1. London Hong Kong Greenwich New York Geneva Milan New Haven London Hong Kong Greenwich Geneva Milan New Haven STEP Guernsey, 12. November 2015 Trusts under attack in continental Europe Lessons for the offshore world in the CRS era London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI Filippo Noseda - Partner Joint Head of Department (Wealth Planning) Withers LLP Solicitors 16 Old Bailey London EC4M 7EG T: +44 207 597 6218 filippo.noseda@withersworldwide.com

2. London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI Repetita iuvant – der Trust-Begriff Legislative backlash The CRS-ojan Horse Guernsey – what next? Once upon a time in Europe

3. - Hague Trust Convention ItalyMalta LiechtensteinMonaco LuxembourgSan Marino Netherlands Switzerland London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI Group I Group II Group III Group IV - Unilateral Rec. Belgium - Case Law France - Tax Treaties Spain

4. EU Law London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI - EU Successions Regulation (650/2012) Choice in favour of national law d

5. London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI Once upon a time in Europe Legislative backlash The CRS-ojan Horse Guernsey – what next? Legislative backlash

6. - Hague Trust Convention ItalyMalta LiechtensteinMonaco LuxembourgSan Marino Netherlands Switzerland London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI Group I Group II Group III Group IV - Unilateral Rec. Belgium - Case Law France - Tax Treaties Spain

7. France London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI Loi de Finances Rectificative pour 2011 Décret d’application obligations des trustees (15/9/2012) “Bénéficiaires réputés constituants” Art. CGI

8. France London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI Loi de Finances Rectificative pour 2011 Décret d’application obligations des trustees (15/9/2012) “In practice, one may ask oneself how this rule will work in the (probably frequent) scenario of a plurality of beneficiaries, which will give rise to a plurality of ‘settlors by operation of law” French parliamentary commission

9. France London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI Loi de Finances Rectificative pour 2011 Décret d’application obligations des trustees (15/9/2012) “In the absence of precise tax rules under French law, the use of irrevocable and discretionary trusts may enable tax evasion: in particular settlors may maintain the control over the trust assets through complex arrangements or confidential letters allowed in certain countries, while giving the appearance of having disposed of their assets in the eyes of the French tax authorities.’ Senator Marini

10. ???????????? London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI TIAEs Case law In re B; B v T Guernsey CA, 35/2012 [France] Volaw Trust and Corporate Services Ltd v Berge Gerd Larsen, [2013] JCA239 CRS Early Adopter

11. Belgium London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI Décision anticipée No. 900.329, 22 December 2009 Loi Programme dated 10 August 2015: Look-through approach Deemed settlors “such direct or indirect heirs of the settlor following his death, unless they can demonstrate that neither they, nor their own heirs, may benefit at any time and in any way, from the legal structure” Loi de Programme

12. Belgium London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI D d “The Problem of offshore structures is not limited to Belgium” “The previous government intended to put in place specific provisions to enable tax to be levied in the hands of beneficiaries” “A first hint of the Belgian approach was presented in an action plan of the College for the Fight Against Tax and Social Fraud (…) extend the scope of enquiries on tax havens to trusts” “The proposed approach has been conceived to harmoniously balance the legitimate interests of the Treasury and those of the taxpayers”

13. Netherlands Law of 17 December 2009 Para 11 Steuer-Anpassungsgesetz Zurechnung Circular No. 30, Aug 2007 Luxembourg Switzerland “An increasing number of entities based in Switzerland specialise in the administration of trusts …This business has a huge potential for growth, since the so-called offshore centres (the Channel Islands and some islands in the Caribbean) are increasingly coming under pressure and Switzerland might offer a serious alternative (…) ” Swiss Gov’t Explanatory Report dated 5 Dec 2005

14. Netherlands Law of 17 December 2009 Para 11 Steuer-Anpassungsgesetz Zurechnung Circular No. 30, Aug 2007 Luxembourg Switzerland “The taxation of trusts is subject to Swiss law. By using certain types of trusts, in an international context, it is possible [in many countries] to legally defer net wealth and income taxes for a long period of time, sometimes for generations, because of a lack of attribution. Trust funds should, however, in principle be taxed in Switzerland.” Swiss Gov’t Explanatory Report dated 20 Oct 2004

