French court declares trust registry of beneficiaries as unconstitutional

While the French administration has declared that Panama is everything but a stain on civilization because of its privacy laws, its Constitutional Court - chaired by Laurent Fabius - has deemed the public registry of beneficiaries to be unconstitutional violation of rights enshriend in the 1789 Declaration of the Rights of Man and the Citizen.

Decision no. 2016-591 QPC of October 21, 2016

Ms. Helen S. [Public Registry of Trusts]

THE CONSTITUTIONAL COUNCIL WAS ASKED TO DECIDE UPON a priority matter of constitutionality on 25 July 2016 by the Conseil d'État (decision no. 400913 of 22 July 2016), under the conditions set out in Article 61-1 of the Constitution. This matter was put forth for Ms. Helen S., by Stéphanie Auféril Esq., Marine Dupas Esq. and Stanislas Pannetier Esq., attorneys admitted to the Paris bar. It was recorded by the General Secretariat of the Constitutional Council under number 2016-591 QPC. It relates to compliance with the rights and freedoms that the Constitution guarantees in the second paragraph of Article 1649 AB of the General Tax Code in its report from Law number 2013-1117 of 6 December 2013 relating to the fight against tax fraud and serious economic and financial crime.

In light of the following texts:

• the Constitution;
• Ordinance no. 58-1067 of 7 November 1958 as amended, concerning the basic law on the Constitutional Council;
• the General Tax Code;
  -Law number 2013-1117 of 6 December 2013 relating to the fight against tax fraud and serious economic and financial crime;
• The Regulation of 4 February 2010 on the procedure applicable before the Constitutional Council with respect to applications for priority preliminary rulings on the issue of constitutionality;

In light of the following items:

• the observations made on behalf of the applicant by SCP Matuchansky-Poupot-Valdelievre, Attorney at the Conseil d'État and the Cour de Cassation, registered on 22 August 2016;
• the observations of the Prime Minister, registered on 22 August 2016;
• the documents produced and appended to the case file;

Having heard Olivier Matuchansky Esq., attorney at the Conseil d'État and the Cour de cassation, and Ms. Auféril Esq. for the applicant, and Mr. Xavier Pottier, appointed by the Prime Minister, at the public hearing of 11 October 2016;

And having heard the Rapporteur;

THE CONSTITUTIONAL COUNCIL DECIDED ON THE FOLLOWING:

1. The second paragraph of Article 1649 AB of the General Tax Code, in its report from Law number 2013-1117 of 6 December 2013 mentioned herein above, states: "A Public Registry of Trusts has been instituted. It mandatorily lists the trusts registered, the name of the administrator, the name of the settlor, the name of the beneficiaries and the date the trust was formed".
2. The applicant claims that these provisions fail to take into account the law in regard to private life and are tarnished by incompetence under the conditions of this right insofar as they allow the public free and unrestricted access to confidential information related to the composition of a trust. These provisions also fail to take into account the principle of equality before the law.

• On the merits:

3. The freedom proclaimed by Article 2 of the 1789 Declaration of the Rights of Man and the Citizen implies the right to respect for private life; Owing to this, collecting, recording, keeping, consulting and communicating information of a personal nature shall be justified by general interest and implemented in an adequate and proportional manner.
4. The Public Registry of Trusts instituted by the second paragraph of Article 1649 AB of the General Tax Code identifies all trusts, under Article 792-0 bis of this Code, and declaring them is made obligatory by the first and fifth paragraphs of this Article. These are trusts which the administrator, the settlor, or at least one of the beneficiaries has its fiscal domicile in France or which include a good or a right located here. For each trust, the registry includes the date the trust was formed as well as the name of the administrator, the settlor, and its beneficiaries. The fourth paragraph of Article 1649 AB refers to a decree in the Conseil d'État and the right to specify the means to consult this Public Registry.
5. By these disputed provisions, through emphasising transparency of the trusts, the legislature intended to prohibit their use for the purpose of tax evasion and money laundering. It also sought the objectives enshrined in the constitution of the fight against fraud and tax evasion.
6. Listing, in a registry accessible to the public, the names of the settlor, the beneficiaries and the administrator of a trust provides information on the manner in which a person intends to manage his or her estate. The result is an infringement on the right of respect for private life. However, the legislature, which did not specify the quality nor the motives that justify consulting the registry, did not limit the people that have access to the information in this registry, placed under the responsibility of the tax administration. Therefore, these disputed provisions have a clearly disproportionate effect on the right of respect for private life in regard to the objectives sought. As a result, without reviewing other grievances, the second paragraph of Article 1649 AB of the General Tax Code should be declared counter to the Constitution.

