Vistra expands into Asia and launches new services
In our April 2008 newsletter we explained our ambition to develop a substantial presence in East Asia. One year later we are proud to announce that our Hong Kong office is now open for business. In this issue John Ashwood and Erik Leenders explain how Hong Kong is the gateway between Europe and Asia. We are celebrating this important milestone with an office launch party on the 7th May. For invitation details, please contact Yasmin Stewart.
As the recession sharpens its teeth new opportunities arise. In response to a growing demand for management of vessels repossessed by lenders, Vistra Marine can offer help with a repossession management package. With swift action, Vistra can apply its dedicated resources to minimise running costs and optimise resale opportunities.
As the G20 summit kicks off in London on April 2 the recession has re-ignited an old debate about the so called "tax havens". On March 13, 2009 the Swiss government announced that it would adopt OECD standards for the future streamlining of administrative assistance. What this means in practice for Swiss banking secrecy is explained further.
After flourishing for almost 80 years, the Luxembourg Holding 1929 company is about to disappear. It follows a conclusion by the European Commission that the tax exempt facility of the Holding 1929 company violates EC state aid rules. In this Newsletter we explore several alternatives. Due to the continued growth of Vistra, we have re-designed and launched a new Solutions section on our website. This re-design will provide you with easier navigation, giving a clear description of services and links directly to key Vistra contacts in relevant jurisdictions.
Bart Deconinck
Group Chief Executive
Vistra opens Hong Kong office
Vistra has just opened an office in the heart of Asia; Hong Kong. Managing Director John Ashwood and Associate Director Erik Leenders explain how it will create a gateway for clients between Europe and Asia.
Q: John, what is the background to the Hong Kong office?
A: We are very excited to be opening in Hong Kong. It is Vistra’s first Asia based office and is a significant step for the Group’s development towards being a truly global trust and corporate services provider.
We consider the Hong Kong office to be a vital link between the West and the East for both private and corporate clients. It will make it far easier for European and other Western clients to move into Asia, as well as for Asian clients with affairs in Europe.
Our prime objective is to provide clients with a practical, efficient and user-friendly one-stop shop for corporate and trust services from Hong Kong. We have a great team who will deliver value added services and complete back-office support to our client operations, without burdening them with unnecessary and time consuming administration like our competitors tend to.
Q: When you say a complete back office, what does that include?
A: Vistra Hong Kong will provide complete back office support for firms who want to reach customers and suppliers in Asia, but for whatever reason don’t want or need their own office in Hong Kong or lack the experience.
Essentially, it covers every type of administrative support that clients might need relevant to their business, from handling their invoicing and treasury functions to recruiting staff and managing the payroll. We are initially focusing on provision of corporate services (including incorporation and secretarial services), accounting services (including payroll services) and trade services (including treasury services), and we are heading each section up with an experienced manager.
As part of the above, we will be providing full fiduciary services including directorships, nominee shareholders and nominee bank account signatories.
Q: How common is it to provide nominee services?
Some competitors here don’t provide them, particularly law and accountancy firms, as they don’t generally offer the full range of fiduciary services that a trust company like us will provide. However, to be considered a complete trust and corporate service provider, you must be capable of providing these kinds of nominee services as well. Unlike many of our competitors, Vistra is not an accounting firm that just decided to provide corporate services; Vistra’s roots are derived from its trust heritage and I think this shows in the range of services that we are willing and able to provide.
Q: What about your treasury services?
A: If clients don’t or only have a small office in Hong Kong, they will often feel a lot more secure outsourcing their treasury operations to a professional service provider they can trust. We can act as the appointed signatories to bank accounts, operated under instructions from the client and subsequently provide summaries of bank accounts and cash flows as and when the client needs them. From a practical point of view it also makes a lot of sense for clients to delegate such services to us. There are time difference issues, as well as the fact that it is impossible for some banking related matters (such as handling letter of credit documentation) to be handled by the client from their home country. Also, some of our clients are listed, or subsidiaries of listed companies, and they prefer to outsource bank account signing authority for security reasons and good corporate governance.
