The whole International community has its eyes on Greece. They apply a withholding tax of 10% on dividends paid by Greek subsidiaries to Swiss parent. The Commission considers that Greece does not respect its obligations under an agreement between the European Community and Switzerland that provides for measures equivalent to those in the Savings Tax Directive 2003/48/EC according to which dividends paid by a subsidiary to a parent company shall not be subject to taxation in the source state.
El código civil entiende el derecho de propiedad como un dominio absoluto, en exclusiva, definitivo, y por tanto lo considera como algo indivisible. Se puede relacionar esto con el mundo de las empresas offshore. Sólo existe un tipo de propiedad: algo nos pertenece o no nos pertenece. No cabe término medio. Es precisamente este concepto de doble propiedad, aceptado por la common law, lo que hace del trust un instrumento enormemente versátil, con muchísimas posibilidades y aplicaciones tanto en el ámbito privado como en las finanzas y el comercio.
Así, se emplean diferentes tipos de trusts que sirven para los más variados propósitos. Por mencionar algunos ejemplos, en el mundo de los negocios pueden utilizarse para realizar inversiones conjuntas, para agrupar las participaciones de pequeños accionistas y así poder ejercer el derecho a voto en una junta de accionistas, para administrar las inversiones privadas de un cargo público y evitar el conflicto de intereses o para garantizar el correcto cumplimiento de una transacción importante. Este último tipo se suele conocer con el nombre de plica o escrow y su uso se ha popularizado últimamente debido a que se está utilizando para garantizar pagos y transacciones en Internet.
En el ámbito privado los trusts suelen utilizarse como alternativa o complemento al testamento (testamentary trusts o "mortis causa") o para administrar diferentes intereses privados y familiares. Esto último se realiza a través de los llamados living trusts o "inter vivos", que puede tener muchas modalidades diferentes.
Durante las últimas décadas se ha hecho popular el llamado offshore trust, que recibe este nombre por estar constituido en una jurisdicción "offshore". Se emplea sobre todo con fines de reducción de impuestos y planificación fiscal. Frecuentemente también para proteger el patrimonio personal y familiar frente a potenciales acreedores o posibles demandantes (por diversos motivos como divorcios, conflictos laborales, etc.).
Algunas jurisdicciones offshore han promulgado leyes especialmente estrictas y favorables que dotan a los trusts constituidos en su territorio de gran protección y seguridad jurídica. Sin embargo su utilización por parte de ciudadanos residentes en países con legislaciones basadas en el derecho civil, no ha estado exenta de dificultades.
Aunque esté constituido en el exterior, el trust por lo general manejará bienes y derechos que se encuentran situados en el país de residencia habitual del settlor o de los beneficiarios. Por ello también tendrá implicaciones legales y fiscales en dicho país. La falta de reconocimiento por parte de la legislación del país en el cual se encuentran situados los intereses económicos, y la diferente interpretación del derecho de propiedad, puede acarrear serios problemas jurídicos.
Estos se producen especialmente en aspectos fiscales, en los relacionados con la transmisión de bienes (especialmente los inmuebles) o en el transcurso de juicios o demandas por cualquier motivo. En este caso las decisiones judiciales, debido a la falta de legislación aplicable, a menudo son imprevisibles y poco favorables.
Para tratar de ofrecer una solución a este tipo de problemas en las jurisdicciones de derecho continental, el 1 de julio de 1985 se presentó en la ciudad de la Haya el "convenio sobre la ley aplicable a los trusts y su reconocimiento" (convention on the law applicable to trusts and on their recognition). Este tratado finalmente entró en vigor el 1 de enero de 1992. Sin embargo hasta la fecha, han sido pocos países los que lo han ratificado. Aparte de Holanda y Luxemburgo, lo ha suscrito también Italia y, ya más recientemente en el año 1997, Suiza.
