Building on firm foundations
23 October 2013
We have recently seen increased interest in the use of Foundations for succession planning particularly from clients in civil law jurisdictions. The Jersey Companies Registry now shows there have been 231 Foundations registered in Jersey. While some of these Foundations have been dissolved a significant number remain.
Whilst Foundations have not replaced the use of Trusts for succession planning they have for many years been used instead of a Trust. In the past Foundations were mainly provided by jurisdictions based in Europe or Central America, but the Crown Dependencies have followed Jersey's lead and introduced Laws to deal with Foundations. Guernsey has 13 Foundations listed on their register, while the IOM registry has 33 Foundations listed.
The UK tax status of Foundations remains an unsolved conundrum for UK tax authorities who either treat them as a trust or a company depending upon the Foundation Charter. While this is perhaps understandable given the flexibility that Foundations provide, it remains problematic for professional advisors in the UK to give advice to clients about Foundations. Perhaps one day this matter will be addressed so that visiting taxpayers who have established Foundations or who are the object of a Foundation can enjoy more certainty on the tax treatment of Foundations.
For further information about Foundations you can read a short guide here
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