PRECISE. PROVEN. PERFORMANCE. Can you trust (in) Belgium ? Expatriates Financial Affairs Christopher Thubron / Jacques Pieters Brussels, 22 March 2013

Trusts: Generalities Definition: An obligation binding the Trustee to deal with the Trust Property for the benefit of persons entitled to enforce the obligation Parties: - Settlor/Founder -Trustee -Beneficiaries -Protector (optional)

Trusts: Generalities Revocable or Irrevocable Types Fixed Interest Trusts Discretionary Trusts Accumulation Trusts

Trusts: Generalities Reasons to set up a trust: anonimity asset protection wealth accumulation trust issues Estate planning and inheritance taxes?

Trusts: non anglo-saxon countries Liechtenstein (Stiftung and Anstalt) Dutch Stichting Administratiekantoor Fiduciary contracts (France, Belgium…) - Same effect as (UK) Trusts? - Same problems too….

Trust (in) Belgium: legal recognition One can always Trust in Belgium Belgium is no party to the Hague Convention of July 1, 1985 on Trusts and their recognition; BUT : the Courts have given many favourable decisions on trusts (de facto applying the convention); STILL : always a test if compatible with Belgian (International) Public Order: inheritance laws, protection of minors, protection of creditors

Trust in Belgium: legal recognition Trusts recognized by the Private International Law Code of July 16, 2004 (right to set up a trust, choice of law, etc…) « Issues » remain: Belgian (International) Public Order, taxes…..

Trust (in) Belgium: death and taxes No specific rules (either income taxes or inheritance taxes) Who gets taxed? –Trust itself; –Settlor; –Trustee; –Beneficiaries. Two schools: economical beneficiary vs legal beneficiary

Trust (in) Belgium today: death and taxes Current situation unclear If a fixed right exists: often taxation of the Beneficiary (Fixed Interest Trusts); Either for personal tax purposes: withholding taxes/mobile income; Or for inheritance tax: art. 8 of the Belgian inheritance tax code; Discretionary trusts: decision of the Ruling Commission of (also applicable to trusts? Contra earlier guidances on Trusts and inheritance taxes).

Trust (in) Belgium: too much trust will kill you? Your Trust can move with you to Belgium ! Do you want it to (tax situation unclear) ?

Belgian alternative: Fondation Privée Law of May 2002 Full legal entity with full capacities: for example manage a (family) estate No members, no owners, only a Founder and a Board that manage the assets for Beneficiaries. Board bound by by-laws, under control of the Courts (possibility for the Beneficiaries to have recourse to the Court)

ActMonies/values (shares, deeds, etc…) Shares of private companies Belgian Real estate Foreign Real Estate Gifts 00-- Endowment (deed) 7% Legacy (will) 8,8% Incorporation 7% Sale 0010%25 Euro Fiscaliteit (Vlaanderen) Tax overview: set up

TaxesApplicable ? Corporate taxNO If no commercial activities Tax on legal entitiesYES Only WHT, Real Estate Tax, VAT (sometimes) Inheritance taxNO Only tax of 0.17% / year Fiscaliteit (Vlaanderen) 2 Tax Overview: going concern

The Belgian Trust: use Legal entity recognized Europe wide; No inheritance taxes (in most countries) since the legal entity doesn’t die; Exceptions: Netherlands (in some cases), France (avoidance possible); Good in case of: - Assets/beneficiaries in multiple jurisdictions - Minors and (re)composed families

Example: Spanish expat case -Private Foundation: Per Eos -Controversy -Goals achieved

Belgian Trust: it is good to Trust in Belgium Conclusion on Private Foundation -(Tax) efficient -stable yet flexible -multiple use -open but discreet -reasonable cost

To reach us Christopher Thubron Tel. 02 – Jacques Pieters Tel. 02 –

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