Al margen del tratado, existen actualmente sólo tres países europeos bajo derecho continental que no sólo reconocen al trust, sino que lo han recogido en sus ordenamientos jurídicos. Aparte de Holanda, que permite la formación de una versión muy limitada del mismo, en los otros dos casos se trata de paraísos fiscales.
Por un lado Mónaco lo reconoce siempre y cuando haya sido creado fuera de sus fronteras e incluso permite constituirlo dentro del principado, cuando las personas que lo hagan sean ciudadanos de países que a su vez lo permitan también. Esto quiere decir que sólo pueden hacerlo los ciudadanos de países anglosajones. Pero es el principado de Liechtenstein la única jurisdicción de derecho civil en Europa, que lo acepta plenamente en su ordenamiento jurídico y permite además su constitución sin limitaciones.
Por otro lado, varios países latinoamericanos, han introducido en sus legislaciones una figura que se asemeja bastante al trust. Se trata del fideicomiso. Cabe destacar sin embargo que el fideicomiso, al ser típico de las jurisdicciones de derecho civil, está bastante más limitado en sus aplicaciones. Esto es debido a que no reconoce la existencia de la doble propiedad típica en la common law que anteriormente comentábamos. Por este motivo su utilización se circunscribe generalmente al mundo de los negocios, en especial para la presentación de garantías en diferentes tipos de transacciones.
Pero si existe una entidad jurídica medianamente similar al trust en el derecho continental lo es sin duda la llamada fundación privada. Las más conocidas son la panameña y la de Liechtenstein, aunque también existen variantes con más o menos restricciones en diferentes países europeos y caribeños. Estas fundaciones pueden ser empleadas de una manera muy eficiente, para la planificación fiscal y para la protección del patrimonio. Incluso pueden llevar a cabo, sin mayores problemas, las funciones de un fideicomiso como empresas offshore.
Es de destacar sin embargo, que su inigualable versatilidad y flexibilidad, hacen del trust anglosajón una extraordinaria herramienta para la gestión tanto de intereses corporativos como privados y lo convierten en una figura jurídica y económica única en el mundo.
Germany: restriction of fiscal unity (Organschaft) regime to domestic companies
A company set up in accordance with the company law of another member state which has its registered office outside Germany under German law and place of effective management in Germany cannot benefit from the fiscal unity regime called Organschaft which is available to German companies, although this company is fully taxable in Germany. As a consequence the company cannot enjoy the tax benefits resulting from the allocation of the group company's income to the parent company (offsetting of profits and losses within the fiscal unity). Such provisions are considered to be discriminatory in comparison to domestic competitors and may restrict the freedom of establishment of businesses in Germany. The EU Commission underlines that this case does not deal with cross-border loss compensation.
When an entity is initially formed, it will obtain an "initial classification." This initial classification can be determined under the default rules or it can be determined as a result of a check-the-box election. Check-the-box elections can generally only be retroactive 75 days from the date of filing (certain late elections may also be allowed). Thus, if no election is made within 75 days of establishing an entity, the default classification will apply.
In the offshore context, this can be problematic where the entity defaults to be treated as a corporation (the typical situation) and the owners would prefer that the entity be treated as a partnership or a disregarded entity, but the owners did not in advance seek the advice of a tax advisor knowledgeable in this area.
Guidance Notes vs. 5 - draft vs. 8 - cleaned up version
Check The Box Taxation in the US
An LLC may choose the manner in which it will be taxed. Since 1997 when the IRS instituted check the box taxation, an LLC may choose to be taxed as a Partnership/Soleproprietorship (depending upon the number of members), an S-Corporation or a C-Corporation.
This flexibility to choose the LLC's manner of Federal Tax (and most states allow the LLC to be taxed in the same manner it is taxed Federally) is called "Check The Box Taxation". Even though the default manner of tax for the LLC is Flow through, there are other options. For the majority of LLCs, flow through taxation is preferable. It is best to understand your options however, because there are times when the other two are very useful.
