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Offshore Trusts: Asset Protection in Dominica

The following describes what constitutes trust in Dominica and a foundation in Dominica, as well as what advantages they provide to the trust manager, the founder of the foundation and the beneficiary. We will study together how to create a trust and foundation in Dominica, and what requirements must be met in order to establish an offshore trust or foundation.

Creating an offshore trust for asset protectio in Dominica

The following describes what constitutes an offshore trust in Dominica and how you can create a trust here. The advantages and purpose of such trusts are described in detail and it is indicated why the jurisdiction of Dominica is attractive to offshore founders.

To create trust in Dominica, you must meet all the following conditions. The founder of the trust property must transfer its assets / personal fortune to the trust. It is necessary to appoint a trustee who is responsible for managing the trust and enforcing the provisions of the declaration of trust in the interests of the beneficiaries (a person or group of persons who benefit directly from the trust). The trustee must be an adult in his right mind and must conscientiously execute a trust declaration. The guarantor controls the activities of the trust, ensures compliance with its trust declaration (trust agreement) and ensures satisfactory management of the trust. The trustee manages the trust on behalf of the founder (who transferred his assets to the trust) in the interests of the designated beneficiaries.

The founders need to understand the main difference between a non-offshore and an offshore trust, namely: in an offshore trust, assets are stored in another country, and the trust is created under the laws of an offshore jurisdiction.

Why create an offshore trust in Dominica?

Dominica is a tax haven for creating trusts, with modern legislation and competent administration in place. After the enactment of the Law on Concessions for International Trusts in Dominica in 1997, the trusts received an exemption on all taxes on the income and stamp duty, or on all activities carried out by the trustee. In accordance with the legislation of Dominica, international trusts are also not subject to currency regulation.

An attractive feature of trusts in Dominica is also the fact that potential heirs cannot sue the trust, and the assets of the trust cannot be seized. The rule of compulsory share in the hereditary mass in the case of trust in Dominica does not apply, which allows the founder to freely choose whom and in what size to leave his fortune. Many people want to protect their assets, and as a founder, you can transfer any of your assets into a trust and legally declare that you do not own them. Another advantage of trust in Dominica is protection from creditors. If a lender intends to file a lawsuit against a trust, he must deposit $ 25,000 as a security in case of loss of the case. In addition, he must prove the actual existence of fraud in the creation and management of the trust.

What is an offshore trust in Dominica?

Trusts are mainly used by very rich people to protect their personal condition and to provide for their children or future generations.

To establish trust in Dominica requires compliance with the three main requirements. First, the beneficiaries of the trust must always be non-residents. Secondly, the property in the trust should not include land in Dominica. Third, at least one of the trustees must be registered in accordance with the Companies Act 1994 or the International Business Corporations Act 1996. Under the Dominica Trust Law, a trust is 100 years old except in the case of a charitable trust, the life of which is not limited. Trusts in Dominica are registered in the registry. To do this, you must submit an application for registration and pay the established fee, provide the name and registered address of the trust, and finally submit a letter from the lawyer confirming that the trust is international.

The types of property that may be in trust in Dominica include, but are not limited to:

– Dominica government securities

– Deposits in a licensed bank

– Securities and shares

Assigning Dominica Trusts

– Asset Protection

– inheritance planning

– Benefits for children

– Benefits for employees

– Charity and social assistance

The most commonly used trusts in Dominica

– Guard Trusts – provide for the possibility of removing or adding proxies

– Charitable trusts – should benefit the public

– Target trusts – can be created subject to the rules of morality, legality, and legality and not violate the law.

Advantages of offshore trusts in Dominica

– Protection of the desires of the testator by avoiding the right to an obligatory share in the public mass

– no requirement for a minimum amount of capital to create a trust

– effective tax planning

– high asset protection. For more information about the asset protection, see this site https://offshorecitizen.net/asset-protection/.

– opportunity for foreigners to own trusts

– a high degree of reliability and confidentiality, since the registrar has no right to disclose information about the trust

– no inheritance tax

– avoid proof of authenticity

– exemption from income tax and stamp duty

– lack of currency regulation

– high level of asset protection and condition management

– the possibility of the existence of a trust up to 100 years

– ease of creating a trust in Dominica

– Very flexible trust structure.