15. Netherlands Law of 17 December 2009 Para 11 Steuer-Anpassungsgesetz Zurechnung Circular No. 30, Aug 2007 Luxembourg Switzerland “If the settlor is resident in Switzerland at the time of the creation of the trust, the trust (whether revocable or irrevocable) will generally have to be treated as transparent, with the result that the trust assets and the trust income are attributed to the settlor.” Tax Guidelines No. 30, issued Aug 2007

16. Italy London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI ‘Fictitious interpositions’ - Circular letter dated 27 December 2010 trusts where the Settlor has the express power to terminate the trust at any time of his own initiative for his own benefit or the benefit of third parties; trusts where the Settlor has the express power at any time to appoint himself as beneficiary; trusts where the trustee cannot make decisions without the Settlor’s or beneficiaries consent; trusts where the beneficiary has an express power to compel the trustee to distribute a share of the trust assets; trusts where the Settlor has the express power, during the life of the trust, to change the beneficiaries; trusts where the Settlor has an express power to assign trusts assets or to give out loans. Black-listing and the VD programme Criminal tax investigations (practice)

17. London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI Spain Tribunal Supremo n 338/2008 of 30 April 2008 Consulta Vinculante V1016-10, 14 May 2010: “We repeat that there is no recognition of the trust concept in our legal system. Therefore, any income generated by the trust … will have to be treated as attributable directly to the settlor.’

18. London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI Once upon a time in Europe Legislative backlash The CRS-ojan Horse Guernsey – what next? The CRS-ojan horse

19. How we got here London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI Art. 26 OECD Art 31 4 th AML-Directive (EU 2015/849) “such information as is foreseeably relevant for the application of the relevant convention or for the administration or enforcement of domestic tax laws” “Member States shall require that the information [on beneficial ownership regarding the trust] is held in a central register when the trust generates tax consequences.”

20. How we got here London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI FATCA Where a financial account is held through a foreign entity, disclosure is limited to ‘substantial US owner(s)’ of such entity. (a) any specified US person treated as the owner of any portion of the trust under [the grantor trust rules]; (b) To the extent provided by the Secretary in regulations or other guidance, any specified US person which holds directly or indirectly, more than 10 per cent of the beneficial interests of such trusts.” Section 1473(2)(A) Internal Revenue Code ‘substantial US owner(s)’

21. How we got here London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI FATCA “A trust that is treated as owned only by US persons under [the grantor trust rules] is not required to treat any of its beneficiaries as substantial US owners” Tax Guidelines No. 30, issued Aug 2007

22. London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI Tax Guidelines No. 30, issued Aug 2007 Enter CRS

23. London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI “Controlling Person” “Equity interest” Financial Institution Entity Controlling Person Entity Financial Institution Equity Interest =

24. London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI “Controlling Person” “Equity interest” “A beneficiary who may receive a discretionary distribution from the trust only will be treated as a beneficiary of a trust if such person receives a distribution in the calendar year or other appropriate reporting period (i.e. either the distribution has been paid or made available)” CRS Commentary, p 178 “A Reportable Person will be treated as being a beneficiary of a trust if such Reportable Person has the right to receive directly or indirectly (for example, through a nominee) a mandatory distribution or may receive, directly or indirectly, a discretionary distribution from the trust.” Definition C.4

25. London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI Once upon a time in Europe Legislative backlash The CRS-ojan Horse Guernsey – what next?

26. London - Geneva - Zurich - Milan - Padua | New York - San Francisco - Los Angeles - Greenwich - New Haven | Hong Kong – Singapore – Tokyo – Sidney - BVI Once upon a time in Europe Legislative backlash The CRS-ojan Horse Guernsey – what next?

27. Europe: London Geneva Zurich Milan Padua Americas: New York Los Angeles San Francisco New Haven Greenwich (CT), Rancho Santa Fe BVI Asia: Hong Kong Singapore Sidney Melbourne (*) Tokyo (**) (*) Withers SBL Alliance (**) Affiliated entity