Foundation vs Trust with and IBC Structure

[Teg Ris]

Hi Everyone.

I am looking to establish a foundation or trust in one jurisdiction, with an IBC in another tax haven jurisdiction.

Below is a short summary of what we do and what we need it for.

We are three partners - two Canadian-Iranian (2 passports) and we live in Canada (over 15 years). We have another partner who is Iranian that has been living outside Iran (since 2005 usually in China or Spain). There is plenty of trust between us.

Our business is mostly on automotive parts (tires; working Chinese supplier; via our Chinese on-shore company) and Information Technology (via our Canadian On-shore company).

The IBC company would be to collect commission from the Chinese company; therefore it would require bank account.

The foundation is the layer of privacy and confidence for our operation.

I would appreciate your assitance for the following questions:

1. Foundation vs Trust; which one; and which jurisdiction.
2. IBC with real brearer shares; is it possible and if so can we open a bank account with it? This IBC would eventually hire our on-shore companies to do services on their behalf; and the IBC would be owned by the foundation.
3. Where to establish the IBC?

Please don't hesitate to provide me any alternative solutions ! I'm all ears.

Thanks to you all.

 

[Martin Everson]

Answers

1. Foundation over a Trust as Foundation can have no beneficiaries. Jersey jurisdiction
2. Yes IBC with bearer shares is possible but not workable with bank. Why bearer shares?
3. Anywhere i.e Vanuatu. Try bank vantubank.com and their corporate services partner that opens Vanuatu companies.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[Teg Ris]

Hi Martin, Thank you for your answers. The IBC bearer shares was a thought for extra privacy;

About jurisdictions you metnioned, is there some reason you chose Jersey and Vanuatu and would you care to share a bit of your brain here on why these jurisdictions; The total armed forces of Vanatu is 500 ppl - that includes the police and mall security.

For a foundation, i had heard Panama and Nevis but not much about Jersey - is there a reason you chose Jersey for a foundation over another jurisdiction? and about Vanuatu, is it because it could be more beneficial structuraly, or because it's easier to open the IBC and the account?

Thanks again Martin.

 

[Martin Everson]

Jersey for a foundation because it follows English common law and language. Their foundation law is very recent (2009) and modern and brought in to address the short comings of trust structures. Jersey is well proven jurisdiction and when the Soviet Union collapsed Russia was able to hide $50bn in hard currency in Jersey to avoid creditors and that money was later used to rebuild Russia into what it is today. Otherwise Russia would have been bought and owned by the foreigners as is happening to Greece right now.

Vanuatu is interesting because you can get the bank and company incorporation bundled together and there is also interesting possibilities there but I won't go into that. Basically you want to find any bank and corporate service combination - often known in Caribbean as a licensed Bank & Trust.

I don't understand where you are going with point about Vanuatu armed forces. You mention Panama Foundations but Panama was invaded by US in 1989 and its president deposed, captured taken to America and jailed. How good is a Foundation then? Armed defense forces are not relevant in today's world where war is fought politically (opposition backing, election influencing), financially (sanctions), digitally(hacking) and socially (subversion of public opinion). Armed forces is an archaic form of defense or conquering and does not work. Case in point the US has been in Afghanistan for 17 years. They spend $500bn a year on the military and have every known type of sophisticated weaponry known to man with which defend and to wage war. However after 17 years they have proven unable to defeat a bunch of guys with only AK47, RPG's that are running round in sandals. What does that tell you about armed forces 🙂

Nevis is good choice also as their foundation law is recent also. I think 2005 it started and was implemented also because Trusts do not work for all clients depending on your home countries tax laws. It has an advantage over Jersey as it is neither a British Crown Dependency or an Overseas Territory. New laws in UK proposed mean that UK will have full access to all financial information for BCD and OT and this information can be shared with other governments...so no privacy possibly by end 2019 :-(

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[Teg Ris]

Hey Martin, thanks again!
Thanks for the history about Russia and Jersey and US vs Panama; thats interesting and your very much correct. I mentioned the forces I was very unfamiliar with Vanuatu.

Martin Everson said:
Vanuatu is interesting because you can get the bank and company incorporation bundled together and there is also interesting possibilities there but I won't go into that. Basically you want to find any bank and corporate service combination - often known in Caribbean as a licensed Bank & Trust.
Click to expand...

Could you elaborate a bit more on what you mean about the combination or "Bank and Trust" - I did some searching and I found CIBC Bank and Trust (Caribbean) but it wasn't very clear to me. The bank becomes sort of like the trustee (like in Trusts?).

Martin Everson said:
Nevis is good choice also as their foundation law is recent also. I think 2005 it started and was implemented also because Trusts do not work for all clients depending on your home countries tax laws. It has an advantage over Jersey as it is neither a British Crown Dependency or an Overseas Territory. New laws in UK proposed mean that UK will have full access to all financial information for BCD and OT and this information can be shared with other governments...so no privacy possibly by end 2019 :-(
Click to expand...

Would you then suggest that I try Nevis for the foundation over Jersey for sake of privacy?

I understand that you can register a foundation with corporate entity as the founder, and vice versa; Would you suggest foundation owning the corporate or the coporate owning the foundation?

Thanks again!

 

[Martin Everson]

Basically regulators issue licenses to operate as a bank or as a trustee. Typically if we go back 20-30 years people would hide their money in a trust offshore. They would go to a trust provider and ask them to setup a trust and open a bank account for it. Banks cottoned on that all the money coming to them was via trust providers and thus had an incentive to be the ones offering trusts services themselves and cut out the middleman. Trust assets are often held for very long periods and generate a good steady income so they are a important source of revenue for a bank. CIBC is a good example and so is Cayman National Bank & Trust in Isle of Man. In fact if you look at the Bahamas for example it is overwhelmingly bank and trust licensed entities.


I would suggest Nevis or Bahamas over Jersey if I had to choose.

Use a lawyer as the founder. Or setup a throw away offshore company as founder. Just remember when the founder (company) is struck off the Foundation becomes an orphaned entity which is good thing ;-)

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[Teg Ris]

Hey M, I can't thank you enough for you help.

So this is what I think is the best suggestion according to your comments:

Step 1. Setup a Nevis Multiform Foundation (or Bahamas)
Step 2. Establish an IBC in Vanuatu - (bank and company incorporation bundled)

In order to setup a foundation, could you provide me with some sources for Nevis and Vanuatu? For example, you mentioned get a lawyer to be founder of the Nevis foundation; then - is there a law firm or company that you guys are familiar with that I can get in touch with them.

Thank you again!

 

[Martin Everson]

I have no specific law firms or companies in mind. Make sure however you mention Iran connection up front to them. A good firm will check your activity is not in violation of any sanctions and then you are good to go.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.