Q: Erik, is there a typical corporate client?
A: Well, a client is never typical because there are so many possibilities for Hong Kong. However, here we do have a lot of clients who are importing products produced or part-produced in Asia, for instance China, and there is a growing trend for them to want to have their own operations in Hong Kong to service that produce. By setting up in Hong Kong, not only can they enjoy the local tax benefits but also control their Asia operations better.
Basically, any client who has any Asia business-related activity could benefit from Hong Kong’s unique structure with the non-resident tax regime, which means that companies can be structured to be free of income tax. Also, Hong Kong has double tax treaties with Belgium and Luxembourg, which create a tax efficient window between Asia and Europe. We see this working in both directions: Asians wanting to invest in Europe and Europeans in Asia. Hong Kong structures can create significant tax savings also in respect of China as Hong Kong’s treaty with them is more favourable than any other treaty partner.
Our office in Hong Kong will also set up and administer offshore companies where they may be more favourable for the commercial and investment objectives of the client.
Q: What will this mean for European clients?
A: Put simply, while the client is focused on running their core operations dealing with customers and suppliers, we can relieve them of the burden of all the administration necessary to support their business activities, and keep their company compliant with the statutory regulations applying in Hong Kong or anywhere else the company may be registered.
This will encompass services like secretarial services, bookkeeping and financial account preparation, co-ordination with company auditors and tax representatives, bank account operation, treasury management and cash flow reporting, payroll and general staff recruitment, mail handling, setting up dedicated telephone and fax lines and so forth - it’s whatever our client needs - a one-stop-shop for complete back office support.
We can also act on a client’s behalf dealing with suppliers and freight companies on logistical matters, and banks and insurance companies on the financial and risk aspects of their trade and investment activities.
This will appeal particularly to firms who have not reached a size to justify having their own staff in Hong Kong or simply don’t want to. We have a specialist team of staff who are not only experts in these services but also master the local languages. We can handle the issues that the time zone and language differences create.
But that’s just the business services part; we also want to point out that Hong Kong can play an interesting role in holding, trust and investment structures. Furthermore, we are also able to help private clients and businesses from Asia with assets in Europe.
Q: What does the Hong Kong office provide for private clients?
A: Our Private clients are more interested in asset management and investment holding, asset protection and estate planning structuring options. They are therefore interested in our trust and private investment holding company services. We offer these services using Hong Kong as well as overseas structures. Properly structured, Hong Kong trusts and companies can enjoy zero tax, whilst not suffering reputation and credibility issues that some other jurisdictions face.
Also we think that the flow of business won’t only be from Europe to Hong Kong. There are situations where Chinese and other Asian clients have business interests and assets that they prefer to own outside their home countries, and a little further a field than Hong Kong. In this case, Vistra has offices in places like Jersey and Geneva where a trust or corporate investment holding structure may be of benefit to the client.
Q: John, tell me more about the office itself.
A: We have opened with ten people and expect it to grow to around 15 to 20 people in a short space of time. We have pretty ambitious plans and the people who have joined I consider to be the best in their respective field of expertise. On the business development and client relationship side Erik will play a key role with helping our European clients, although everyone will play an important part in growing the business and supporting our clients. Our commitment to take on this many people from day one reflects our philosophy that unless we have got the right team to support our business and clients from the start, there is no point in asking clients to support us. So as far as our actual presence, we have created a very attractive and efficient office on the 57th floor of Central Plaza, which is a well recognised landmark building in Hong Kong.
Q: John, what is your background?
