The growing interest in onshore structures
Article 3 minute read

The growing interest in onshore structures

31 July 2018

As increasing transparency and concern over reputational issues cause a drop in the popularity of offshore structures, onshore structures are becoming more attractively competitive.

The increasing globalisation of families, their business interests and their personal investment holdings are key drivers behind a rise in demand for onshore structures. In particular this is increasing within the US and Canada which are deemed desirable locations for the investment of capital and mobility and education of family.

There is also a dawning realisation that offshore structures are no longer as cost-effective or as advantageous, from a regulatory perspective, as they once were. This goes in tandem with a general decline in interest in the offshore world, where increasing changes to tax regulations curtail any benefits that might have come from such a structure. The introduction of rules to banish secrecy, plus regulations geared to curtail tax evasion such as CRS and FATCA, have made the offshore arena less attractive and many who have structures established in former tax havens are now considering bringing the structures back on shore for simplicity.

There are also reputational issues to consider, where clients perceive there may be a stigma to having assets in an offshore ‘tax haven’. Instances such as the leaking of the ‘Panama Papers’ and other breaks in privacy, unsettle the market for offshore structures and even those who have valid compliant international structures worry about their reputations if their dealings are exposed.

The move to onshore

This is all good news for the onshore world. From a US and Canada perspective, we’re seeing increasing enquiries from clients looking to set up trusts or well-structured entities in either of these areas to support family wealth. We have local clients who want to relocate offshore structures back onshore, and we have those from elsewhere looking to use an onshore trust in Canada and the US, and fiduciary providers there, to provide the necessary structuring.

The onshore world is also becoming more competitive, with corporate-friendly tax policies, such as multiple tax treaties with other countries, and the calibre and education of the professionals working in this field. Legislation is also evolving, rules against perpetuities are being abolished, directed trust provisions are available in many US states, and strong asset protection is often afforded in many of the popular structuring jurisdictions.

Confidentiality is still important. In Latin America in particular, clients are concerned about extreme measures against their wealth, such as extortion, bribery, kidnapping etc. They often look to set up onshore structures in Canada or the US because they want to have a safe banking system, proper government infrastructure and long-term security for their assets. Onshore structures are typically located in countries that have a well-developed economy and strong financial markets.

One of the challenges that families face where they might have different generations scattered around the world, with business dealings and assets in different countries, is finding professional wealth management support on a global basis.

Because TMF group is truly a global organisation, we field enquiries from colleagues all over the world who have clients looking to set up an onshore structure for a variety of reasons. A client in Hong Kong might have children being educated in the US and want to set up a financial structure there. Or a client in Europe might have real estate in Canada and be looking to establish a holding vehicle in Canada.

Colleagues in all TMFs private client jurisdictions regularly confer. We work as part of a team, not in silos, to give our clients the best possible support for their family wealth and business interests from a global and local perspective.

TMF Group

Our specialist Family Business Wealth team creates and administers services that provide for private clients and their extended families, manage multiple and complex cross-border assets, navigate tax and regulatory issues, and plan for estate and business succession. By working with TMF Group, not only do you have access to our experienced teams and our network of more than 125 offices worldwide, but you will also benefit from our unrivalled local knowledge. If you would like to find out more about our services, please get in touch.

Written by

Lisa Wilcox

Market Leader, North America

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