• On the Effects of the Ruling of Unconstitutionality:

7. According to the second paragraph of Article 62 of the Constitution: “A provision declared unconstitutional on the basis of Article 61-1 is revoked as from the publication of the decision of the Constitutional Council or at a later date stipulated in the decision. The Constitutional Council determines the conditions and the limits according to which the effects produced by the provision shall be liable to be challenged". In principle, the declaration of unconstitutionality should benefit the individual who brought up this priority matter, and the provision declared unconstitutional may not be applied in proceedings pending on the date of publication of the decision of the Constitutional Council. However, the provisions of Article 62 of the Constitution provide the latter with the power to set the date of repeal and to delay its effects in time and to reconsider the effects that the provision may produce before this declaration takes effect.
8. In this case, no motive should justify a delay of its effects of unconstitutionality. This should take effect from the date of the publication of this decision.

HELD:

Article 1. - The second paragraph of Article 1649 AB of the General Tax Code in its report from Law number 2013-1117 of 6 December 2013 relating to the fight against tax fraud and serious economic and financial crime is unconstitutional.

Article 2. - The declaration of unconstitutionality of Article 1 shall take effect under the conditions set out in paragraph 8 of this decision.

Article 3. - This decision shall be published in the Journal officiel of the French Republic and notified in the conditions provided for in Section 23-11 of the Ordinance of 7 November 1958 referred to hereinabove.

Ver texto en: https://www.conseil-constitutionnel.fr/decision/2016/2016591QPC.htm

RAK as an offshore trust jurisdiction

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Trusts and Corporate Trusts

RAK Offshore also provides an ideal location to establish various kinds of offshore trusts. An offshore trust is a light and versatile vehicle that can be used as a direct investment that offers great income, tax, and inheritance advantages. An offshore trust can also be used to hold companies or other assets under the RAK Offshore Special Corporate Trusts Regulations.

The key elements of a RAK Offshore trust are:

The Deed: A constitution or legal agreement which sets out the duties and responsibilities of the trustees, the rights of beneficiaries as well as the specifics governing the trust property.

The Settler or Grantor: The person or entity who establishes the trust and lays down its rules

The Trustee: A licensed individual legally appointed to receive the trust property and to manage it in accordance to the terms of the trust deed.

The Beneficiaries: The persons or entities entitled to the benefits of the trust property

The Protector or Protection Committee: The person or people appointed by the settler as a guardian over the trustee and the trust property.

Trusts can be discretionary of nondiscretionary. In discretionary trusts, ownership, control, income and capital distribution vest in the trustees. The beneficiaries of the trust are not entitled to any benefits until the trustees exercise their absolute discretion. In non-discretionary trusts, the trustees have no discretion and all amounts accrue to the beneficiaries as of right.

Why choose RAK offshore for your trust

Trusts are a flexible way of handling both private and corporate affairs and there are numerous reasons to settle a trust with RAK Offshore.

RAK Offshore has developed a comprehensive, yet efficient legislation, to fulfill every potential need, from avoiding forced heirship or managing your employee benefits to establishing a charitable organization or simply protecting assets.

The range of trusts offered by RAK Offshore are:

Education Trusts: Income and capital are accumulated within the trust until the actualization of a conditional event. For example, a trust to fund the education of your children or grandchildren.

Employee Trusts: For holding pension fund monies or for employee incentive schemes

Spendthrift Trusts: For protecting prodigal or immature beneficiaries

Grantor Trusts: The settler retains control over income or capital, or retains power to revoke the trust

Charitable Trusts and Foundations: For advancing charitable causes. The distinct advantage of charitable trusts is that they are normally granted tax relief provided they meet certain requirements.