A: I’m Australian and grew up in Tasmania. I attained a Bachelor of Commerce Degree from the University of Tasmania and later qualified as a Chartered Accountant having worked with several large international accountancy firms in Melbourne and Hobart. I extended my career into the international trust and corporate service arena when I left Australia, taking up General Manager roles with a trust company in Samoa in 1998 and Singapore in 2000, and later being appointed as a Director of another leading international trust company in Hong Kong in 2006. I then joined Vistra earlier this year to help set up its new Hong Kong office
Q: Erik, what about you?
A: I grew up in Eindhoven, which is in the south of The Netherlands, near Belgium and graduated in business management there. I then moved into sales for a few years before becoming an accountant with a local accountants firm. I moved to a large international trust company in Hong Kong as Manager – European Desk, where I also met John. I then changed position to a Management Consultancy firm as Manager Business Advisory before being reunited again with John at Vistra.
For more information, please contact either John Ashwood or Erik Leenders on +852 2827 6188.
Vistra Marine launches repossession management package
In recent months the global downturn has had a severe impact on the large yacht sector, especially in terms of new orders. Recently at The Abu Dhabi Yacht show, where Vistra was present, the consensus among the industry’s leading yacht brokers was that there appeared to be a comparative lack of buyers at this show.
Nevertheless, Vistra’s Marine & Aviation team reports a healthy start to the year despite the difficulties this market is experiencing. The industry continues to need reliable corporate services and accurate administration. Order books at shipyards are still full for the next 3 years from orders that were placed at the height of the market, which extended well into 2008, consequently there is still much work for the team to do.
However, in response to a growing demand for management of vessels repossessed by lenders, Vistra can offer help with a repossession management package. With swift action, Vistra can apply its dedicated resources as well as coordinating banks, lawyers, crew and surveyors to minimise running costs and optimise resale opportunities.
This package includes the following services:
- Quickly assume control of yacht and owner on behalf of the lender
- Provision of directors, members nominee shareholders etc., if required
- Review of expenditure (ensure vessel remains fully operational, well presented and in compliance with Minimum Safe Manning regulations for minimum cost)
- Manage crew payroll, budgeting, bookkeeping and accounting
- Coordinate all sale documentation
- Review of all class and flag documentation
- Ensure compliance with all relevant tax legislation
Where required Vistra can supply technical management via its UK suppliers. Some yachts that are subject to default provisions will be in refit or build and specific advice may be required to again minimise owner cost while optimising resale opportunity.
We recommend that in the event of a yacht repossession scenario that you contact our marine team. For further information please contact Matthew Ruane on +44 (0)1534 504700.
Swiss banking secrecy ... Quo Vadis?
On March 13, 2009 the Swiss government announced that it would adopt OECD standards for the future streamlining of administrative assistance. However, no laws in Switzerland will change. Banking secrecy laws will not be amended.
The adoption of the OECD standard on administrative assistance in tax matters according to Article 26 of the OECD’s Model Tax Convention will only apply to future double taxation agreements.
In the past Switzerland had not fully recognized Article 26, as it has only been willing to grant administrative assistance in cases of tax fraud, but not in cases of tax evasion.
As no Swiss laws will change, only the provisions of the relevant double taxation agreement are authoritative. Therefore, any future administrative assistance by Switzerland for tax evasion may only take place according to the future provisions of new (re-) negotiated tax treaties.
In accordance with the provisions of said Article 26, the new treaties will not provide for any automatic exchange of information. Information will only be provided upon receipt of a written request from another country. Administrative assistance will only be provided if there is justified suspicion that tax evasion or tax fraud has actually occurred. Fishing expeditions will not be allowed and the information requesting State will need to mention a specific bank. Furthermore, international standard practice forbids new double taxation agreements from taking retroactive effect. Thus, information from the years preceding the amended double taxation agreements will not have to be provided.
The Swiss government has emphasised that it would insist on the adoption of equitable transitory measures.
In conclusion, the current limited exchange of information system practised by Switzerland remains fully intact until new tax treaties will have been negotiated, signed and ratified by the Swiss parliament and perhaps submitted to the Swiss voters in referendum.
