It is possible to structure a company or holding of companies based on its current business needs and type of business activity.  The number of offshore jurisdictions getting lower, but there are still countries providing tax exemptions, personal data protection and liberal accounting and reporting requirements. When creating such foreign company you can concentrate on your business rather than filling out annual reports.

Trusts are undeservedly rarely used for some reason nowadays. Mostly trusts are preferred by people who want additional guarantees of their privacy. The creation of a trust is recommended when conducting a high-risk business abroad, or when there is no confidence in the reliability of partners. This form of relationship may be effective tax planning tool, protecting financial assets and their inheritance.

Trust can be used in several cases:

1. Tax reduction. It is impossible to file any tax claims against trust founders, as they do not hold asset management rights. From a legal point of view, trust assets do not belong to founders any more. Trustees are not required to report the trust's income to the tax authorities of the countries where the existing beneficiaries reside.
2. Hiding ownership. In a trust, it happens that the founder and beneficiary are the same person. This makes possible to make a profit, while keeping anonymity.
3. Preservation of capital. Trusts may restrict the use of financial assets by beneficiaries.

It is important to establish the right trust structure, which takes into account all the needs of the founders. It is recommended that you contact qualified lawyers for the development of suitable trust structure. This procedure is fully payback by its benefits. Further, only minor annual maintenance of trust will be required.

Company prospects in case of creating a trust

Trust mean the initial business owner refusal of his rights to receive commercial profits and dividends in favour of third parties. Three key actors are involved in the structure of the trust. The founder creates a trust and formulates its terms and conditions. The trustee bears obligations to the beneficiaries, and manages financial assets for beneficiaries. Beneficiaries do not manage the trust and do not control the actions of the trustee, but they benefit from his actions. When the rules of trust management and the trust deed are drawn up right, the founder remains the real owner of the property. He has the ability to participate in explicit or implicit way in asset management, and may even withdraw the beneficiary. "It is well known that initially a trust is created not for hiding the real owner. Therefore, it is important to structure the trust in such a way that, during its operation period, it really works in favour of the new beneficiary. It is necessary to exclude the possibility of considering it as “pretend” trust by the authorities. The key is to draw up a trust deed professionally, after an interview with a client, to determine his needs and goals, as well as to give it the right legal form".

Partner of the international company Legal Welt, 

PhD, Attorney-at-law Sergii Malomuzh