Corporate Trusts: For a business owner who wants to keep management control of his company, while transferring it to a beneficiary.

RAKOffshore also provides an ideal location to establish various kind of offshore trusts. An offshore trust is a light and versatile vehicle that can be used as a direct investment that offers greatincome, tax, and inheritance advantages. An offshore trust can also be used to hold companies or other assets under the RAK Offshore Special Corporate Trusts Regulations.

The key elements of a RAK Offshore trust are:

The Deed: A constitution or legal agreement which sets out the duties and responsibilities of the trustees, the rights of beneficiaries as well as the specifics governing the trust property.

The Settlor or Grantor: The person or entity who establishes the trust and lays down its rules

The Trustee: A licensed individual legally appointed to receive the trust property and to manage it in accordance to the terms of the trust deed.

The Beneficiaries: The persons or entities entitled to the benefits of the trust property

The Protector or Protection Committee: The person or people appointed by the settler as a guardian over the trustee and the trust property.

Trusts can be discretionary of nondiscretionary. In discretionary trusts, ownership, control, income and capital distribution vest in the trustees. The beneficiaries of the trust are not entitled to any benefits until the trustees exercise their absolute discretion. In non-discretionary trusts, the trustees have no discretion and all amounts accrue to the beneficiaries as of right.

Why 

choose RAK offshore for your trust

Trusts are a flexible way of handling both private and corporate affairs and there are numerous reasons to settle a trust with RAK Offshore.

RAK Offshore has developed a 

comprehensive, yet efficient legislation, to fulfill every potential 

need, from avoiding forced heirship or managing your employee benefits to establishing a charitable organization or simply protecting assets.

The 

range of trusts offered by RAK Offshore are:

Education Trusts: Income and capital are accumulated within the trust until the actualization of a conditional event. For example, a trust to fund the education of your children or grandchildren.

Employee Trusts: For holding pension fund monies or for employee incentive schemes

Spendthrift Trusts: For protecting prodigal or immature beneficiaries

Grantor Trusts: The settler retains control over income or capital, or retains power to revoke the trust

Charitable Trusts and Foundations: For advancing charitable causes. The distinct advantage of charitable trusts is that they are normally granted tax relief provided they meet certain requirements.

Corporate Trusts: For a business owner who wants to keep management control of his company, while transferring it to a beneficiary. 

RAK Offshore Trusts
Minimum Assets	No
Charitable Purpose Trust	Yes, but tighter control on charitable trusts
Perpetuity Period	99 years Wait and see provision Do not apply to charitable trusts
Re-domiciliation	Possible in and out
Choice of Proper Law	Very liberal Different laws can govern a trust
Revocable and Irrevocable	Yes
Accumulation	Possible
Registration of Trusts	Yes, anonymous
Exchange Control	No
License for Trustees	Yes
Confidentiality Rules	Strict
Financial Disclosure	Yes
Foreign Court Awards (for trust taking the law of the jurisdiction)	Immunity
Time Limit to bring Suit	2 years
Fraudulent Dispositions	Yes
Forced Heirship Excluded	Yes
Number of Trustees	1 to 4
Trustee as Beneficiary or Settler	All combinations possible
Protectors	Office of protectors allowed
Financial Guaranties	Yes
Tax Treaties	Yes
Compliant with the Hague International Convention on Trusts	Yes

• Flexible types of trusts available combined with liberal asset-protection provisions
• Strong protection for customer money
• Liberal choice of law governing the trust and the option of re-domiciliation
• No minimum amount of property
• Compelling confidentiality rules
• A trust estate may form an IBC
• Anonymous registration of trust
• Office of protectors is allowed
• No taxes

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If you need to form your RAK company or trust, contact us through our website, by email, Bitwine or Skype

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Lombardi Aguilar Attorney To Speak at New York State Bar Association Panel Discussion

Lombardi Aguilar Attorney To Speak at New York State Bar Association Panel Discussion

Attorney Alvaro Aguilar will be a speaker at a panel discussion on trust & estate laws to be held before members of the New York State Bar Association (NYSBA) International Section

Lombardi Aguilar Group (http://www.laglex.com/) partner Alvaro Aguilar-Alfu will be a speaker at a panel discussion during the New York State Bar Association (NYSBA) International Section seasonal meeting. The theme of this seasonal meeting is "Latin America as an Engine for Economic Recovery and Growth." Mr. Aguilar is also Co-Chair of the meeting local steering committee comprised of lawyers from the Central and South American cities of Panama City, Bogota, Buenos Aires, Santiago, São Paolo, and San Jose. The meeting will be held from September 21-24, 2011, in Panama City, Panama, and a pre-meeting of the NYSBA Costa Rica Chapter will be held on on September 19.

