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Trust Taxation

inector

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May 6, 2021
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A proper trust structure usually requires a holding company. Let's say it is in Singapore, where the tax is 17%.

Now, you don't own it, the trust owns it, and they are based in let's say Liechtenstein, where the tax is 12.5%.

The Singaporean company does nothing but receives dividends from subsidiaries.

Is it possible for the Liechtenstein trust (foundation) to become place of management for Singapore (so you pay 12.5% instead of 17%)? Is it common?
 
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A proper trust structure usually requires a holding company. Let's say it is in Singapore, where the tax is 17%.

Now, you don't own it, the trust owns it, and they are based in let's say Liechtenstein, where the tax is 12.5%.

The Singaporean company does nothing but receives dividends from subsidiaries.

Is it possible for the Liechtenstein trust (foundation) to become place of management for Singapore (so you pay 12.5% instead of 17%)? Is it common?
It can be provided the tax residency conditions of both jurisdictions and potentially the treaty between them ( if it exists) would allow it.
 
Interesting topic :)

A proper trust structure usually requires a holding company. Let's say it is in Singapore, where the tax is 17%.

An elegant one does. Direct control is more often. Not better, efficient nor private though.

Now, you don't own it, the trust owns it, and they are based in let's say Liechtenstein, where the tax is 12.5%.

The Singaporean company does nothing but receives dividends from subsidiaries.

Is it possible for the Liechtenstein trust (foundation) to become place of management for Singapore (so you pay 12.5% instead of 17%)? Is it common?

A substance must be present for both entities, LI trust and SG holding company. LI tax benefits come from effective management of SG entity by LI entity.

You should consult appropriate advisor for your idea before commencing anything - it will require nuanced approach due to DTAs and remitance and significant maintenance budget.
 
This seems to be the case - Oceanic Trust Case

If South Africa and Mauritius had these problems, I can only imagine what would happen in EU...

I've read the case and it appears the declatory rulling was requested post factum and post festum where the factual aspect is disputable so SAR court declined to decide.

Ergo, you should request tax rulling at appropriate time - before the structure setup. Those rullings - like in CH - can be obtained from SG tax authority. I'm not certain whether LI authorities have same regime, but there comes the tax advisor - above all, you do not actually need special tax regime for LI entity so the only setup should be done for SG one.
 
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