In short, a "check-the-box" election is an entity classification election that is made on I.R.S. Form 8832, Entity Classification Election. The procedure to make a check-the-box election is quite easy. You simply check the appropriate box, specify the date that the election is to be effective, sign and file the form.
Be aware, however, that the tax implications of making such an election can be extremely significant. It is therefore very important that taxpayers speak with a tax adviser to discuss the implications of making such an election before the election is made.
Only "eligible entities" can make check-the-box elections. The regulations contain a list of the types of entities that are not eligible entities. Treas. Reg. § 301.7701-2(b). These non-eligible entities must be treated as corporations and are often referred to as "per se" corporations.
In the domestic context, an entity organized as a "corporation" or as "incorporated" under a federal or state statute would be a per se corporation. For foreign entities, a country-by-country list is provided in the regulations that specifies the per se corporations for each country. Typically, S.A.s, N.V.s, P.L.C.s, and A.G.s are per se corporations.
Tax Classifications
There are three possible U.S. tax classifications for "business entities" --- corporation, partnership, or disregarded entity. The regulations provide default classification rules for eligible entities (i.e., non-per se corporations) that do not make check-the-box elections. Treas. Reg. § 301.7701-3(b).
A U.S. domestic "eligible entity" defaults to be treated as a partnership if the entity has more than one owner and as a disregarded entity (similar to a sole proprietorship for individuals or to a branch or a division for corporations) if the entity has only one owner.
The default classification rule for non-U.S. entities is different. It is often assumed by taxpayers and their domestic tax advisers that a foreign entity that is similar to a U.S. L.L.C. will default to be treated as a partnership or disregarded entity (as would be the case for a U.S. L.L.C.). However, foreign L.L.C.s almost always default to be treated as corporations.
The rule for a foreign eligible entity is that it will default to be treated as:
a corporation if all of its owners have limited liability,
a partnership if it has two or more owners and at least one owner does not have limited liability, and
a disregarded entity if it has a single owner that does not have limited liability.
Check the box for non-US entities
Regarding check the Box for non-US Entities, both the foreign tax credit and operating losses pass through to the owners American tax return. The single member foreign entity has simplified his/her reporting as compared for a controlled foreign corporation.
Foreign entities that qualify for the check the box rules are great for foreign tax credit planning and the pass through of operating loss. To avoid complex tax issues, the check the box election is best filed in the first year of existence of the foreign entity.
We have found an IRS email private letter rulings on an LLC owned in a community property state. If you are a tax planner, this PLR gives great advice.
Check the Box is a great tax planning tool for international taxation, if you know where it is taking you. When the checks the box election is filed for a foreign entity, what occurs in a community property state. A major tax difference exists between a foreign partnership and a disregarded entity.
According to the IRS " the election under Rev. Proc. 2002-69 is optional. If no election is made, then the classification of the LLC defaults to the "check the box" regulations, Treas. Reg. § 301.7701-3. Under these regulations, if there are two owners of the business, it is automatically by default a partnership. If there is one owner of the business, it is automatically by default a disregarded entity.
The election and default rules under Rev. Proc. 2002-69 supersede the governing documents. Therefore, while both husband and wife appear as responsible individuals on the governing documents, which would imply a partnership, they can elect to have their business considered a disregarded entity. Since no returns have been filed and the husband and wife have not made an election under Rev. Proc. 2002-69, the business would be considered a partnership because both husband and wife own the business."
Guidance Notes vs. 5 - draft vs. 8 - cleaned up version Guidance Notes vs. 5 - draft vs. 8 - cleaned up version
The nominee structure is ostensibly a simple set-up where an onshore company acts as nominee for a low tax company principal. The concept is often used to avoid the problems often seen for low tax companies who trade internationally as it offers an onshore face with all the low tax benefits.