Mr. Aguilar will be a panelist of the session on "Trusts and Estates – Regulation of Offshore Accounts and Trusts in the US and Latin America" on Thursday, September 23, from 2:40 p.m. to 3:55 p.m. Other experts in the panel will be Glenn G. Fox and Michael W. Galligan (both of New York City, U.S.), Mary Fernandez (Santo Domingo, Dominican Republic), Cristina Sánchez-Urtiz (Mexico City, México) and Diego Fissore (Buenos Aires, Argentina). Lombardi is a graduate of Universidad Santa Maria la Antigua (LLB) and Washington College of Law / The American University (LLM).

To register for the 2011 Seasonal Meeting of the International Section, visit the New York State Bar Association Website at: http://www.nysba.org/PanamaMeeting2011


About the New York State Bar Association (NYSBA) International Section

NYSBA http://www.nysba.org/ilp is the organisation of lawyers in the State of New York, and with more than 76,000 members, it is the largest voluntary bar organisation in the United States.
The NYSBA International Section is one of the most active sections of the Association, with over 2,000 members throughout the United States and in many foreign countries and with chapter chairs in numerous cities worldwide. Members are primarily professionals practising law at major international law firms or corporations with a global reach.
NYSBA International provides its members the opportunity to keep up to date and influence issues and events that affect their clients and their practice. Each year NYSBA International hosts its Seasonal Meeting in a different city outside of the United States to provide American and foreign colleagues the opportunity to meet, network and expand their international practices.

About Lombardi Aguilar Group
Lombardi Aguilar Group is a partnership of consultants created as an alternative for clients worldwide who seek fast, innovative and effective solutions to their legal problems. The firm currently provides services to individual and corporate clients in Panama as well in the Americas, Europe and Asia. Its partners maintain a commitment with professional ethics and social responsibility by participating in the board of directors of groups such as the Panama Bar Association, the Alliance Francaise, the German and the American Chambers of Commerce (AMCHAM) of Panama, and the Association of Chinese-Panamanian Professionals (APROCHIPA).

The firm centers its law practice in private client services and asset protection (Private Interest Foundations, Trusts), business structures (Offshore Corporations), tax planning, real estate and e-commerce. It also advices in areas of Law such as Corporate, Commercial, Intellectual Property, Maritime, Tax, Environmental and Immigration Law as well as related litigation.

For more information, contact +507 340-6447, e-mail info (at) laglex.com, or see: Lombardi Aguilar Group http://www.laglawyers.com/

Keywords: panama, latin america, new york, tax, offshore, Trust, trustee, estate, Real Estate, Property, corporation, foundation

http://prlog.org/11646540

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Panama - a trust jurisdiction in a Civil Law region

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PANAMA – A TRUST JURISDICTION IN A CIVIL LAW REGION

Panama is traditionally considered a Civil Law jurisdiction like the rest Latin America where judges construe the law as stated in Codes. However, its long relationship with the United States makes it an exception in a region where laws originate from French Civil Code. As of this day:

• the U.S. Dollar is currency of legal tender since 1904,

• the 1917 law of commercial paper is based on the U.S. Uniform Negotiable Instruments Law,

• the 1927 corporation law is based on the law of Delaware of the time,

• trusts may be formed since 1925.

The original 1925 law was changed in 1941 and finally its current version of Law 1 of 1984. Its main features are:

1. Simplicity of execution: Trust deeds may be granted by private document, granted by the settlor before a Notary Public anywhere in the world.

