Why use Switzerland for asset protection and why use a Swiss fiduciary – Corporate / Commercial law
Switzerland is a very attractive jurisdiction for the coordination of asset protection for several reasons, including the stability of this international center and the highest level of confidentiality guaranteed.
A trust under English, Guernsey, Isle of Man, Malta or Nevis law, with Swiss trustees, can offer a number of tax efficiencies, as well as wealth preservation and confidentiality benefits. .
Dixcart can establish and manage such structures of trust.
Reasons why Switzerland is a privileged place
- Political, financial, social and economic stability
Switzerland’s economy is one of the most advanced in the world. The service sector plays an important economic role, in particular the financial services sector. The Swiss economy ranked first in the Global Innovation Index 2019 and fifth in the Global Competitiveness Report 2019.
Switzerland’s stable political and economic environment makes it an attractive jurisdiction from an asset protection perspective, with the added benefit of attractive tax regimes for businesses and individuals. These factors, combined with the country’s high regard for privacy and confidentiality, are of interest to Family Offices around the world.
Switzerland offers one of the strongest and most commercial banking centers in the world.
She has extensive experience in dealing with international currencies and open capital markets. Many banks have dedicated offices for particular jurisdictions, providing specific services to clients.
The main advantages of having a bank account in Switzerland are the low level of financial risk and the high level of confidentiality
- Trusts and private trust companies as asset protection vehicles
Widely used in Anglo-Saxon countries, a trust is flexible and, under the right circumstances, can be an effective vehicle for asset protection. It ensures the anonymity of families, and the confidentiality of the assets and / or companies that it owns. Trusts can be a useful estate planning aid and can help with long-term estate matters.
A private trust company (PTC) is a legal person authorized to act as a trustee. The client and their family can actively participate in asset management and decision-making processes, as well as serve on the PTC Board of Directors.
Switzerland recognized trusts with the ratification of the Hague Convention on the Law Applicable to Trusts (1985), July 1, 2007. Although there is no domestic law governing trusts in Switzerland, trusts other jurisdictions, and their specific rules, are recognized and may be administered in Switzerland.
In Switzerland, the settlor (the natural person who deposits assets in the trust for the benefit of the beneficiaries) can choose the law of any specified trust jurisdiction to govern the trust. For example, a Guernsey trust can be established with a Swiss trustee.
The tax advantages offered by the use of a trust with a Swiss trustee depend essentially on the tax residence of the Settlor and the Beneficiaries. Professional advice should be taken.
Reasons to use a Swiss fiduciary
- Taxation of trusts in Switzerland
The Hague Convention (Article 19) states that the Convention does not affect the powers of sovereign states in fiscal matters. Consequently, Switzerland has maintained its sovereignty with regard to the tax treatment of trusts.
The tax advantages offered by the use of a trust with a Swiss trustee depend essentially on the tax residence of the Settlor and the Beneficiaries.
Under Swiss law:
- A Swiss resident trustee is not subject to Swiss income tax or Swiss capital gains tax on assets held under management in a trust.
- Constituents and beneficiaries are exempt from Swiss taxes as long as they are not considered to be Swiss residents.
- Swiss trustees regulations
Swiss trustees must be registered as financial intermediaries in accordance with Swiss law against money laundering. They can be registered with the Central Regulatory Authority or with a self-regulatory body (SRO), which must be recognized by the Swiss Federal State.
Under common law, the trustee owns the assets and is required to administer the assets of the trust separately from its own assets. In the event of the death or bankruptcy of the Trustee, the assets are not considered to belong to the Trustee but are subject to the protection of the Trust and held separately for the Beneficiaries. The assets of the trust are therefore segregated from the estate of the trustee.
- Confidentiality in Switzerland
Switzerland is well known for its commitment to banking services, professional secrecy and commercial competence.
The SATC stipulates that: “All information relating to a guardianship and acquired by a member must be strictly confidential by the member, its directors, officers and other employees”.
A breach of confidentiality, whether professional or commercial, would only be permitted by law in cases of criminal liability.
Dixcart and Swiss Trustee Services
Dixcart’s office in Switzerland has been providing Swiss fiduciary services for over twenty years and is a member of the Swiss Association of Trust Companies (SATC) and registered with the Association Romande des Intermediate Financiers (ARIF).
The Federal Law on Financial Institutions (LEFIN) entered into force in early 2020 and Family Offices and Trustees must now obtain compulsory authorization. Dixcart Trustees (Switzerland) SA fulfills all required regulatory obligations and continues to do so.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.