contact me directly at stephen@palladiumtrustservices.net if you would like more information on what Palladium can do for you.

We hope you enjoy the articles below and find them an interesting resource.

Until next month,

Stephen

World Bank confirms trusts are rarely used for nefarious means:
http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:23030059~pagePK:34370~piPK:34424~theSitePK:4607,00.html

HMRC’s new stance is raising tempers:
http://www.ifaonline.co.uk/ifaonline/news/2120213/hmrc-hit-complaints-inappropriate-letters

EU to fight the UK’s and Germany’s “Swiss” deals:
http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/11/709

Ecclestone case reveals how badly trust arrangements can sour:
http://uk.finance.yahoo.com/news/Bernie-Ecclestone-admits-tele-969968926.html

Malta reduces tax further:
http://www.tax-news.com/news/Malta_Cuts_Tax_Burden_In_2012_Budget____52502.html

HMRC’s updated inheritance tax toolkit:
http://www.hmrc.gov.uk/agents/toolkits/iht.pdf

Call for CIMA regulation of Cayman fund directors:
http://www.compasscayman.com/caycompass/2011/11/23/DMS--Seymour-calls-for-CIMA-regulation-of-fund-directors