Trust Law in Germany
Trust Law in GermanyUpdated on Friday 21st October 2016
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Trusts can be incorporated in Germany in order to protect the assets of individuals who are considered high-net worth persons. As a general rule, there is no legislation which is addressing to the incorporation of trusts in this country, but the legal framework available in Germany prescribes similar legal entities. Because the legislation is not very specific, as it is the case of other jurisdictions, it is advisable to receive assistance from our German law firm, where businessmen can find out more on the instruments which can be set up following the main characteristics of a trust.
Trust instruments in Germany
Businessmen who are interested in wealth management in Germany can set up a vehicle which is similar with a trust. Under the regulations of the German Bonds Act, foreign investors can set up a Gemeinsamer Vertreter, which is an entity similar with a trust, able to act as a bond trustee.
The other structure similar with a trust is the Anleihetreuhänder, which can act as a security trustee. Businessmen may request in-depth information on this matter from our German lawyers, who can explain the registration requirements for such vehicles and, as well, can offer more details on the taxation system available in this case, which is presented below.
Taxation of the German trusts instruments
Persons who want to open a company in Germany under the form of a German trust may do so, provided that certain conditions are met. Investors should also verify the taxation system applicable to this type of instruments. As a general rule, entities registered as a trust instrument are taxed for the inheritance tax and gift tax.
However, the corporate tax may be applicable in certain situations, such as:
• a foreign trust is taxed for the income received from German sources;
• a foreign trust may be taxed in Germany if the main place of business is situated in this country.
The inheritance tax in applicable in Germany for both the person who transfers a certain amount of money, as well as for the trust.
Investors should also know that the inheritance tax may not be applied, if certain conditions are met.
More details on the trust law can be found out by foreign businessmen if they contact our attorneys in Germany.