Offshore Fund in Dominica

What is a foundation in Dominica?

In order to create a foundation in Dominica, a founder who is the person/organization creating the fund is required, the guarantor is necessary to ensure the conformity of the fund management, as in the case of trusts, the beneficiary is the person or group of people who benefit from the fund, board members. There are no shareholder requirements.

After the foundation is created, it becomes a legal entity and, therefore, the owner of the fund’s assets. As a result, the fund does not have a specific owner and is created, as a rule, in the interests of the company’s offshore clients. Funds can own a wide variety of companies and assets and can issue instructions, which, as in the case of trusts, are binding. Requirements instructions are included in the registration document of the fund and its charter.

Types of funds in Dominica

– Public fund – created by families, groups of individuals, etc.

– Private fund – created by private individuals, usually private investment funds

– State Fund

– Mixed Fund – can be created by any of the above.

Assigning Funds to Dominica

– Asset Protection Tool

– Protecting personal status from financial and political instability in their jurisdiction

– Asset management for planning and asset allocation through a centralized management system

– Tax planning of inherited assets

– Availability of corporate control and management

– separation of voting and economic benefits

– Profit participation schemes for employees

– Charity groups

Types of assets that may be located in an offshore fund in Dominica

– Shares and securities of private and public companies

– Bank deposits

– Life insurance policies

– Investment portfolios

– Real Estate

– Objects of intellectual property.

Advantages of a fund in Dominica

– Corporate asset protection

– Persons contributing to the fund in Dominica have the right to exclude the deposited amount from income taxation

– Dominica offers “tax haven” for foreign investors

– Dominica legislation provides a high level of confidentiality

– The geographical position of Dominica contributes to international relations and access to other jurisdictions of the world.

– A foundation in Dominica provides the founder and its property with a high level of asset protection.

– Payment of reasonable compensation for your services to the fund

– the assets are owned by the fund, not the designated person

– Ability to own numerous companies and enter into agreements with third parties

– The possibility of implementing the prescribed instructions, as is the case with trusts

– No capital gains tax or income taxes.

Offshore for the real estate market – how and why

Recent changes in Russian legislation prohibiting civil servants from holding bank accounts and owning real estate abroad , as well as restricting transfers on foreign accounts only through Russian banks, will push those Russians who have already used offshore services to finally transfer all their assets into them, and who have not had any offshore experience, acquire one and open their own offshore.

We often use the word “offshore”, but, as it turns out, not everyone knows what stands behind it – how the offshore scheme works, what it is for, and what are the benefits from it. In this article, we will try to look at the topic of offshore companies from a “technical” point of view, without going into arguments about how the withdrawal of many Russians and their funds offshore affects the economy of a country. The main task for us is to understand what an offshore company is, the basic principles of its work and what it gives to those who open it. Good or bad? Everyone makes this decision for himself.

What is offshore in the literal meaning of the word “

Offshore” is a company that is registered in one of the many offshore zones in the world. Offshore zones of the British Virgin and Cayman Islands are most popular among Russians. A complete list of offshore companies around the world can be easily found by typing the phrase “open offshore” in a search engine, and by clicking on the first site, you can view the entire list.

The Russian authorities are far from being the first to take measures against the withdrawal of funds and assets of citizens to offshore, therefore, they have been ready for everything for a long time, because the registration of offshore companies and ensuring their activities is the main income of such countries. So, changes in the Russian legislation, unless they increase the flow of customers, otherwise nothing will change.

It is necessary to understand everything in order. At the first stage, an ordinary registration of a company takes place in an offshore jurisdiction, there is nothing unusual here. Then, the newly formed company issues securities, shares, and this is where the most interesting begins. Since, for various reasons, the foreign owner of the company cannot be the holder of these shares (this is why he opens an offshore company), 100% of the shares of the new company are transferred to a special trust that holds them in the name of this foreign citizen. Offshore services such as trust are well developed. A trust is a special form of relationship between legal entities, the main purpose of which is to hold securities (shares) of an offshore in the name of the beneficiary, the actual owner of this offshore. The focus of such a scheme is that the name of this owner, for which the trust holds shares, it is known only to those who are directly related to the trust, i.e. this is classified information. It’s impossible to find out the name of the real owner of the offshore to a third party – neither the trust nor the offshore provide such information.