Advantages include:
1. High level of credibility.
2. With no ownership, related party transactions may not be reported by auditors.
3. A large percentage of the net profit on trade, for example 80% of the total, is payable to the low tax company.
4. A small percentage of net profit is kept in the onshore company, and therefore corporation tax is paid in the high tax jurisdiction. This tax could be as low as 5% of total turnover.
5. All transactions with clients are with the onshore company.
The Structure
The low tax company is the "Principal" in the operation while the onshore company is the contracted "Nominee" or "Agent" company. The nominee company carries out all business on behalf of the principal. A commercial agreement between the two companies must be drafted, setting out the terms upon which the nominee carries out its work.
As mentioned above, the nominee company is the "shop window" and so all goods purchased and all invoices generated are done by this company, on behalf of the principal. The resulting monies are collected by the nominee company and so the client is only aware of the onshore aspect and does not need to know about the low tax relationship. The nominee company receives a fee for its services and this is usually deducted from the trading income. After these costs, the remaining monies are sent straight to the principal. The nominee company's accounts will only show the fee income and any expenses incurred along the way. They will not need to show the trading income, as this was handled on behalf of the principal. Any profit made from the fee income, after costs etc. is taxable. The level of fee income is determined by the volume of trade, margins achieved and turnover during the year. Typically, a figure of 15-20% of gross turnover is acceptable.
Things to consider:
1. The nominee company should not trade in its country of residence, as it could be deemed liable to taxation on its revenue.
2. Although the nominee company is purchasing the goods, the ultimate ownership rests with the principal company.
3. Each company should have different officers and shareholders.
4. The Directors of the low tax company should be non-resident.
5. The nominee company should be registered for VAT if applicable.
6. All the advertising, marketing and promotion is undertaken by the nominee company.
7. The clients are not aware of the agency agreement which exists between the nominee Company and the low tax company.
8. The two companies need different directors and shareholders.
9. Contracts with the nominee Company should be signed outside its country of incorporation.
10. The directors of the nominee Company must not be resident in its country of incorporation.
11. The beneficiaries should be not residents in either country.
It is important for the taxpayer to understand the tax implications of changes in an entity's classification. If an entity changes its classification from a corporation to either a partnership or a disregarded entity, the transaction will often be a taxable liquidation. A taxable liquidation triggers gain or loss to both the corporation and to the shareholder(s). For a foreign entity, gain at the corporate level can trigger Subpart F Income and gain at the shareholder level is often taxed as ordinary income.
Although it may be very simple to file Form 8832 and change the classification of an entity, the tax costs can be immense. Taxpayers are well advised to speak with a knowledgeable tax advisor prior to the filing of any check-the-box election.
Unchecking the Box for tax reasons
President Obama looks anxious to revive a controversial pronouncement emanating from the Internal Revenue Service which was issued — and almost immediately discredited — during the Clinton years: The notorious Notice 98-11, 1998-1 C.B. 433. The aim of the notice was to prevent multinational corporations from "abusing" the so-called "check-the-box option." The option allowed flows of passive income between controlled foreign corporations (CFCs) disappear for purposes of the Subpart F rules. The best way to understand the President's plans is to review the facts and conclusions set forth in Notice 98-11, the principles of which the President has made clear he seeks to resuscitate.
Notice 98-11 sought to repair the hole in Subpart F created by the so-called "hybrid branch" strategy. The notice explains that a hybrid branch is one that is viewed, under U.S. tax principles, to be part of the CFC. Specifically, the branch is seen, therefore is "fiscally transparent." However, under the laws of the CFC's country of incorporation, a hybrid branch is regarded as an entity separate from the CFC, so it is seen as "non-fiscally transparent."
Notice 98-11 notes that Subpart F was enacted — at the behest of President Kennedy in the Revenue Act of 1962 — to limit the deferral of U.S. taxation of certain income earned outside of the U.S. by CFCs. Limited deferral, however, was retained "to protect the competitiveness" of CFCs doing business overseas." Under the tax code, transactions of CFCs that involve related persons frequently give rise to "Subpart F income" unless an exception applies.
