The European Parliament voted on 20 February 2014 to bring trusts within the ambit of the Fourth Money Laundering Directive. A further vote will take place in March but if the plans go through, they could have a far-reaching impact on trusts in the UK.
The plans would involve each EU country having to create and maintain a public register of all trusts associated with the country, puting on public record the identity of the person behind the trust. At present, there is no such register, and trusts are confidential to those that create them and are involved with them. With large family trusts in particular, this type of information is highly sensitive and private, and such a register is bound to be seen as an unnecessary invasion of privacy.
The driving force behind the plans is the counteraction of tax avoidance. The UK is one of very few countries in the EU that uses trusts, and the rest of the EU views them with suspicion as vehicles for tax avoidance, which is in fact rarely the case.
We hope the UK government will use its influence to deliver a workable solution.
Fay Copeland, partner and head of the Private Client team at Wedlake Bell, expresses her concern at the potential impact of these proposals in the article below first published in Spear's magazine on 24 February 2014 (www.spearswms.com):-
" Trusts to be laid bare as EU threatens to invade privacy rights "
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