Tax and Jurisdictions

Family offices, particularly those in Asia, need to be active and contact their financial institutions about the new US Foreign Account Tax Compliance Act, according to a leading tax lawyer.

Tom Humphreys, from law firm Morrison & Forester, said financial institutions in Europe were more likely to be aware of the new legislation, which is expected to come into effect on 1 January 2014, than smaller banks in developing economies, where US tax laws do not usually have as much of an impact.

Ultra-high net worth families and family offices in the UK need to move quickly and clear up their tax arrears to benefit from the Liechtenstein Disclosure Facility, according to an expert in international taxation.

“If families are not dealing with clearing [undisclosed assets], they are not doing the next generation any favours. The LDF is a way to change that at a time when passing on wealth is a challenge,” Philip Marcovici, a member of the board of wealth manager Kaiser Partner and a former partner at law firm Baker & McKenzie, told CampdenFO.

Many multi family offices in the UK are already subject to Financial Services Authority regulation and SEC requirements would not impose much more in the way of additional compliance requirements other than a possible inspection, says Stonehage Investment Partners’ Paul Hecker.

“As with the asset management industry, some family offices may choose to ringfence their US client business in a separate entity to avoid the whole of their business being subject to SEC regulation.”

The UK-based Institute for Family Business has recommended that the rules governing creation of a family business trust be simplified so that families can plan their succession successfully.

According to IFB, family businesses use trusts to ensure stable management of the business, especially when handing over control to the next generation.

US family offices won a significant battle in their efforts to remain private earlier this year when they gained exemption from the Dodd-Frank Wall Street Reform and Consumer Protection Act, writes Katie Barker.

Following the backlash from family offices over having to register with the US Securities and Exchange Commission and in order not to inadvertently disadvantage family offices, the US regulators amended the reforms to exclude family offices.

Billionaires might be lining up in the US to join the so-called Gates pledge initiative, but so far it has little support outside of America, writes Katie Barker. 
 
Forty billionaires have signed up to the pledge, whereby they agree to give away at least half of their fortunes to philanthropy during their lifetime or shortly after their death. But not one of them is based outside of the US.
 

Few would argue that UBS is not beginning to improve the performance of its wealth management business. But some may question if the wealthy have regained the same level of trust they gave UBS back when it was the pre-eminent wealth manager in the world, writes David Bain.
 
Tuesday's announcement of the bank's second quarter results show outflows from UBS' global wealth management business continuing to fall after the record amounts leaving the bank in 2009.
 

L'Oreal heiress and France's richest woman Liliane Bettencourt (pictured) is accused of paying president Sarkozy's government €150,000 during the 2007 elections.

The allegations come from Bettencourt's former accountant Claire Thibout in an interview with French news website Mediapart.

The interview claims that Bettencourt's financial advisor Patrice de Maistre gave French Labour Minister Eric Woerth a €150,000 donation. The accusation is severe as an individual political donation cannot exceed €7,500 a year under French law.

The latest edition of Campden FO, the magazine dedicated to the global family office community, is now available. There are two areas of focus to this issue: tax and family offices in Asia. Click here to go straight to the issue.

As established financial centres disagree on the merits of proposed European legislation, smaller jurisdictions such as Malta hope to benefit, writes Marc Smith.

The ability to tax plan and tax mitigate is now treated almost as the divine right of the wealthy, but in our straightened times is this attitude any longer morally defensible, assuming it ever was? Equally, Governments are ill advised to impose excessive taxation on such a group which is largely mobile, certainly creative and undoubtedly wealth creating. How can this dilemma be reconciled?

Wealthy families around the world may appear to be facing a barrage of tax increases, but there is positive news if you look carefully, writes Selwyn Parker.