Any company should have a director, and offshore in this regard is no exception, with the only difference that the director is exclusively nominal, and this is a legal entity that is the CEO of thousands more such companies.

The question arises – how does the real owner fit into this whole scheme and how does he manage all of this? A general power of attorney has issued annually to the actual owner, which gives him the right to manage the company’s accounts and manage its funds. An interesting detail: such a power of attorney can be issued not only to the owner but also to other people, for example, his relatives, family members, etc. Thus, the owner of an offshore company is absolutely not constrained in terms of managing their funds. Legally, such a holder of power of attorney does not own either the company or its assets – money, shares, real estate, etc., it only manages these assets by proxy, so it cannot be charged under the new law.

To open such a company is very inexpensive – only $ 2000, service – another $ 1000 per year. And no taxes, no restrictions on the use of the property. In the case of verification, it is simply impossible to find out who the owner of offshore assets is (in our case of real estate), because in the register of enterprises offshore securities are recorded for trust, the nominal director is a legal entity, to whom this year the general power of attorney was issued, find out there is no possibility.

Today, approximately 50% of transactions with foreign real estate are made with the help of offshore companies. The fact is that it is not difficult to transfer real estate to offshore and it will cost mere pennies. The owner of the property has the right to dispose of it at its discretion, he can “resell” its offshore for only $ 100. And a month later, when the transaction will be executed, this property will not legally be considered the property of this person. To withdraw the property from offshore is also easy and cheap.

To open a company in an offshore, you do not have to be a financial guru, you do not need to have an economic or legal education, even to know the language – in Russia, there are a huge number of companies that provide services for opening and servicing offshore companies. By the number of such firms, one can judge the popularity of offshore services among Russians, and the new legislation will give a strong impetus to the further development of such a business.

It has already been said about a new ban for officials and civil servants to have a property or an account in a foreign bank, and innovations in the law oblige citizens of the Russian Federation (not only officials) to conduct operations with foreign accounts only through Russian financial institutions. And these institutions will certainly take advantage of this and raise the rates on transactions with accounts abroad, but if the account is registered for an offshore company in one of the numerous banks, for example, in the Baltic States, then this allows us to bypass the new ban. Modern technologies allow the account holder to have access to their funds 24 hours a day, almost anywhere in the world – you only need a bank card or a phone at hand to contact the bank’s concierge service.

Cyprus problem

Speaking of offshore, it is impossible to bypass the topic of events in Cyprus. Most Russians considered Cyprus an offshore zone, even after the country had essentially ceased to be so. An offshore zone is a special economic zone in which companies do not pay any taxes on any income — capital gains, dividends, and so on. Vivid examples of such zones are the British Virgin Islands, Cayman Islands, Belize, and many others.

In Cyprus, as well as in other offshore companies, they opened companies, but for a completely different reason than in the case of Belize or the Cayman Islands.

During the current discussions of changes in the legislation of Cyprus, it turned out that a third of the deposits placed in local banks belong to Russian citizens. But the specific amounts were not disclosed – out of 100 deposits in Cyprus, approximately 30 belong to the Russians, but how much money exactly lies on these accounts is unknown. Most likely, in terms of money, about half of the money placed in Cyprus belongs to the Russians. The most interesting thing is that the bulk of this money belongs to large Russian companies, and it is likely that even some corporations with state participation placed funds there.

What is the secret of such popularity of Cyprus? First of all, Cyprus has a very good judicial system. Cyprus is a former British colony, and the colonialists managed very well to debug this particular public institution. In Russia, big business does not want to sue because of the high level of corruption. Therefore, companies opened in Cyprus, but in Russia, it was just a representative office or a branch of the company, thus it was easier for entrepreneurs to defend their rights. If the business was originally created for sale, then the presence of residence in Cyprus was almost one of the main requirements, especially if negotiations were conducted with Western investors.

The current situation will provoke a powerful cash outflow, as well as the mass exodus of companies from Cyprus. The banking system of this state, most likely, has been irrevocably undermined.

Do not forget about the fact that Cyprus is a member of the European Union, and the EU authorities would hardly have allowed the presence of an offshore from the blacklist. Therefore, Cyprus has long ceased to be offshore in its negative understanding. Cyprus taxes were a long time, from 10% to 15%.