Finally, the legal distinction between tax fraud and tax evasion will continue to apply to all Swiss residents.
For more information, please contact Walter Stresemann on +41 (0)22 319 18 90.
Spotlight on ... Luxembourg Holding 1929 Alternatives
After flourishing for almost 80 years, the Holding 1929 company is about to disappear. It follows a conclusion by the European Commission that the tax exempt facility of the Holding 1929 company violates EC state aid rules.
The Holding 1929 company principally provided a vehicle in Luxembourg for private wealth investments, facilitating family office activities and offering attractive tax benefits.
Existing Holding 1929 companies are grandfathered until December 31, 2010 and are banished under Luxembourg law from January 1, 2011.
THE ALTERNATIVES
THE SPF
During 2007, the Luxembourg government introduced the Luxembourg alternative to the Holding 1929 company: the Societe de Gestion de Patrimoine Familiale (SPF). It is available to private individuals, private wealth entities and/or intermediaries acting on their behalf.
The exclusive object of the SPF must be the acquisition, holding, management and realization of financial instruments/assets such as shares, bonds, deposit accounts structured products, hedge funds, warrants, currencies etc.
The SPF is completely exempt from corporate income tax, municipal tax and net wealth tax. However, if the SPF receives at least 5% of the total of dividends from a participation in a non-resident company, which is not liable to a comparable income tax, the benefits of the SPF regime are disallowed.
The SPF is subject to a 0.25% registration tax with a minimum of Euro 100 and a maximum of Euro 125,000.
It should be noted that the Luxembourg capital tax has been abolished since January 1, 2009.
Like the Holding 1929 company, the SPF cannot benefit from the double tax treaties concluded by Luxembourg.
JERSEY
Another alternative might be the transfer of the registered seat and effective place of management of the Holding 1929 company to Jersey. This transfer would imply that the Holding 1929 ceases to be a Luxembourg company. The transfer of seat would be considered a liquidation in Luxembourg.
Upon such a transfer the legal personality of the (ex) Holding 1929 continues to exist. Upon the Holding 1929’s migration to Jersey, the continuance must be approved at a shareholders’ meeting. After this meeting an application to the Jersey Financial Services Commission is made to obtain a Certificate of Continuance. Once the Certificate of Continuance has been obtained, the company becomes a company incorporated under Jersey Companies Law.
In Jersey, the company would be liable to a 0% tax and other advantages.
OTHER
As well as the above mentioned alternatives to the Holding 1929, there are many more solutions. Examples include the use of a Luxembourg SIF (see our newsletter of August 2008); the use of a Liechtenstein Foundation or more offshore solutions such as the creation of a Bahamas or Panama company, in which the assets of the (ex) holding 1929 can be held.
On a case by case basis it should be determined which alternative is the best in a specific situation.
For any more information, please contact Marjoleine van Oort on +352 42 22 29.
Vistra Launches New Website Solutions Section
Due to the continued growth of Vistra, now with offices in 13 key cities, Vistra has also expanded its range of services.
In order to fully reflect our complete range of solutions, we have re-designed and launched a new Solutions section on our website. This re-design will provide our website viewers with easier navigation, giving a clear description of services and links directly to key Vistra contacts in relevant jurisdictions. We have also provided access to a number of more detailed information sheets, available to download in PDF format.
Please click here to visit our new Solutions section.
DISCLAIMER
The contents of this document are made available for information purposes only. Nothing within this document should be relied upon as constituting legal or other professional advice. Neither Vistra Holdings Limited nor any of its companies, subsidiaries or affiliates accept any responsibility whatsoever for any loss occasioned to any person no matter howsoever caused or arising as a result, or in consequence, of action taken or refrained from in reliance on any of the contents of this document.
This document must be read in conjunction with our Legal and Regulatory notice at http://www.vistra.com/notices.