Guernsey is one of the leading tax-free jurisdictions for international private wealth from Latin America. Although a Crown Dependency and represented internationally
by the UK government, it is autonomous. It has
its own parliament, its own currency and its own
tax regime. Guernsey also has over 50 years’ experience in establishing and managing private structures for individuals and families.
In recent times, it has been consistently recognised for its compliance with international standards and its quality of regulation. Data security, capital adequacy and high ethical standards are among the many requirements imposed by the law. As a result, Guernsey is well regarded by governments and regulators worldwide, and is accepted without reservation as an appropriate jurisdiction in which to do business.
Guernsey also has a long tradition of providing services to Latin American clients. For many such clients, Guernsey’s European location, with its proven stability, proximity to London and access to all the major markets, has been determinant.
Guernsey has both excelled in offering traditional services to private clients, and been at the forefront of new developments.
Standard companies remain popular, but many families now prefer the ‘cellular’ approach, using either a protected cell company or an incorporated cell company. The former provides by law that the assets and liabilities of separate cells must be kept separate; the latter takes a similar approach but constitutes each cell as a legal person. Such companies have been used
to divide assets and liabilities between family members, or to provide for different assets to be
an attractive domicile for Latin American private wealth held separately – for example, real estate, a traditional portfolio, and trading assets with potentially significant liabilities.
Companies have also been structured so as
to divorce control from economic ownership, allowing younger members or a wider family group to benefit, while control is retained by a selected group. A company limited by guarantee is particularly apt for this purpose, as it recognises a class of members who may have no interest in the capital of the company, while at the same time allowing for the issue of shares.
Latin American clients have also found open-ended companies attractive, particularly for holding family businesses, allowing family members to add to or withdraw from the capital of the company, usually subject to the directors’ consent and frequently used in conjunction with a trust at shareholder level.
All types of trusts have remained popular
with Latin American clients, partly because
of the great flexibility afforded in the drafting
of the constitutional documents. Families
with more complex requirements find a real advantage in stepping outside of the constraints of corporate law and designing their own regime.
For similar reasons, family unit trusts have proven popular, again splitting ownership and control and providing for fixed interests.
PRIVATE TRUST COMPANIES
A particularly interesting way of providing involvement for the family, or certain members, at trustee level, is the establishment of a private trust company (PTC) to act as trustee of the family trust. The PTC might be owned by one or more family members or by another trust, but in principle
Ogier Legal Guernsey, Private Wealth Group
T +44 1481 737163 | E firstname.lastname@example.org
William Simpson, LLB,
Advocatewill allow involvement in the management of one or more trusts by way of board membership.
PRIVATE LIMITED PARTNERSHIPS
Private limited partnerships have proven particularly popular as a way of one generation retaining control, via the general partner, and another generation gradually receiving benefit through the transfer of limited partnership interests. Of course, interests as general partner may also in due course be passed over.
Many of the above concepts are very recognisable in Latin America. However, the most recent innovation in Guernsey is a special type of foundation designed particularly to allow flexibility in drafting, to give corporate status, and to provide maximum confidentiality. At the same time, a foundation will have no members or shareholders nor any person beneficially interested in its assets. This gives its governing body, the council, very wide power to manage its assets. It also avoids having interests held by persons residing in jurisdictions where this may be problematic.
All of the structures proposed will in principle
not be subject to any Guernsey taxation, provided the income generated arises outside
of Guernsey and those who benefit also reside outside of Guernsey.
All the major international firms of accountants, together with banks, trust companies and law firms, are located in Guernsey, with very considerable expertise in establishing and managing the structures outlined.