2. Contractual freedom: A settlor can grant a deed with any clauses or distribution plans as long as they are not contrary to law, morality or public interest. This extends to allow the possibility of post-mortem distributions different from those of the settlor's estate laws or forced heirship rules. The law also allows practitioners to draft trust deeds for execution of Sharia-complaint trusts or appointing a protector as a limit to trustee powers.

3. Duration: The duration of the trust can be indefinite, which represents a change from the rule against perpetuities in the previous 1941 law.

4. Confidentiality: Trust deeds do not need to be made public by their registration (unless real estate in Panama is being settled). The trustee and its employees are subject to a duty of confidentiality. Breaches of said duty are subject to imprisonment or monetary fines.

5. No citizenship requirements: Individuals or entities of any country can serve as settlors, trustees or beneficiaries. None of the parties need to be Panamanian, except for the attorney which serves as resident agent.

6. No trustee requirements: Any capable person or entity may serve as trustee and does not need to be authorised by a government authority, unless they market themselves as such on a regular basis. Trustees serving as commercial custodians may seek to apply for a trustee license from the Superintendent of Banks in which case the trustee is subject to quarterly reporting, capital adequacy ratios and know-your-customer rules similar to those of banks.

7. Charitable or for-profit purpose: Trust provisions may appoint a general class of beneficiaries or unborn beneficiaries. Alternatively, trusts may also serve for commercial transactions, such as securitization of receivables or other assets.

8. Revocability option: Trusts are irrevocable by default, unless parties decide otherwise.

9. Separate patrimony: Trust assets are deemed as separate from assets of the settlor and trustee. Therefore, creditors of the settlor¹ or trustee – such as commercial creditors or inheritance creditors in probate cases - cannot seize assets settled. Trust assets may be seized for liabilities incurred or damages caused from the performance of trust or by third parties when assets have been transfered or withheld by fraud.

10. Low local taxation: Income earned from assets located abroad or funds held in any bank in Panama are exempt from local Panama taxes. However, legislation from the countries of residence or citizenship of the settlor or trustee may impose additional tax obligations.

11. Minimum reporting requirements: Trusts without assets in Panama or not earning income in Panama are exempt from having to file tax returns or financial statements. Trustees are required to render account of their performance to the beneficiaries and maintain a duty of care under the bonus pater familiae standard.

Conflicts of Laws

The trust is subject to Panama law once it is stated in the trust deed. However, parties may agree to settle disputes under foreign law.

Disputes by default are resolved by Panama courts under a summary procedure with a shorter evidentiary stage. Parties may agree to have controversies settled by arbitration or before foreign courts.

Panama trusts may be transferred to another country when the trust deed allows so.

Foreign trusts may be subject to Panama law, as long as the trustee alone or jointly with the settlor, states so.

Foreign trusts are subject to Panama law, when enforcing their rights in court.²

Panama is not a member of The Hague 1985 Convention on the Law Applicable to Trusts and on their Recognition. Panama courts have cooperated in international service of process under international comity rules, but strictly enforce confidentiality and trust privilege granted by trust law³. National treatment is granted to nationals under Bilateral Investment Treaties (with U.S. and other countries) and Free Trade Agreements (Singapore and – pending ratification by Congress - U.S.).

1A vehicle held in trust by a trustee company for the benefit of its driver, cannot be seized by a government-owned bank to satisfy consumer debt of said driver. Decision of March 2, 2004, by Supreme Court of Justice – Administrative Section, Case 281-08.

2When a will granted in Panama by a St. Kitts national which appointed a St. Kitts & Nevis trust as heir. The trustee of the Nevis trust – not the trust itself - was held to be the rightful representative of the heir, because both Panama and St. Kitts trust laws consider the trust to be a relationship between settlor, trustee and beneficiary but not a separate entity in itself. Decision of May 4, 2007, by First Superior Tribunal of Justice, In re Estate of Wilson Charles Lucom.

3Two Panamanian principals of a BVI trustee company may answer the deposition requested by Polish authorities through exequatur but not provide copies of the trust documents. Decision of December 30, 2004, by Supreme Court of Justice – General Affairs Section, Case 110-04.

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See also:
Should You Use an Offshore Entity?
US forms required for Panama trust and other non-US entities